What is Operations Management? How Can Operations Management Be Specified in Accounting?
Operations management is the essence of modern organizations at the intersection of strategy, efficiency, and innovation. As the global landscape shifts, the pressure mounts for operations management to proficiently navigate an array of challenges and opportunities, shaping not only the fate of businesses but, also the world we inhabit. In the face of rapid change, navigating the complex realm of operations management and the alliance of accounting can foster a new atmosphere in integrating a more holistic approach to enhancing a business’s continuous success behind the scenes (Robinson). By becoming proficient in the intricate forms of technology, and enterprise resource planning (ERP), many organizations can rise to the challenges of a rapidly evolving world, driving positive change and shaping a brighter future through strengthening other business aspects.
What is Accounting?
Accounting is a systematic process of recording, analyzing, interpreting, and communicating financial information to stakeholders. It involves tracking, evaluating, and reporting an organization’s financial transactions, assets, liabilities, revenues, and expenses. The main purpose of accounting is to provide useful information for decision-making, planning, and control within an organization. As John Iwuozor described accounting is like a “powerful machine” to input data and get information as the output. Think of accounting as like solving a puzzle and figuring out where each specific puzzle pieces go to make the perfect design.
How Do Operations Management Principles Impact Accounting?
Before considering how operations management principles play a significant role in accounting, operational accounting can be described as various techniques for assigning responsibilities, streamlining workflow, methodically correcting errors, etc. The term operations is proficient in improving and documenting processes of efficiency and effectiveness, leading operational accounting to be related to accounting itself in streamlining processes, analyzing current trends, and identifying and solving problems (Bragg, 2012, p.49). Moreover, accounting principles significantly shape the financial health and efficiency of an organization’s operation processes. Such principles or service lines can include audit, tax, consulting, and/or management.
Audit: Effective operations management strategies can help ensure that financial statements are accurate and reliable by implementing controls and procedures that monitor and verify financial information. Through well-managed operations management in place, auditors can easily access and analyze financial data, making the process more efficient and effective in terms of communication (He).
Tax: Operations management strategies can help ensure compliance with tax laws and regulations. Through optimizing processes and resources, accounting can accurately calculate and report tax liabilities, minimizing the risk of potential penalties or fines. Identifying tax planning and improving cash flow management can enhance overall tax performance in an organization. Leading to effectively reducing tax costs for their clients and improving financial performance (Allen).
Consulting/Management: Enhancing management can be implemented through performance and profitability. Within operations management principles such as resource allocation, process improvement, and quality control, organizations can optimize operational efficiency and boost productivity. Also, operations management can highlight key challenges that prevent effective collaboration between management accounting and operations management, such as communication barriers, different objectives, and a lack of understanding of each other’s roles (Curry). Working together at shop floor level can lead to better alignment of strategic goals, enhanced performance, and improved problem-solving capabilities.
How does Operations Management and Accounting Work Together in the Business World?
Operations management and accounting are both essential functions within an organization that work closely together to ensure the efficient and effective operation of a business. Operations management is responsible for overseeing the production and delivery of goods and services, while accounting is solely for tracking and managing the financial health of the business.
Within the business industry, forms of technology can be implemented through the emerging trend of Artificial Intelligence (AI). Professor Shan Li, a Baruch Associate Professor, highlights the potential of AI, stating that it can enable predictive analytics to anticipate and mitigate issues before they arise. Through advanced software and automated systems, organizations can streamline their processes, reduce errors, and improve overall efficiency in both operations and financial reporting.
Furthermore, the use of Enterprise Resource Planning (ERP) systems has revolutionized the way business manage their operations and financial data to enhance efficiency, accuracy, and decision-making processes. ERP integrates various functions such as production planning, inventory management, quality control, and financial reporting into a single comprehensive platform (Kelly). This integration allows operations management to optimize resource allocation and improve supply chain management by leveraging accounting data for cost analysis and budgeting purposes (Curwell; Gunasekaran & Irani).
Maximizing Business Success
Thus, in the dynamic business world of today, operations management and accounting must seamlessly collaborate to drive company success. This strategic alignment fosters a culture of accountability, transparency, and data-driven decision-making within the organization. In essence, the synergy of these 2 significant functions lays the foundation for sustainable growth and competitive advantage in a rapidly evolving business world.