Operations Management Systems

This chapter takes a look at operations management systems and how they differ from accounting systems.

Operations Management vs. Accounting

An accounting system is usually maintained to address three issues:

1. Determine the amount of sales tax due

2. Track gross sales minus expenses to get gross profit so that you now how much state and federal income tax to pay

3. Determine gross profit to demonstrate profit for your business to qualify for loans.

In order to do this, accounting systems track dollars received and dollars spent, i.e., sales and expenses. Your business activity is translated to dollars so you can tell someone else how your business did last year, quarter or month. An accounting system is a tool that measures what has happened after the fact. It does not tell you about the day to day activity of your business. Tracking your day to day business activity is usually done by an operations management system.

Operations Management System

An operations management system is used to track business activity daily, and sometimes hourly, when tracking worker activity. Let’s take a look at how and what an operation management system measures for a portable and a septic business. Where an accounting system puts everything in terms of dollars, an operations management system tracks activity in terms of other items, depending upon your business. The following tables break down the categories for portable and septic businesses.

Portable