“Operations” covers a lot of territory in a company. If you currently have, or are considering hiring, a Chief Operations Officer, or COO, you need to decide how broad you define his or her duties.
A few of the independent COOs at Cerius helped us identify critical questions about operations that serve as a checklist for CEOs. This checklist will help you do three critical things: First, get you thinking about any potential weaknesses that could signal an imminent rupture in your company’s operations backbone; second, determine if it’s time for at least an independent COO to get structure and processes in place; and finally, if you currently have a head of operations, do you need to make a change – either in the job duties, or the person?
As your company’s CEO, for operations do you …
… know how your company’s revenue and growth compare with your peer group, including ratio of revenue per employee;
… do a monthly profitability run to see if material variances are cutting into your profit by not adjusting prices accordingly;
… calculate overhead by factoring each manufacturing process separately and by knowing labor and materials costs for each product;
… ensure every step, process, product, or feature is something that your customers need, and eliminate those they don’t – even if you’ve been doing it for years;
… understand your supply chain, from your inventory turn rate, to your delivery times, and the technology that drives it;
… know how well your company leverages technology to maximize performance in each department;
… make sure each employee understands the link between their performance initiatives and how they affect the company directly – and that employees are held accountable for those initiatives (part of the strategic planning process);
… have confidence that your revenue-generation mechanism is devoting adequate resources to prospecting versus account management;
… know your RFQ (request for quotation) “hit” ratio – and what that ratio means;
… spend your time equally on internal and external duties.
If you answered “no” or unsure of any aspect of the questions on this list, take a look at what several independent COOs from Cerius have to say, “Putting Muscle Into Operations”.
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