The Challenges of the COO’s Job

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It’s tough being the operations guy. You have to “make it happen” in terms of cost savings and sometimes you are even responsible for the top line. The COO is often responsible for a vast swath of the business aside from some administrative functions such as legal and finance. As a result, the pressures on the COO are intense and getting worse.

First, you have to deal with cost savings that are increasingly illusive to find. All of the “low hanging fruit” has already been harvested. Things like fixed cost takeout and continuous improvement “sprints” have largely run their course, so it’s time for something new. Plants that can be closed have been closed, transportation routes that can be optimized have been optimized and procurement spend that can be lowered has been lowered.

Second, the COO has to deal with increasing complexity. Customers are still demanding last minute shipments, changes to orders and different transportation methods.   But, they are also demanding new packaging, new configurations and formulations, and line extensions. All of these bring added pressure to the supply chain. This additional complexity requires additional changeovers on the production line, new packaging and ingredients, new suppliers and new processes. And, you need to make sure you quantify and include this “cost of complexity” into the products to make sure you are really making the profit you think you are making.

Finally, there is the day-to-day blocking and tackling to get quality product out of the door. Major impediments such as severe weather events and strikes are hard to predict and seemingly more common. Recently, we’ve seen major operations disruptions at UPS and 1-800-Flowers and research suggests that most companies will undergo some sort of significant service interruption at some point. The companies that are prepared and have well thought through disaster recovery plans will suffer the least damage.

The job of the COO is definitely getting tougher. “More with less” is the order of the day and there is no sign of things letting up. However, the best performing COOs have an opportunity to make their operations a source of competitive advantage that cannot be easily replicated. Creating this “edge” will not only enable successes for your organization, but you might even get a promotion out of it!

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