How has the role of the COO evolved in the digital age?
How has the role of the COO evolved in the digital age?
discover | Thursday - 19 / 12 / 2024 - 1:20 pm
No one denies the pivotal role of the Chief Operating Officer (COO) in steering the operational direction of an organization, with some even considering it as the second-in-command (after the CEO). The uniqueness of this role lies in its fluidity; it transforms and adapts to the distinct needs of each company and industry. This adaptability not only facilitates smooth coordination of business operations but also enhances innovation and strategic alignment.
Now, as we enter the era of digital transformation, a question arises: do traditional boundaries still exist for the role of the COO? Operations managers respond to business and operational challenges by reassessing every aspect of operational strategy (including what it means to be an operations manager today). For instance, merely improving cost and on-time delivery is no longer sufficient; today’s supply chains require a “fit-for-purpose” approach that considers trade-offs across multiple attributes such as cost, flexibility, and sustainability.
Another area of additional scrutiny is making operating models more agile and flexible.
Top 5 Priorities for Operations Managers Today:
In today’s data-driven digital age, operations managers must leverage the power of data analytics to make informed decisions. Harnessing data not only helps understand market trends but also improves customer experiences, especially in service-oriented sectors where user engagement is critical (and risky!).
Providing a Flexible Strategic Framework:
Keeping pace with today’s demands requires a flexible process, not a rigid, one-size-fits-all approach. Developing a strategic framework begins with examining the organization’s strategy, business priorities, and trends that will impact the supply chain and operations. This is followed by designing an end-to-end supply chain framework that is both tax-efficient and enabled by a robust operations management system that uses data and digital tools to drive decisions. While there are many aspects to consider, many organizations focus on improving product portfolios, asset ownership (outsourcing versus insourcing), capability delivery (global versus regional versus local), digital transformation (data, analytics, cloud, and security), and talent management.
Flexible Plans to Compensate for Supply Chain Disruptions:
A well-defined vision and roadmap are essential to building resilience and agility into business operations. A resilient supply chain increases the assurance of product availability in the right place and at the right time.
A flexible plan forms the operating model for anticipating change and prepares the organization for any future unforeseen pivots. There is a variety of stress testing techniques, supplier risk assessments, agile multi-capability networks, alternative sourcing strategies, and scenario planning to avoid bottlenecks and delays.
Pursuing Cost Efficiency (for Immediate and Long-Term Gains):
An effective operations strategy identifies the required changes in operating costs and the working capital profile to fund the transformation. These strategies not only address cost but also provide increased margins, reduce value leakage, improve productivity, and enhance capital allocations for long-term benefits.
One of the studies highlights how some organizations have successfully reduced the cost of goods sold by more than 10% while improving their inventory levels and service.
Organizations can also reduce selling, general, and administrative costs by up to 25% due to indirect procurement cost initiatives.
Generating Operational Models that Embrace Sustainability:
Organizations are striving to optimize resource utilization within their supply chains. For instance, EY research indicates that 72% of companies are reducing water intensity in their operations, and 58% are minimizing material waste in production processes.
Operations managers must respond to these evolving needs by transparently addressing sustainability metrics, proactively updating Environmental, Social, and Governance (ESG) disclosures, and driving the decarbonization process across the product lifecycle, encompassing sourcing, product design choices, manufacturing waste management, and packaging design.
Innovating New Revenue Streams:
Digital tools and supply chain disruption have created new expectations for operations managers. Advanced technologies such as supply chain analytics can help operations managers gain operational visibility and enhance decision-making throughout the organization.
Digital tools not only enable operational efficiencies but also enhance existing products or enable the creation of new products or services, thus creating new revenue streams.
Digital capabilities such as advanced AI and the latest applications can:
– Reduce forecasting errors.
– Improve supply and procurement processes, as well as enhance supply chain tracking.
– Optimize production and scheduling.
– Simplify logistics and distribution activities.
– Boost product launch activities; and make customer service and returns more efficient.
Operations managers should align their talent needs with these significant technological leaps.
The role of the Chief Operating Officer (COO) in building a digital transformation program for an organization:
The five steps mentioned above represent an opportunity to improve business processes in several ways. The good news is that the COO can see the benefits of the transformation within three to six months!
Developing a successful transformation program begins with an assessment: review the design, identify opportunities to provide differentiation, and test the flexibility of the current operating model.
These steps will help prioritize plans and identify the right leaders to own the programs and initiate change. From there, organizations typically implement pilot programs, often focusing on urgent issues, and then move on to testing larger groups, monitoring responses, and identifying gaps.
Operational transformation is an ongoing process, especially considering the constant threats from hackers, natural disasters, geopolitical events, new regulations, and uncertain economic conditions.
By using advanced digital tools, operations managers can prepare for and respond to these fluctuating forces at any moment, turning potential disasters into avoidable crises.
Through successful operational transformation, your organization can be in an ideal position to capitalize on change while competitors struggle with missed deadlines and lost opportunities.
In summary, digital technologies enable operations managers and their facilities to maintain flexibility in responding to external pressures while creating conditions for additional cost savings and growth. The benefits of digital transformation extend beyond supply chain flexibility; transparency in operations can reveal opportunities for cost reduction, improve sustainability, and assist organizations in finding new sources of revenue. A successful digital transformation program led by the operations manager can help their organization navigate challenging headwinds and emerge ahead.
