How an OP Expert can boost your bottom line
What is OP?
Operating Profit (OP) is a measure of the organisation’s operating performance and is one of the methods by which Investors, Private Equity Companies and Bankers, etc. use to evaluate the performance of an organisation. It is also an important element used to compute EBITDA. OP is extremely key for the personal wealth of the shareholder and also for future sustainability. Without an attractive OP, the organisation would not be investable. Apart from OP, some of the other important aspects of measuring the organisation’s health and its future sustainability are Marketing, Human Capital, R&D and Product Development. However, it is difficult to have a Marketing, R&D, HR or a Product Development expert be solely responsible for improving the bottom line.
Even though continuous improvement programs are taking place in all types of organisations and in every continent, many organisations do not seem to be addressing the fundamental issues that these continuous improvement methods are intended to bring. Organisations are making huge mistakes in cost-cutting exercises as they dive into finding cost management solutions at the P&L level and not at the overall Corporate level. They basically fail to understand the relationship between Operations, Processes, Product mix, Product profitability, Capacity utilisation, Efficiencies, Customers, Suppliers, Distribution channels, Systems and Speed of reaction.
As described in the book “Going the Distance: How the World’s Best Companies Achieve High Performance”, high-performance organisations are those that:
Effectively balance current needs with future opportunities,
Consistently outperform the competitors in revenue growth, profitability and return to shareholders,
Sustain their superiority over time, business cycles, industry disruptions and changes in leadership.
And they do the above by:
Market focus and position resulting in better decisions,
Distinctive capability resulting in better practices,
Performance autonomy resulting in better mind-sets.
How can The CFOO Centre help?
We can help organisations increase their value through process improvement initiatives and business transformation. We will help you understand the multiple drivers and the root causes of costs. We will offer practical and realistic guides which would address opportunities, the environment and the levels of operational maturity. We shall carefully balance internal and external factors ensuring that resulting increase in OP will not materially affect overall business performance by lowering quality, lowering customer service levels or negatively impacting market shares. Finally, we will ensure that the OP increase is sustainable. We shall do this by using various tools which we have been trained on and indeed tested.
Bringing on The CFOO Centre in this role will have an immensely positive effect on your organisation’s OP, its systems and processes.