Role of Operations Director in Improvement of Financial Performance

https://www.apohanconsultants.com/financial-strategy__trashed/the-technical-operational-strategies-for-increasing-the-profits-of-an-indian-sme-company/

Role of a technocrat promoter:

Ideally, a business should be managed by one technocrat promoter and one financial promoter. When we look at the various competencies available with professionals, financial competencies and Technical competencies typically form mutually exclusive sets of individuals. The people who have financial knowledge don’t have technical knowledge in depth, the people who have technical knowledge don’t have the financial knowledge in depth. It is better to have these two functions managed by two different individuals. This can be achieved by the mergers and acquisitions between a small and medium enterprise and a financial investor.

INCREASING VOLUME OF SALES/SUPPLIES

The volume of sales can be increased in the following ways:

1. Increase in production capacity
2. Adding new production capacity
3. Acquire new production capacity
4. Use all existing and new production capacity
5. Produce what sells
6. Produce what sells with more margin
7. Market all the production
8. Reduce the span (in months/weeks) of cash conversion cycle

INCREASING PRICES OF GOODS/SERVICES

1. Increase quality for a price
2. Increased features for a price
3. Identify unique selling points
4. Target the niche Market
5. Identify right buyers
6. Market properly
7. Reach the high affordability markets
8. Carry out product basket rationalization
9. Provide value added services
10. Attack the most attractive elements in the value chain
11. Get rid of something that doesn’t make money
12. Incorporate indexation clauses in the sales contracts
13. Clarify what is not scope of work
14. Compress the margins of wholesalers and retailers
15. Get marginally lesser money quickly then getting the entire money very late from the client

REDUCING COST OF PRODUCTION/ DELIVERY

1. Reduce volume of inputs using Technology and management skills
2. Reduce cost of all inputs using proper procurement policy
3. Identify contribution of each project/ product
4. Work with less but sufficient inventory
5. Increase quality of inputs to avoid rejection
6. Increase quality of processes to avoid rejection
7. Increase efficiencies to avoid rejection and wastage
8. Identify the effectiveness of each of the marketing avenues
9. Drop the inefficient marketing expenses
10. Look to reduce life cycle costs instead of up front costs
11. Include the internal costs including differential in cost of manpower to achieve the same work
12. Avoid all kinds of delays
13. Take benefit of scale of operation

So what should be the operational philosophy of a company?

The operations form the bread and butter of a company. There is nothing more important than profitable operations of a company. Even during the process of merger and acquisition, the investor likes to see whether the operations are profitable and whether they have the strategic advantages and flexibility.

Increase in companies wealth = (product price + incentive per product- production cost per unit- marketing cost per unit- financial cost per unit- asset replacement cost per unit- regulatory cost or tax per unit) * maximum sales volume possible with the available capital* number of cash conversion cycles in a year.

Apohan’s Role:

Apohan does not provide any of these operational services as they are highly technical & sector specific. However, Apohan, fully understands the financial side of the strategy & implementation of these technical, operational & marketing decision and integrates them with corporate management, business strategy, financial strategy & mergers & acquisitions.

The suggestions are layman’s suggestions into core activities and the businessmen are the best people who know the hundreds of aspects of these decisions.