Critical KPIs for COOs: Connecting Operations, Demand and Finance

Knowing which metrics really matter is essential when running increasingly complex organizations with global supply chains, volatile demand and growing pressure on margins and service levels. Today, measuring each function in isolation is no longer enough. Real competitive advantage comes from understanding how operations, demand and finance interact within a single decision framework.

That’s why this article focuses on the critical KPIs COOs rely on: why many traditional metrics lose relevance at the executive level, what COOs actually expect from their KPIs, and which indicators help anticipate risk, align teams and drive decisions with a direct impact on business performance.

Why COOs Need an Integrated View to Make Strategic Decisions

The role of the COO has evolved significantly in recent years. It’s no longer limited to operational efficiency. Instead, it serves as the bridge between corporate strategy and day-to-day execution. To play that role effectively, COOs need an integrated view that shows the full impact of each decision.

From Local Efficiency to End-to-End Business Impact

Optimizing individual processes can deliver short-term gains, but it doesn’t always improve overall performance. A more efficient production line, a lower purchase cost or higher warehouse availability may hide downstream effects on inventory, service or profitability.

COOs need KPIs that go beyond local efficiency and reveal how improvements in one area affect the entire supply chain. Only then can they determine whether a decision truly supports strategic objectives.

The Risk of Optimizing Isolated Functions Without an End-to-End View

When each function operates with its own KPIs, silos emerge. Sales may push for growth, Operations for stability and Finance for cost control, without a shared framework to align those priorities.

This fragmented approach often creates internal friction and conflicting decisions. COOs need end-to-end KPIs that align all functions around the same goals and enable cross-functional decisions based on shared data.

When Operational KPIs Don’t Explain Financial Results

One of leadership’s biggest challenges is that many operational KPIs fail to explain why financial performance deviates from plan. High service levels can coexist with shrinking margins, just as lean inventories can still result in recurring stockouts.

The key is linking operational metrics to their financial impact. Without that connection, COOs end up managing symptoms rather than root causes.

The Problem with Disconnected KPIs Across Demand, Operations and Finance

In many organizations, KPIs exist, but they don’t connect. This disconnect limits their value for strategic decision-making. If KPIs are meant to reflect end-to-end performance, they must be linked across functions.

Forecasts That Don’t Align with Budgets and Financial Targets

It’s common for demand forecasts to be developed within Supply Chain or Sales, while financial budgets are built separately. When these views aren’t aligned, deviations arise that are hard to explain.

For a COO, this lack of coherence is critical. They need to understand whether a budget variance comes from forecast error, mix changes, capacity constraints or operational decisions that are out of sync.

Efficient Production That Creates Excess Inventory

A plant can hit its efficiency targets and still overproduce. This often happens when production is optimized without a clear view of real demand and current inventory levels.

The result is tied-up cash, higher obsolescence risk and pressure on cash flow. Without KPIs that connect production, demand and inventory, these structural inefficiencies remain hidden.

Tactical Decisions with Strategic Consequences

Many seemingly tactical choices (bringing production forward, increasing batch sizes or accepting a promotion) carry medium-term strategic consequences. Without indicators that measure that impact, margins and service levels are at risk.

COOs need KPIs that evaluate decisions based on future impact, not just immediate results.

What COOs Really Expect from Management KPIs

For a COO, KPIs are a core management tool, not a reporting exercise. In volatile environments with strong cost pressure, they need metrics that bring clarity and support decisions with real impact. The objective is to reduce complexity and quickly identify risks and opportunities.

This means moving beyond long dashboards or purely operational metrics. COOs look for a focused set of KPIs aligned with strategic levers, indicators that help prioritize actions and anticipate outcomes. When KPIs are actionable, comparable and forward-looking, they become true leadership tools.

KPIs Designed for Decisions, Not Just Reporting

A useful KPI isn’t one that’s reviewed once a month, it’s one that triggers action. For COOs, indicators should clearly show where to intervene, what to prioritize and the expected impact of each option.

That requires shifting away from descriptive metrics toward actionable KPIs with clear thresholds and ownership.

Forward Visibility Instead of After-the-Fact Analysis

Most traditional reports explain what already happened. But the real value for COOs lies in identifying deviations before they affect results.

Predictive KPIs and early-warning indicators enable a shift from reactive to proactive management, reducing risk and improving operational stability.

Comparable, Traceable and Actionable Metrics

To support executive decisions, KPIs must be comparable across time periods, business units and scenarios. They also need to be traceable back to source data and translatable into concrete actions.

Without these attributes, KPIs lose credibility at the leadership level.

Critical Indicators to Align Demand, Operations and Finance

When used correctly, certain KPIs help align these three core dimensions of the business.

Forecast Accuracy and Bias (Forecast Accuracy and BIAS)

Forecast accuracy doesn’t just affect Supply Chain, it directly impacts inventory, capacity, cost and financial performance. BIAS highlights systematic deviations that drive structurally flawed decisions.

For COOs, these indicators are essential to assess plan reliability and execution risk.

Service Level and OTIF with Financial Context

Measuring service without considering cost leads to unbalanced decisions. OTIF becomes meaningful only when analyzed alongside penalties, lost sales and cost to serve.

This perspective helps COOs determine how much additional service truly creates business value.

Average Inventory, Inventory Turns and Tied-Up Capital

Inventory is one of the largest consumers of capital. KPIs such as average inventory and inventory turns explain how that capital is being used and where optimization opportunities exist.

For COOs, these metrics are key to balancing service, risk and liquidity.

Plan Stability and the Cost of Change

Frequent plan changes create hidden inefficiencies: overtime, rescheduling, expediting and emergency logistics. Measuring plan stability and the cost of change reveals the true quality of planning.

Utilized Capacity vs. Available Capacity

This KPI shows whether resources are underutilized or operating at the limit—both scenarios carry risk. Clear capacity visibility supports decisions around investment, outsourcing or mix adjustments.

Cost to Serve and Operating Margin by Customer or Channel

Not all customers and channels deliver the same value. Analyzing operating margin alongside cost to serve helps COOs make informed decisions on pricing, service levels and commercial prioritization.

How to Connect Operational Indicators with Financial Results

For leadership, the real challenge is translating operations into economic impact.

Turning Units and Volumes into Dollars and Margin

Operational KPIs are often expressed in units, tons or hours. For COOs, converting those figures into dollars and margin is essential to assess real impact.

This translation ensures decisions stay aligned with financial objectives.

Understanding Trade-Offs Between Service, Cost and Inventory

Improving service often requires higher inventory or operating costs, while reducing inventory can affect service. KPIs should make these trade-offs explicit.

COOs need to evaluate scenarios and choose the right balance based on strategy.

Anticipating Deviations Before They Hit the P&L

Predictive KPIs help identify deviations early, while there’s still time to act. This ability to anticipate is critical to protecting margins and meeting financial targets.

The Role of S&OP as the Backbone of Executive Alignment

S&OP is the natural framework where demand, operations and finance come together.

S&OP as a Decision Forum, Not a Reporting Meeting

When S&OP is limited to reviewing numbers, it loses value. For COOs, it should be a decision forum where scenarios are evaluated and clear commitments are made.

Scenarios, Alignment and Cross-Functional Commitments

The true value of S&OP lies in alignment based on data. Shared KPIs ensure every function speaks the same language and commits to a unified plan.

Shared KPIs to Enable a Common Language

Defining a core set of shared KPIs prevents conflicting interpretations and supports consistent executive decision-making.

From Data to Action: Turning Indicators into Decisions

Measuring performance isn’t enough, the value lies in acting on it.

Identifying Meaningful Exceptions Without Losing Focus

Not every deviation requires action. COOs must identify the exceptions that truly impact the business and prioritize attention accordingly.

Prioritizing Decisions Based on Business Impact

Well-designed KPIs help prioritize decisions based on economic and strategic impact, avoiding scattered effort.

Reducing Uncertainty and Overreliance on Intuition

Intuition still matters, but it should be supported by solid data. Connected KPIs reduce uncertainty and improve decision quality.

The Right KPIs Help COOs Lead with Foresight, Not Reaction

Leading organizations don’t win by reacting faster, they win by anticipating better. For COOs, having the right KPIs that connect demand, operations and finance is the foundation for leading with foresight, consistency and control.

At Imperia, that’s exactly what we help enable. Our platform supports a unified planning model where KPIs stop being isolated metrics and become real decision levers. If you’d like to see how to better align your indicators and improve decision-making across your organization, request a free advisory session with our experts.