Critical KPIs for COOs: how to connect operations, demand and finance

Knowing which metrics to track is essential when running increasingly complex organisations with global supply chains, volatile demand and growing pressure on margins and service levels. Today, it is no longer enough to measure each area well in isolation. The real competitive advantage comes from understanding how operations, demand and finance interact within a single decision-making model. That is why we will look at the critical KPIs for COOs, why many traditional metrics stop being useful at executive level, what a COO really expects from their KPIs and which indicators help anticipate risk, align teams and make decisions with a direct impact on business performance.

Why COOs need an integrated view to make strategic decisions

The COO role has evolved significantly in recent years. It is no longer limited to ensuring operational efficiency. Instead, it acts as the link between corporate strategy and day-to-day execution. To fulfil that role, COOs need an integrated view that helps them understand the overall impact of each decision.

From local efficiency to global business impact

Optimising local processes can deliver visible short-term improvements but it does not always translate into better overall performance. A more efficient production line, a cheaper purchase or a warehouse with higher availability can hide knock-on effects on inventory, service or profitability.

COOs need KPIs that go beyond one-off efficiency and show how a local improvement affects the entire supply chain. Only then can they assess whether a decision truly supports the company’s strategic objectives.

The risk of optimising isolated functions without an end-to-end view

When each function operates with its own KPIs, decision-making silos appear. Sales may push for growth, Operations for stability and Finance for cost reduction without a shared framework that connects these priorities.

This fragmented approach often leads to internal tension and conflicting decisions. COOs need end-to-end KPIs that align all functions behind the same goal and enable cross-functional decisions based on shared data.

When operational KPIs do not explain the financial outcome

One of the biggest challenges for leadership is that many operational KPIs do not explain why financial results deviate from plan. High service levels can coexist with shrinking margins or lean inventories with recurring stockouts.

The key is to connect operational metrics to their economic impact. Without that link, COOs manage symptoms rather than root causes.

The problem with disconnected KPIs across demand, operations and finance

In many organisations, KPIs exist but they do not talk to each other. This disconnect limits their real value for strategic decision-making. If indicators are meant to reflect performance end to end, they need to be linked across functions.

Forecasts that do not match budgets and financial targets

It is common for demand forecasting to be built within supply chain or Sales while financial budgets are defined in parallel. When those two worlds are not aligned, deviations emerge that are difficult 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 not aligned.

Efficient production that creates unnecessary inventory

A plant can hit its efficiency KPIs and still generate overproduction. This often happens when production is optimised without a clear view of real demand and current inventory.

The result is cash tied up, higher obsolescence risk and pressure on cash flow. Without KPIs that connect production, demand and inventory, COOs lose visibility of this type of structural inefficiency.

Tactical decisions with strategic consequences

Many seemingly tactical decisions (bringing production forward, increasing a batch size, accepting a promotion) have medium-term strategic consequences. Without indicators that measure that impact, the risk of eroding margin or service increases.

COOs need KPIs that help assess decisions based on their future impact not just the immediate outcome.

What a COO really expects from management KPIs

For a COO, management KPIs are a core tool to run the business, not a box-ticking exercise. In highly volatile environments with strong cost pressure, they need KPIs that bring clarity and support decisions with real impact. The goal is to reduce complexity and quickly understand where the risks and opportunities are. Without this view, decision-making becomes reactive and fragmented.

That means going beyond lengthy dashboards or purely operational metrics. COOs look for a limited set of KPIs aligned with the business’s strategic levers. Indicators that help prioritise actions and anticipate their impact on results. When KPIs are actionable, comparable and predictive, they stop being descriptive metrics and become a genuine leadership tool.

KPIs designed for decisions not just reporting

A useful KPI is not the one reviewed once a month. It is the one that triggers a clear decision. For a COO, indicators should show where to intervene, what to prioritise and what impact each option will have.

This means moving away from purely descriptive measures and focusing on actionable KPIs with clear thresholds and defined owners.

Forward visibility rather than after-the-fact analysis

Most traditional reports explain what has already happened. However, the real value for a COO lies in spotting deviations before they affect results.

Predictive KPIs and early warning indicators make it possible to move from reactive management to proactive management reducing risk and improving operational stability.

Comparable, traceable and actionable indicators

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

Without these characteristics, indicators lose credibility and usefulness in the leadership team.

Critical indicators to align demand, operations and finance

There are several KPIs that, when used well, help align these three key dimensions of the business.

Forecast accuracy and bias (Forecast Accuracy and BIAS)

Forecast accuracy does not only affect supply chain. It directly impacts inventory, capacity, costs and financial performance. BIAS, in turn, highlights systematic deviations that lead to structurally wrong decisions.

For a COO, these indicators are essential to assess plan reliability and the risk attached to execution.

Service level and OTIF with an economic impact

Measuring service without considering its cost can lead to unbalanced decisions. OTIF only becomes meaningful when analysed alongside penalties, lost sales and cost to serve.

This approach enables COOs to decide how far increasing service creates real business value.

Average inventory, inventory turns and tied-up capital

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

For a COO, these indicators are key to balancing service, risk and liquidity.

Plan stability and the cost of operational change

Constant plan changes create hidden inefficiencies: overtime, rescheduling, expediting and logistics emergencies. Measuring plan stability and the cost of change helps COOs assess the true quality of planning.

Utilised capacity vs available capacity

This KPI shows whether the organisation is underusing resources or operating at the limit. Both extremes carry risk. Clear capacity visibility supports decisions on investment, outsourcing or mix adjustments.

Cost to serve and operating margin by customer or channel

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

How to connect operational indicators with financial results

For leadership, the key is translating operations into economic impact.

Converting units and volumes into pounds and margin

Operational KPIs are often expressed in units, tonnes or hours. For a COO, it is essential to convert those figures into pounds and margin to assess real impact.

This translation supports decisions aligned with the company’s financial objectives.

Understanding the trade-offs between service, cost and inventory

Improving service often requires higher inventory or greater operating costs. Reducing inventory can affect service levels. KPIs should make these trade-offs clear.

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

Anticipating deviations before they hit the profit and loss account

Predictive KPIs help detect deviations while there is still time to correct them. That ability to anticipate is essential to protect margins and meet financial targets.

The role of the S&OP process as the backbone of executive alignment

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

S&OP as a decision forum not an information meeting

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

Scenarios, alignment and commitments across functions

The real value of S&OP lies in building alignment based on data. Shared KPIs ensure every function speaks the same language and commits to an aligned plan.

Shared KPIs to speak the same language

Defining a set of shared KPIs avoids conflicting interpretations and supports executive decision-making.

From data to action: how to move from indicators to decisions

Measuring is not enough. The value comes from acting.

Identifying meaningful exceptions without losing focus

Not every deviation needs action. COOs must identify the exceptions that truly affect the business and prioritise their attention.

Prioritising decisions based on business impact

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

Reducing uncertainty and reliance on instinct

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

The right KPIs help COOs lead with foresight not reaction

The competitive advantage of leading organisations is not reacting faster. It is anticipating better. For a COO, having critical KPIs that connect demand, operations and finance is the foundation for leading with foresight, consistency and control.

At Imperia, that is exactly what we work to enable. Our platform helps you build a single planning model where KPIs stop being isolated metrics and become real decision levers. If you would like to see how to align your indicators and improve decision-making in your organisation, we invite you to request a free advisory session with our experts.