Operations deals with how the company is performing. Operations may be refined into different manufacturing processes such as design, material acquisition, assembly, testing and so on.
A VP of operations has asked you to make a presentation at the weekly status meeting on how to improve the efficiency and effectiveness of each manufacturing sub processes individually and as a whole.
She states that to drive performance, you will need to examine accounting-based data on material, labor, and overhead costs. This type of information is not disclosed in financial reports used for lenders and owners. Rather product cost information relates to how the operation is now doing and moving forward in the future. External reports are more backward-looking about how an entity DID operate. While there will be a strong relation between operation profits and profit per the external financial statements, the way that profitability is measured can vary greatly especially since profits on an external financial report are defined according to strict definitions set by the accounting regulators. Nevertheless, the VP of operations finds the relation between operation profits and profit per the external financial statements most useful. You are to present your findings and recommendation at this meeting.
Make sure that you:
You should decide upon a measurement for profitability (such as net income, sales growth, and etc) for you as the Manager. Then explain how Claire's Antiques can measure your definition of profitability, how do you compute your profitability, and indicate why Claire's Antiques can achieve this measurement. Also, how will your measurement help to motivate Claire's Antiques to reach its goals of growing into other regions?
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