operational business planning techniques and approaches

How to Master Operational Planning: A Practical Approach

Navigating the complex landscape of business success requires more than just a grand vision. While strategic planning sets the course, it’s the operational plan that truly steers the ship. This crucial component bridges the gap between lofty aspirations and daily realities, transforming abstract goals into concrete actions. Operational planning serves as the backbone of organizational efficiency. It’s the process that breathes life into strategies, providing a clear roadmap for teams to follow. By breaking down overarching objectives into manageable tasks, it ensures that every team member understands their role in the bigger picture.

But operational planning isn’t just about task allocation. It’s a dynamic framework that adapts to challenges, aligns resources, and keeps everyone moving in the same direction. In essence, it’s the secret ingredient that turns strategic dreams into tangible results, making it an indispensable tool for any business aiming for sustainable success.

What is Operational Planning?

Operational planning is the execution of a strategic plan, creating a series of team-based activities that support it. It involves mapping out daily, weekly, and monthly operations to ensure that an organization achieves its long-term objectives. Essentially, operational planning turns high-level goals into actionable steps that guide the daily activities of every department within a company.

Operational planning is crucial because it aligns the actions of different teams and departments with the organization’s strategic goals. This alignment ensures that every activity supports the company’s broader objectives, optimizing resource use and increasing efficiency. Effective operational planning clarifies roles, reduces redundancy, and helps track progress in real-time, enabling teams to pivot quickly when challenges arise.

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Tactical vs. Operational vs. Strategic Planning

Operational planning is often compared to other types of planning, such as tactical and strategic planning. Here’s a quick overview:

Tactical Planning: Focuses on the short-term actions and initiatives that achieve strategic goals. Tactical plans are more granular and detail the “how” of executing strategies.

Operational Planning: Addresses the day-to-day operations required to run the organization efficiently. It translates strategic objectives into specific, actionable tasks with timelines and resource allocations.

Strategic Planning: Defines the long-term vision and goals of an organization over a period of 1-3 years. It outlines the high-level strategies required to achieve these goals.

Strategic planning doesn’t stand alone; It’s dependent on flawless operational and tactical planning. Together, these planning types ensure coherent execution from the overarching vision down to the smallest daily tasks. For more details on the difference between strategy and planning, check out our guide on strategic vs tactical planning .

Keys to effective operational planning include incorporating the use of strategic planning tools like Strategic Planning Tools , and creating detailed action plans for daily operations. This interconnectedness facilitates holistic planning and efficient execution.

Strategic Planning: An Overview

Strategic planning is the process of defining long-term business goals and determining the best strategies to achieve them. Typically spanning one to three years, strategic plans provide a macro view of the organization’s future. They focus on high-level objectives such as market expansion, product development, and revenue growth, offering a comprehensive roadmap for where the business aspires to be in the upcoming years.

Operational Planing VS Strategic Planning

While both operational and strategic planning are essential, they serve different purposes. Strategic planning lays out the long-term vision and overarching goals. In contrast, operational planning zeroes in on the short-term actions and procedures necessary to achieve these strategic objectives on a day-to-day basis. The operational plan breaks down the high-level goals into manageable tasks, ensuring that each department and team knows their role in the bigger picture.

Strategic Planning Tools: Provides solutions to map out long-term strcategies.

Operational Planning: Turns these strategies into actionable steps aligned with daily business activities.

For businesses to succeed, it is crucial to align both strategic and operational plans. An effective operational plan operationalizes strategic goals, ensuring all efforts are coherent and directed towards the organization’s vision. This alignment also helps in identifying resource requirements, setting feasible timelines, and fostering team collaboration.

Benefits of Operational Planning

Effective operational planning offers a range of advantages for organizations, aligning daily operations with long-term strategic goals. Here are some of the key benefits:

Provides Clarity: A well-drafted operational plan sheds light on the company’s goals, ensuring that each team member understands their role in achieving them. It offers a clear roadmap, defining tasks, responsibilities, and deadlines, which contributes to efficient task execution and team alignment.

Comprehensive Guide for Day-to-Day Activities: By outlining specific activities, timelines, and resource allocations, operational planning serves as a practical guide for daily, weekly, and monthly operations. This helps in maintaining consistency in performance and workflow, making sure that everyone knows their tasks and priorities. To learn how to master your day to day activities check out our guide on how to write an action plan .

Avoids Teams Going Off Track: Operational planning prevents ambiguity and distractions that could derail the project. By defining and assigning specific roles and responsibilities, it helps in keeping the teams focused and oriented towards the strategic goals, minimizing the chances of tasks slipping through the cracks.

These benefits underscore the necessity of integrating robust operational planning into your business strategy. Utilizing tools like Creately’s visual work management platform can greatly enhance the planning process. Creately offers features such as data-linked templates, real-time dashboards, and collaboration tools, which ensure that planning, tracking, and executing tasks become streamlined and effective. By leveraging these tools, organizations can not only plan meticulously but also monitor progress and adapt to changes promptly.

What to Include in Operational Planning

Building an effective operational plan requires including several essential components. These elements act as the foundation for guiding daily activities and ensuring successful execution of strategic goals. Here are the key elements to consider:

Executive Summary: A concise overview of the entire plan, providing quick insights for stakeholders.

Operational Budget: A detailed breakdown of expected costs and revenues, which is crucial for ensuring resource availability without overspending.

Objectives: Clearly defined operational objectives that align with the strategic goals of the organization.

Processes and Workflows: Well-documented processes and workflows that outline the tasks and resources needed to achieve the objectives.

Timeline: An operational timeline to coordinate the duration for executing business operations efficiently.

Hiring Plan: A plan detailing skills gaps and steps to acquire necessary human resources.

Quality Assurance and Control: Implementing procedures to meet regulatory compliance and ensure quality standards.

Risk Management: Identifying potential risks, assumptions, and constraints that may impact the plan, along with mitigation strategies.

KPIs: Key Performance Indicators to measure and track the productivity and success of business operations.

Detailed Breakdown of Essential Components of Operational Planning

For a deeper understanding, let’s break down some of these components:

For those looking to streamline the process, using a operation planning gantt chart can simplify complex procedures and save time by providing predefined structures for various jobs.

Step-by-Step Operational Planning Process

Step 1: create a strategic plan.

Before delving into the specifics of daily operations, it’s crucial to establish a comprehensive strategic plan. This foundational step provides the long-term vision and goals that will guide your more detailed planning. The strategic planning process encompasses four key steps: first, determine your current position; second, develop your strategy; third, build your strategic plan; and finally, share, monitor, and manage your strategic plan. Each of these steps plays a vital role in creating a robust framework for your organization’s future.

Step 2: Set Goals

Next, set clear, actionable goals that align with your organization’s overarching strategic objectives. Involving your team in the goal-setting process ensures that the goals are realistic and achievable. Remember to make your goals SMART (Specific, Measurable, Achievable, Relevant, and Time-bound) to provide a clear direction.

Step 3: Develop Action Plans

Action plans are essential for converting strategic objectives into daily activities. Define the tasks, allocate responsibilities, and set timelines to ensure that each aspect of the project is covered.

Step 4: Allocate Resources

Effective resource allocation ensures that your team has the necessary tools, budget, and personnel to complete their tasks. Review your operational budgeting to distribute resources efficiently and ensure that each department has what it needs to succeed.

Step 5: Monitor Progress

Regular monitoring is crucial for keeping the project on track. Use Key Performance Indicators (KPIs) and real-time dashboards to measure progress and performance. This helps identify any deviations from the plan early, allowing for timely adjustments.

Step 6: Revise the Plan

The final step is to revise the plan as needed. Operational plans should be flexible to accommodate changes and unexpected challenges. Make adjustments based on performance data, and continuously involve your team to ensure that the plan remains relevant and effective.

By following these steps, you can create a robust operational plan that drives your organization toward its strategic goals while maintaining efficiency and accountability.

Encouraging Team Collaboration

Ensuring team buy-in and collaboration is crucial for the success of an operational plan. When team members are actively involved in the planning process, they are more likely to take ownership of their tasks and responsibilities, ultimately leading to better execution. Use collaborative tools and platforms to facilitate communication and ensure everyone is on the same page.

Common Challenges in Operational Planning

Identifying common challenges.

Even with a thorough approach, operational planning comes with its share of challenges. Common issues include:

Human errors : Mistakes are inevitable but can significantly disrupt plans if not identified and corrected swiftly.

Poor cross-functional collaboration: Teams working in silos can lead to misaligned objectives and delayed project timelines.

Ineffective task coordination: Without a robust framework, tasks can become mismanaged, causing bottlenecks and reduced productivity.

Resistance to change: Employees may be reluctant to adopt new processes, impacting overall efficiency.

Strategies to Overcome Planning Hurdles

To tackle these challenges head-on, consider implementing the following strategies:

Real-time dashboards : Utilize tools like Creately’s strategic planning tools and templates to monitor progress and quickly identify areas needing attention.

Collaboration tools: Encourage cross-functional collaboration by using platforms that offer real-time communication features, such as integrated video calls and live commenting.

Clear communication channels: Establish regular check-ins and update meetings to keep everyone on the same page.

Training and support: Offer ongoing training sessions to help teams adapt to new methodologies and tools efficiently.

By adopting these strategies and leveraging technology, organizations can minimize disruptions and keep their operational planning on track. Utilizing platforms like Creately can provide the necessary tools to streamline processes, improve task coordination, and enhance overall productivity.

Adapting Plans Based on Feedback

Flexibility is key to accommodating changes and unforeseen challenges. Regular reviews and feedback sessions allow teams to reassess their operational plans and make necessary revisions. For example, if a specific strategy isn’t yielding expected results, teams can pivot and allocate resources to more promising areas.

Case studies highlight the importance of adaptability in operational planning. For instance, a company facing supply chain disruptions might revise its plan by diversifying suppliers and adjusting procurement strategies to maintain production schedules. Such proactive measures ensure that the operational plan remains viable and effective under changing conditions.

To effectively monitor and revise operational plans, businesses can benefit from tools offered by Creately’s smart visual work management platform. With templates, real-time dashboards, and collaboration tools, teams can streamline their planning processes, enhance efficiency, and improve overall outcomes.

How Creately Improves Operational Planning

Operational planning is crucial to achieving strategic goals, and leveraging technology can take your planning process to the next level. Our smart visual work management platform, Creately, is designed to simplify operational planning, making it more efficient for teams and individuals involved in project management, HR planning, IT infrastructure, and beyond.

Creately is more than just a visual tool; it’s a comprehensive platform that connects ideas, people, and data. This makes it the perfect solution for operational planning, allowing for seamless collaboration and ensuring all team members are on the same page. With Creately, planning becomes a visual and dynamic process, helping you stay focused on your business objectives.

Templates and Dashboards : Our platform offers various strategic planning templates and real-time dashboards that streamline complex workflows. These tools make it easy to manage operational plans, track progress, and adjust strategies as needed.

Enhanced Collaboration: Real-time collaboration tools ensure that every team member can contribute effectively. Whether you’re performing tactical planning, operational budgeting, or aligning with strategic planning, our platform facilitates smooth communication and coordination.

Visual Work Management: The visual nature of Creately helps teams to understand the relationships between different tasks and processes. This clarity aids in resource allocation, timeline management, and ensures that everyone is moving in the same direction.

Flexibility and Adaptability: Our platform is designed to adapt to your changing needs. For instance, you can easily revise operational plans based on real-time data and feedback, ensuring your team can pivot and respond to new challenges swiftly.

By leveraging these tools, companies have seen marked improvements in project outcomes, resource management, and overall team productivity.

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

Frequently Asked Questions (FAQs) about Operational Planning

How does operational planning differ from business planning, can small businesses benefit from operational planning, how does operational planning impact employee productivity, how does tactical planning fit into the operational planning process, what’s the relationship between an operational plan and a business plan, how does operational budgeting differ from other types of budgeting, how do long-term and short-term planning intersect in operational planning, more related articles.

Chiraag George is a communication specialist here at Creately. He is a marketing junkie that is fascinated by how brands occupy consumer mind space. A lover of all things tech, he writes a lot about the intersection of technology, branding and culture at large.

Painless operational planning

Turning strategy into an operational plan isn't about doing more things right – it's about doing more of the right things. In contrast to strategic planning, the goal of an operational plan is to see how you'll execute on your strategy month by month, week by week. And since you work in a vacuum, this means you'll need to coordinate people, time, and budgets across teams (and maybe across departments, too).

An actionable operational plan answers questions like: 

• What milestones do we need to hit?
• Who will work on what?
• Where might we run into bottlenecks and how can we avoid them?
• How will we define success?
• What early indicators will tell us we're on the right track? 

Once you have an actionable plan drafted, be sure to gather and incorporate feedback from the core team involved, as well as stakeholders. Don't get discouraged if you go through a few iterations before landing on a plan everyone can get on board with. (They don't call operational planning a "process" for nothing!)

Ready to dig in? Let's do this. 

Top 6 plays for better operational planning

Whether you're planning for the quarter or for the fiscal year, operational planning is a team sport. This collection of plays is designed to help you collaborate and agree on goals, priorities, roles, and risks. 

Goals, Signals, and Measures

Starting with your high-level objective in mind, you'll define a specific goal. Then you'll brainstorm signals you can listen for in the short-term that'll let you know you're making progress (think KPIs) and agree on how you'll measure success. Run this play at the beginning of the planning process. 

Roles and Responsibilities

Gather your core team to establish who is responsible for what on a day-to-day basis. This play is very effective for uncovering skill gaps or redundancies. (Efficient resourcing for the win!)

Prioritization Matrix

Real talk: you can't just implement your operational plan. You'll also need to support requests coming in from across the organization. Run this play with leads from adjacent teams to determine the right balance. 

Capacity Planning

Resource management is tricky. Does your plan require more time than you have? Will the right people be available when you need them? Use this play to take the guesswork out of estimating and prioritizing. 

Dependency Mapping

Use our handy template to visualize the web of dependencies lurking within your plan and develop your approach to managing them. You'll think through the various systems your plan will affect, risks, and how to create a feedback loop with stakeholders.

Trade-off Sliders

Take the frustration out of decision-making by agreeing on what you need to optimize for at all costs, and where you can be flexible. This sets your team up to make every-day decisions autonomously and keep implementation chuggin' right along. 

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Leadership team health monitor.

Delivering a great operational plan requires a healthy team of planners. Use the Health Monitor to self-assess against eight attributes common amongst high-performing teams, then track your progress over time. 

Gather your operational planning team for an honest discussion about how you're working together.

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Operational Planning: a Practical Guide for Businesses

Learn about operational planning, its best practices and how to execute it flawlessly in your business.

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Every business owner dreams of success. But without a clear roadmap, even the hardest workers can get lost in the shuffle of daily tasks, losing sight of their grand ambitions.

Operational planning is that roadmap, breaking down lofty goals into actionable steps. It’s not just about working hard — it’s about working smart.

Dive into this guide as we dissect operational planning and show how it can propel your business toward its next significant milestone.

What is operational planning?

Operational planning is about making detailed plans for achieving short-term goals, usually within a year. It turns big strategies into specific tasks and steps that teams can follow.

For example, a store might have an operational plan for the holiday season that includes sales targets and staffing schedules.

This kind of planning helps everyone know what they need to do and ensures that resources are used effectively.

It’s like creating a detailed map for a journey, making sure the ship stays on course and reaches its destination smoothly.

Operational planning is essential because it directly helps an organization reach its bigger goals, even though it might seem like a small part of the process.

What’s the difference between an operational plan and a strategic plan?

An operational plan is a short-term, detailed guide for day-to-day work, aiming to reach goals within a year. It's like a specific recipe you follow to cook a meal.

On the other hand, a strategic plan sets long-term company goals for the next three to five years, giving the big picture of what you want to achieve, similar to planning a menu for a week.

The operational plan shows the steps ( how and when ), while the strategic plan shows the overall goals ( what and why ).

Understanding the difference between operational and strategic planning helps you (and your team) use time and resources wisely , keeps everyone on the same page, and ensures that every small task inches you closer to your bigger goals.

Why operational planning is so important for your business

Enhances team productivity.

Operational planning helps everyone know what to do, stay excited about their work, and focus on important tasks, making the whole team work better.

Operational planning helps achieve this by:

• Establishing clear roles: Everyone knows exactly what their job is, what their key performance indicators are, and what results they’re expected to deliver
• Motivating through clarity: Having clear goals helps everyone feel more ready and eager to work.
• Identifying levers: Everyone works on what’s most important — the “levers” that make big impacts — rather than “ putting their time in” on bootless tasks.

This way, operational planning guides every team member in contributing effectively, enhancing overall productivity .

Provides clarity and direction

A good operational plan shows the best way to use time and money and lays a clear path for the team.

It does this through:

• Smart use of resources: A solid operational plan makes sure that time and money are spent on the most important things.
• Knowing what’s important: Prioritization helps teams focus on the big tasks first.
• Removing the guesswork: Make sure everyone knows the plan and follows it.

These elements work together to guide the team towards achieving their goals efficiently.

‎Secures alignment with strategic objectives and goals

Operational planning connects everyday tasks to the company’s big organizational goals, helps check progress, and keeps everyone working together towards the same aim.

It accomplishes this by:

• Connecting daily activities to big ideas: 41% of US workers aren’t sure what their organizational purpose is. So, establishing this connection shows how every task helps achieve the main goals.
• Regular check-ins: These let the team check if they’re on the right path and make changes if needed.
• One shared goal: A unified front keeps everyone working towards the company’s primary aim.

This alignment keeps everyone moving in the same direction, ensuring all the work contributes to the business’s success.

Boosts business flexibility

A strong operational plan prepares your business for sudden changes, helps plan for possible challenges, and lets leaders make quick decisions.

Operational planning shapes this adaptability through the following:

• Preparing for surprises: “Expecting the unexpected” helps the business adjust quickly when these unexpected things happen.
• Nurturing a problem-solving mindset: By thinking about what problems threaten the business, teams nurture problem-solving skills , leading to better decision-making.
• Quick decisions: Operational planning helps leaders make fast and informed choices. Being flexible like this is key to staying strong and ready for anything in business.

Each of these elements helps your business survive in the face of uncertainty and become more resilient to unexpected threats.

Streamlines decision-making

Operational planning makes decision-making easier by using facts, clear steps, and setting priorities to guide choices.

Operational planning supports this by:

• Helping you make choices based on facts: Operational planning ensures that decisions are based on real information, not just feelings.
• Establishing clear procedures: A clear plan defines steps for various processes so that you’re not shooting from the hip, hoping you’ll do things right.
• Fewer arguments: With clear priorities, there's less disagreement on what to do next, saving time, money, and the sanity of everyone on the team.

The bottom line is that by streamlining decision-making in this way, operational planning helps the business navigate challenges and seize opportunities effectively.

Challenges of operational planning

Operational planning is essential for a business’s success, but it’s not without challenges. Let’s break these down to understand them better.

Balancing today's work with tomorrow's goals

It’s tough to manage daily tasks while also thinking about the future. Imagine a juggler trying to keep several balls in the air at once. If they focus too much on one ball, the others might drop.

In business, concentrating only on today's work can cause us to lose sight of our long-term goals.

And deciding whether to spend our time and money now or save it for later can be tricky. It’s like being at a crossroads and needing to choose the right path that leads to growth and success.

Gathering reliable information

Today, we have more information at our fingertips than ever before. But this can be overwhelming. It’s like trying to drink water from a fire hose – too much too fast.

It's challenging to know what information is important and what isn't. For example, a business might have a lot of customer feedback, but figuring out which comments will help improve the product can be hard.

And because the business world moves so quickly, using old information can lead to mistakes. It’s like trying to hit a moving target using an outdated map.

Keeping your team aligned

Making sure everyone on a team understands and follows the plan can be like herding cats. Even with clear instructions, people might need clarification. And some might not want to change the way they work, even if it’s for the better.

It’s essential to keep everyone on the same page and moving in the same direction. Think of it as a boat crew rowing together; if everyone is in sync, the boat moves smoothly. But if not, it can be a bumpy ride.

The bottom line is that operational planning is key to a business’s growth, but it has its hurdles.

Balancing daily work with future plans, finding the correct information, and aligning the team are all “mission critical.”

Tackling these challenges head-on can lead to a smoother journey and a brighter future for the business.

How to create an operational plan

Creating your operational plan requires a systematic approach so that you cover all the bases to set your business on a path to achieve its goals.

Here’s a step-by-step guide to help you through the process.

Step 1: Review your big picture

Start by taking a step back and looking at the overarching goals of your business. What are the main objectives you want to achieve in the next year or even five years? These could range from increasing revenue and expanding market share to improving customer satisfaction.

Step 2: Identify current strengths and weaknesses

Once you have a clear understanding of your long-term goals, it’s time to assess your current situation. Conducting a SWOT analysis can be a helpful tool here. This involves identifying your business’s strengths, weaknesses, opportunities, and threats. It’s about understanding what you’re doing well, where you could improve, and what external factors might impact your business.

Step 3: Set clear, actionable objectives

With your SWOT analysis in hand, you can now set specific short-term targets that will help you achieve your long-term goals. Make sure these targets are SMART – Specific, Measurable, Achievable, Relevant, and Time-bound. For example, instead of setting a vague goal like "increase sales," a SMART goa l would be "increase sales by 10% in the next quarter."

‎Step 4: Determine resources needed

Next, list out all the resources you will need to achieve your objectives. This could include money, staff, equipment, and more. Also, plan how you will secure these resources. It might involve hiring new staff, purchasing equipment, or reallocating existing resources.

Step 5: Assign roles and tasks

Clearly define who in your team is responsible for what. Make sure every member knows their specific duties and the deadlines associated with them. This helps in ensuring accountability and that everyone is on the same page.

Step 6: Monitor progress regularly

Set up regular check-ins, whether weekly, monthly, or quarterly, to track the progress of your operational plan. Use these sessions to identify issues, address problems, and make necessary adjustments to stay on track.

Step 7: Be ready to adjust the plan

Finally, understand that no plan is perfect from the get-go. Be flexible and open to making changes based on the feedback you receive and the results you observe. The business environment is always changing, and your operational plan should be adaptable enough to change with it.

By following these steps, you create a solid foundation for your business to achieve its strategic initiatives , ensuring you are prepared for the journey ahead.

Examples of operational plans

Next, we'll go through practical examples to show you how operational plans work in real-life situations.

You'll see the steps involved and understand how these plans help businesses achieve their goals.

By looking at these examples, you'll get a clearer idea of how to apply operational planning to different scenarios.

Example 1: A gym aiming to boost membership rates

Suppose we have a local gym aiming to boost membership by introducing new fitness classes.

• Goal: Increase gym memberships by 15% by launching three new fitness classes within the next six months.
• Strength: Loyal member base and knowledge of their fitness preferences.
• Weakness: Limited space in the gym and lack of instructors for specialized classes.
• Objective: Research popular fitness trends, hire or train instructors, and set up class schedules in 5 months. Dedicate one month for promotion to attract new members.

Step 4: Determine resources needed

• Need: Equipment for the new classes, trained instructors, and promotional materials to entice new sign-ups.
• Manager to research and decide on the new classes.
• HR to recruit or train instructors.
• Marketing team (or person) to create a campaign that highlights the new classes and appeals to potential members.
• Bi-weekly meetings to check on class setup progress and track membership sign-up rates.
• If the classes aren't drawing in the expected number of new members, consider offering promotions, adjusting class times, or exploring different class types.

Example 2: A local bookstore aiming to increase sales

Suppose there’s a local bookstore that wants to increase book sales by hosting monthly themed events.

• Goal: Boost monthly sales by 20% by hosting themed events over the next six months.
• Strength: Well-curated book selection and a cozy venue that's popular for gatherings.
• Weakness : Limited marketing experience and budget constraints for organizing larger events.
• Objective: Identify and organize one themed event per month that resonates with the community, driving both event attendance and book sales.
• Need: Event materials, possible guest speakers or performers, promotional flyers, and online ads.
• Store owner to select monthly themes and potential books to highlight.
• Staff members to handle event logistics like setting up, decorating, and coordinating with guest speakers.
• A dedicated person (or outsourced help) to manage promotion, both in-store and online.
• Post-event reviews to measure attendance, book sales during the event, and gather attendee feedback for future improvements.
• If an event theme doesn't mesh with customers or fails to boost sales as expected, brainstorm new themes, adjust marketing strategies, or consider partnerships with local businesses for joint events.

How Motion helps your operational planning

Efficient operational planning is key in the fast-paced business world, and Motion is here to streamline that process.

AI-powered scheduling adapts to changes, keeping your business on track

Motion’s AI-powered scheduling plans your day, ensuring nothing is missed by rescheduling uncompleted tasks. This feature helps you focus on priority tasks adapting to real-time changes.

Project oversight keeps the team together and in the know

Motion provides a clear overview of all team tasks, reducing the need for constant check-ins and enhancing communication. Tasks are sorted by priority, deadlines, and dependencies, aligning the team towards common goals.

Unified work management keeps tasks organized in one spot, making work smoother.

Motion consolidates to-dos, calendars, and tasks in one place, streamlining your workflow. It ranks tasks by importance and alerts you to deadlines, helping you manage your time effectively.

By integrating Motion into your operational planning, your business gains a tool that promotes efficiency, clarity, and focus, transforming operational planning into a strategic advantage.

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Operational Planning: How to Make an Operations Plan

The operations of your business can be defined as the sum of all the daily activities that you and your team execute to create products or services and engage with your customers, among other critical business functions. While organizing these moving parts might sound difficult, it can be easily done by writing a business operational plan. But before we learn how to make one, let’s first understand what’s the relationship between strategic and operational planning.

Operational Planning vs. Strategic Planning

Operational planning and strategic planning are complementary to each other. This is because strategic plans define the business strategy and the long-term goals for your organization, while operational plans define the steps required to achieve them.

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Operational Plan Template

Use this free Operational Plan Template for Word to manage your projects better.

What Is a Strategic Plan?

A strategic plan is a business document that describes the business goals of a company as well as the high-level actions that will be taken to achieve them over a time period of 1-3 years.

What Is an Operational Plan?

Operational plans map the daily, weekly or monthly business operations that’ll be executed by the department to complete the goals you’ve previously defined in your strategic plan. Operational plans go deeper into explaining your business operations as they explain roles and responsibilities, timelines and the scope of work.

Operational plans work best when an entire department buys in, assigning due dates for tasks, measuring goals for success, reporting on issues and collaborating effectively. They work even better when there’s a platform like ProjectManager , which facilitates communication across departments to ensure that the machine is running smoothly as each team reaches its benchmark. Get started with ProjectManager for free today.

What Is Operational Planning?

Operational planning is the process of turning strategic plans into action plans, which simply means breaking down high-level strategic goals and activities into smaller, actionable steps. The main goal of operational planning is to coordinate different departments and layers of management to ensure the whole organization works towards the same objective, which is achieving the goals set forth in the strategic plan .

How to Make an Operational Plan

There’s no single approach to follow when making an operation plan for your business. However, there’s one golden rule in operations management : your strategic and operational plans must be aligned. Based on that principle, here are seven steps to make an operational plan.

• Map business processes and workflows: What steps need to be taken at the operations level to accomplish long-term strategic goals?
• Set operational-level goals: Describe what operational-level goals contribute to the achievement of larger strategic goals.
• Determine the operational timeline: Is there any time frame for the achievement of the operational plan?
• Define your resource requirements: Estimate what resources are needed for the execution of the operational plan.
• Estimate the operational budget: Based on your resource requirements, estimate costs and define an operational budget.
• Set a hiring plan: Are there any skills gaps that need to be filled in your organization?
• Set key performance indicators: Define metrics and performance tracking procedures to measure your team’s performance.

Free Operational Plan Template

Leverage everything you’ve learned today with our template. This free operational plan template for Word will help you define your budget, timeline, KPIs and more. It’s the perfect first step in organizing and improving your operations. Download it today.

What Should be Included in an Operational Plan?

Your operational plan should describe your business operations as accurately as possible so that internal teams know how the company works and how they can help achieve the larger strategic objectives. Here’s a list of some of the key elements that you’ll need to consider when writing an operational plan.

Executive Summary

An executive summary is a brief document that summarizes the content of larger documents like business plans, strategic plans or operation plans. Their main purpose is to provide a quick overview for busy stakeholders.

Operational Budget

An operational budget is an estimation of the expected operating costs and revenues for a given time period. As with other types of budget, the operational budget defines the amount of money that’s available to acquire raw materials, equipment or anything else that’s needed for business operations.

It’s important to limit your spending to stay below your operational budget, otherwise, your company could run out of resources to execute its normal activities. You can use our free operating budget template for Excel to track your operating costs.

Operational Objectives

It’s essential to align your operational objectives with your strategic objectives. For example, if one of your strategic objectives is to increase sales by 25 percent over the next three years, one possible operational objective would be to hire new sales employees. You should always grab your strategic plan objectives and turn them into one or multiple action items .

Processes & Workflows

Explain the various business processes, workflows and tasks that need to be executed to achieve your operational objectives. Make sure to explain what resources are needed, such as raw materials, equipment or human resources.

Operational Timeline

It’s important to establish a timeline for your operational plan. In most cases, your operational plan will have the same length as your strategic plan, but in some scenarios, you might create multiple operational plans for specific purposes. Not all operational plans are equal, so the length of your operational timeline will depend on the duration of your projects , workflows and processes.

Hiring Plan

Find any skills gap there might be in your team. You might need to hire a couple of individuals or even create new departments in order to execute your business processes .

Quality Assurance and Control

Most companies implement quality assurance and control procedures for a variety of reasons such as customer safety and regulatory compliance. In addition, quality assurance issues can cost your business millions, so establishing quality management protocols is a key step in operational planning.

Key Performance Indicators

It’s important to establish key performance indicators (KPIs) to measure the productivity of your business operations. You can define as many KPIs as needed for all your business processes. For example, you can define KPIs for marketing, sales, product development and other key departments in your company. This can include product launch deadlines, number of manufactured goods, number of customer service cases closed, number of 5-star reviews received, number of customers acquired, revenue increased by a certain percentage and so on.

Risks, Assumptions and Constraints

Note any potential risks, assumptions and time or resource constraints that might affect your business operations.

What Are the Benefits of Operational Planning?

Every plan has a massive effect on all team members involved, and those can be to your company’s benefit or to their detriment. If it’s to their detriment, it’s best to find out as soon as possible so you can modify your operational plan and pivot with ease.

But that’s the whole point of operational planning: you get to see the effect of your operations on the business’s bottom line in real time, or at every benchmark, so you know exactly when to pivot. And with a plan that’s as custom to each department as an operational plan, you know exactly where things go wrong and why.

How ProjectManager Can Help with Operational Planning

Creating and implementing a high-quality operational plan is the best way to ensure that your organization starts out a project on the right foot. ProjectManager has award-winning project management tools to help you craft and execute such a plan.

Gantt charts are essential to create and monitor operational plans effectively. ProjectManager helps you access your Gantt chart online so you can add benchmarks for operational performance reviews. You can also create tasks along with dependencies to make the operation a surefire success.

Whether you’re a team of IT system administrators, marketing experts, or engineers, ProjectManager includes robust planning and reporting tools. Plan in sprints, assign due dates, collaborate with team members and track everything with just the click of a button. Plus, we have numerous ready-made project reports that can be generated instantly, including status reports, variance reports, timesheet reports and more.

Related Operations Management Content

• Operational Strategy: A Quick Guide
• Operations Management: Key Functions, Roles and Skills
• Operational Efficiency: A Quick Guide
• Using Operational Excellence to Be More Productive

Operational planning isn’t done in a silo, and it doesn’t work without the full weight of the team backing it up. Ensure that your department is successful at each benchmark. ProjectManager is an award-winning pm software dedicated to helping businesses smooth out their operational plans for a better year ahead. Sign up for our free 30-day trial today.

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A Small Business Guide to Operational Planning

See Full Bio

Our Small Business Expert

Operational planning isn't glamorous, but it's a must for any small business. Without a roadmap, you’ll get lost when you set out to accomplish a goal.

But where do you begin with an operational plan? It sounds complicated, and in some ways it is. But you don't need to be a business genius to draft one.

An operational plan is about understanding your vision, creating goals, and laying out the concrete steps to realize them. This handy guide will help you get it right.

Overview: What is operational planning?

Operational planning refers to the creation of an outline of what activities a department or organization will focus on in the coming months.

An operational plan is the "how" to any organization's long-term vision. It lays out how a department will accomplish a specific project that is part of a larger effort in the company's vision.

A strategic plan sets big, grand goals for a vision, with major tasks you must complete over time to get there, while an operational plan serves as the blueprint for how a department will complete each task.

Operational planning vs. strategic planning: What's the difference?

An operational plan differs from a strategic plan in that the latter is more about your organization's vision, while the operational planning dives into the nuts and bolts of how that's going to play out day to day.

A strategic plan looks at long-term goals five years into the future or more, while an operational plan looks at what you will work on for the next, say, six months to a year.

An operational plan is also more department-focused than the strategic plan, which concentrates on organization-wide goals. The time involved may vary; annual operational planning is common, but an organization may just draw up a plan for the next three or six months.

Benefits of operational planning

Organizations that don’t spend time on operational and project planning are often winging it, which means they run into obstacles along the way and fail to achieve overarching goals. Here are three main benefits to doing this planning correctly:

1. It makes success more likely

Setting ambitious goals is important as an organization, as it gives you something to drive toward. But you won’t realize those goals without a practical, realistic plan. Drafting an operational plan makes it more likely the organization will succeed.

2. It improves teamwork and collaboration

With an operational plan in place, everyone has a role and teammates aren’t stepping on each other's toes. The plan lays out who is responsible for what and sets expectations on how and when these tasks are achieved.

3. It boosts productivity

Everyone is more productive when they have proper guidance on what they should be doing. An operational plan provides that direction to your team.

They’ll know what’s expected of them and understand the deliverables. They'll just flat out be more motivated to do the work when they understand and believe in the vision.

Types of operational plans

You’ll likely use two types of operational plans: single-use and standing.

A single-use plan is an operational plan relates to a particular project, and it’s discarded once the project is complete. Use this when the project doesn't match another project or isn't likely to be used again later. You can customize it to fit the individual project.

A standing plan is an operational plan that’s used repeatedly. A department will use this for projects or tasks that crop up frequently. Having these plans in place means you won’t have to "reinvent the wheel" each time, but you will sacrifice some flexibility.

How to create an operations plan for your small business

An operations plan is straightforward, but devote sufficient time to draft one -- don't cut corners. These five basic steps can help you create your own:

Step 1: Examine your organization's vision

Any organizational project is a steppingstone to achieve a larger vision, so know and understand that vision before initiating any project. What is your organization trying to accomplish at a macro level?

Talk to leadership and find out what they consider important. Then think about how your project fits into that bigger picture.

Quick tips:

• Ask leadership what success looks like to them: Frequently, a department manager's idea of success looks different than organizational leadership’s idea. That's not surprising, because leadership’s focused on the big picture while a departmental vision is a bit narrower. Ask leadership what they think success looks like for your project so you’re not guessing.
• Create a vision for your own department: After that conversation, draft a vision for your department that’s closely aligned with the organization’s vision -- like a localized version of it. As you draft it, constantly compare it to the organizational vision and make adjustments as necessary. This will ensure you have the proper focus before you begin the project.

Step 2: Define the goals and strategy

Now that you understand where your tasks fit into the big picture, figure out what the goals of this specific project should be. Then draft a strategy on how you'll get there as a department.

At this point in the operational planning process, draft a scope of work and identify stakeholders.

• Use project management software : Software can help you track the metrics you set in your goals to see if your team is meeting them. You can use other project management tools as well to help you during the project.
• Use past projects as your guide: Examine an operating plan example from a previous project that’s similar to yours. What mistakes did they make you can learn from? What timeline did they work with and how successful were they in terms of sticking with it?

Step 3: Plan out activities

With vision, goals, operations strategy, and project scope handled, now you can get into actually planning the activities. You must be very specific, laying out what concrete plans to reach the end goal. Break these into small steps.

• Work backwards: Start with the goal, and then determine what the preceding step would look like. For example, if you set a goal "increase sales by 20%," the preceding step might be "pitch to 20% more leads," and the step before that might be "generate 20% more leads," and so on. Each larger step could have subsets to further break them up.
• Identify resources: You must list all supplies, equipment, training, and other resources you will need to accomplish each task. Without these, you will fall behind.

Step 4: Assign roles and responsibilities

Next, assign roles and responsibilities to team members. Select and assign people to tasks based on their skills. Lay out communications strategies so you’re all on the same page. Be specific about team member reporting structures and deadlines you expect them to meet.

• Consult with each member of your team: After you draw up the plan and assign responsibilities, meet with members of your team individually for a gut check. Did you miss anything? Did you put too much on their plate (or not enough)? Did you assign tasks appropriately? Should you reassign tasks based on your meetings with team members?
• Reward successes: Motivate your team by offering them rewards if they meet critical milestones: maybe a bonus or a pay raise, or something more modest, such as a gift card.

Step 5: Monitor and adjust

Monitor progress and adjust as necessary to ensure everything is on track. Hold your team to the deadlines you set, and if you miss a deadline, adjust the plan to keep from getting off track. Draft work reports throughout the project so you can properly analyze team performance.

• Be flexible: A rigid project is doomed to failure, so bake in room for adjustments. Be willing to drop some less-important goals for more important ones, and be prepared to shuffle people into different roles at a moment's notice.
• Have a post-project meeting: When you’ve finished with the project, meet with your team to talk over what went right and what could be improved. Keep a positive outlook and encourage honesty so you can identify opportunities to execute the next project even better.

Set aside time to do operational planning right

The bottom line is that an operational plan is not rocket science, but you've got to put in the work. A good operational plan will be mapped out in great detail, spelling out manpower, resources and specific steps you must take.

This isn’t something you can whip up in a half hour on your lunch break. Set aside hours or even days to do the legwork, meet with stakeholders and leadership, and draw up a strategy, with detailed action steps.

It may seem like a lot of effort, but it will pay off in the end when your department completes a praiseworthy project on time and on budget.

We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. The Ascent has a dedicated team of editors and analysts focused on personal finance, and they follow the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.

The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.

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Operational Planning Guide for SaaS Companies (With Examples)

Joe Garafalo

Founder and COO

The 2024 Financial Planning Blueprint

When building plans for your SaaS company, it’s easy enough for finance to come up with strategic business goals — a revenue increase of 25%, a phased roll-out of new product features in Q3 and Q4, or a 1% reduction in customer churn each month. The hard part? Determining whether or not these company goals are realistic .

Does your org have the capacity to achieve the goals it has set? If not, will it be able to expand its capacity fast enough, all while ensuring new expenses don’t overrun revenue growth and shorten your cash runway to dangerous levels?

Answering questions like these is the purpose of operational planning and the bread and butter of your org’s short- and long-term strategy. Operational planning revolves around building financial models that track progress toward your goals, helping you create strategies that get you from A to Z in the most efficient way possible.

While efficiency and tight resource allocation are key to strategic finance , the best operational business plans leave room for flexibility, allowing the org to respond to crises or changes in the SaaS landscape while still remaining on track toward those goals.

Table of Contents

What Is Operational Planning?

Operational planning is the process of setting budgets and goals on a departmental level within your company. It transforms your annual strategic plan into a week-by-week, day-by-day roadmap for specific departments like sales, marketing, and customer success to follow.

Since operational planning works at the departmental level, it’s best to use a bottom-up approach. As opposed to a top-down approach, a bottom-up approach involves working with departmental heads, asking them questions about workflows or specific line items and how they contribute to the success of the operational plan.

This benefits the company in two ways: first, finance can optimize resource allocation based on leaders’ unique knowledge of their departmental workflows. Second, by involving everyone in the planning process, it increases buy-in and commitment. You have a collaborative game plan where team members understand how their daily activities are contributing to strategic objectives.

Operational Planning vs. Strategic Planning

The most obvious difference between operational and strategic planning is scale, with strategic planning considering the big picture, and operational planning more focused on the day-to-day.

A strategic plan includes your overarching, annual goals — they’re your long-term vision, the goals the whole company is working towards. Operational plans, on the other hand, are specifically built for individual departments. They’re the division of those long-term annual goals into smaller, achievable milestones that highlight the relevant stakeholders and detail things like resource requirements and timeframe.

So, operational and strategic planning are two sides of the same “ operational finance ” coin. The challenge is building realistic operational plans to understand what’s actually achievable within a fiscal year. When finance can build a deep understanding of departmental workflows, they can construct strategic and operational plans with the perfect rhythm, and that’s when your org really starts to see results.

Operational Planning Examples

So, what does an operational plan look like? Let’s say a SaaS company aims to increase revenue by 20% over the course of one year.

To build your operational plan, you’ll need to determine what each relevant department will have to do — and how many resources they’ll need — to achieve this. How many conversions will the sales team need to make each month? What are staffing requirements? What about marketing initiatives? Which channels will be prioritized based on the amount of new customers required?

Another example of operational planning would be to retain customer loyalty by adding new product features. How many engineers will you need?

The best way to answer business operations questions like these is with robust, data-driven financial models. To get a clear sense of why, let’s break it down and look at the key elements of a successful operational planning process.

5 Key Components of Effective Operational Planning

Key components of operational planning include:

• Defining realistic goals
• Allocating resources to those goals
• Building out an achievable timeline
• Collaboration
• Flexibility

The first three involve the construction of the plan, while inter-departmental collaboration helps secure the necessary details as well as company-wide buy-in. Flexibility, the final component, allows finance leaders to alter the plan if the assumptions it was built on change.

1. Clear, Realistic Goals

The first thing you’ll need for your operational plan is a clear, strategic, number-based goal. Common goals for SaaS companies include reducing customer churn, increasing revenue, or increasing market share.

Get an exact number and, as mentioned, use financial models to determine if it’s realistic. For example, let’s say the strategic goal your company decides on is to increase revenue by 20%. Why 20%, not 25% or 30%?

Because, using your financial model, you’ve determined that revenue won’t grow fast enough to make up for the money you’d need to pay for the increase in headcount required to hit a 25% increase in revenue. 20% is your sweet spot — your strategic goal that’ll guide your operational plans.

Get the SaaS Financial Model Template

2. proper allocation of resources.

Once you’ve decided on a goal, it’s time to build a strategic budget .

Especially in the early stages, most SaaS companies don’t have a huge amount of resources. In an environment where employees have to wear many hats, a well-designed operational plan is built with an understanding of how specific resource allocation correlates with specific results.

In other words, the best operational plans are driver-based. A driver-based plan ties your business drivers to specific key performance indicators (KPIs). For example, the key driver for revenue growth is the number of sales reps, while for customer acquisition , it’s marketing spend.

Get a head-start on driver-based planning with a sales capacity model

Keep in mind, it’s not always necessary to increase your budget from last year. Use historical data only insofar as it contributes to your strategic goals. For instance, if historical data shows a specific marketing channel, say social media, brought in 10% of new customers, you may want to increase funding on social media to bring in 5% more new customers, to match with the number of new sales reps you’re bringing on board over the next year.

3. Timeline

Next, you’ll need to think about how each component of your operational plan will be spaced out over time. This is where you divide it into short-term goals for each department.

Continuing with the revenue example, this means modeling out how long it’ll take to grow your topline by a specific percentage. How do you do that? Since the key driver for revenue is your number of sales reps, you’ll need to consider related metrics like headcount and sales capacity planning .

Plugging these values into your financial model helps your org plan out its hiring cadence and understand how fast you can realistically grow revenue. Furthermore, this information will feed back into your operating budget.

Tools like Mosaic’s Topline Planner help you get a more exact timeline as to sales rep ramp rate , so you know how long you’ll need for that driver-based KPI — revenue growth — to hit full stride when you make a hire.

According to CJ Gustafson, CFO of PartsTech, missing the sales rep ramp rate can “totally kill your plan.” Get it right from the beginning so that you don’t have to readjust your timeframe and push back your strategic goals.

When you do headcount planning using a tool like Mosaic, you can see the effects of hiring new sales reps. You can also stagger start dates to see the effects on revenue over time.

So, let’s say hypothetically, you determine you need to add 4 new heads every quarter to meet the revenue target of 20% over a year. That’s an operational goal for HR. Using your model and based on ARR , you determine that sales reps need to secure 15 new customers each month — an operational goal for the sales department.

4. Collaboration

Buy-in is crucial for your operational plans to succeed. That means everyone needs to be “speaking the same language,” understanding how their actions are contributing to the overarching, strategic goals.

A tool like Mosaic empowers finance to act as a central hub, showing departments how they’re tracking against specific KPIs in a way that’s understandable. With customizable metrics and dashboards, everybody “gets” what they need to be doing and why they’re doing it.

5. Flexibility

So you’ve ensured your operational goal is clear and attainable, have set out an exact timeline, and have ensured buy-in and collaboration across the org.

Congrats! Your operating plan is complete. But that’s just the first step. You’ll still need to refresh it month to month by reforecasting . The idea is to continuously monitor progress so that, if necessary, you can reallocate resources. This way, whatever factors pop up will be reflected in your model, and you can readjust accordingly.

Successful Operational Planning With Mosaic

Galley , a series A startup, helps food organizations prioritize purchases and inventory based on recipes. Towards the beginning of 2022, they were successful in raising over $14 million.

But sailing wasn’t always so smooth for Galley.

Granted, they did get things started right by leveraging flexible, driver-based planning and connecting short- and long-term goals to operational metrics .

The only problem? Their driver-based planning relied on spreadsheets. Things got very complicated, very quickly.

In order to keep on top of things, Galley ended up having to pay an outside firm to create and update their spreadsheets and dashboards.

Fortunately, they quickly realized paying someone to have an outsourced model was unnecessary and began searching for a new solution. When Jason Peretz, Galley’s chief business officer, saw a Mosaic demo, he thought, “That’s what we need!” Mosaic would allow Galley to build their own financial models and dashboards by integrating directly with their systems — no more outsourced, spreadsheet-based models.

After making the switch, Galley has a clear, continuously updated view of how they’re tracking against KPIs. This allows them to stay in line with their operational goals simply by logging into the platform.

Common Pitfalls of Operational Planning and How To Avoid Them

Operational planning is no simple task. Even at a small- or medium-sized org, finance leaders have to align different departments, different mindsets, and a range of resources all on one common goal. And that leaves room for plenty of pitfalls. Awareness is the first step to avoiding them.

Lack of Alignment

First things first — your operational plans won’t get you anywhere if they don’t align with your strategic plans. Seems obvious, right? But it’s not necessarily as easy as it sounds. Use financial models to test your operational plans. See if, when you model them out, your forecasts line up with your long-term plans.

Lack of alignment can also refer to a lack of buy-in from individual departments. To get them on board, it’s best to provide easy access to relevant KPIs through a tool like Mosaic. Involve departmental heads in planning, too.

Lack of Flexibility

Predicting a year out isn’t easy. While your strategic goals may remain largely the same, your pathway to those goals — that is, your operational plan — may need to change. To keep yourself from getting tied to outdated budgets, leverage agile financial planning processes such as driver-based planning and rolling forecasts so that you can shift if needed.

Lack of Transparency

Buy-in is important for the success of your operational plan. They’re bottom-up, departmentally-based plans, after all. With a tool like Mosaic, complicated metrics and KPIs that were formerly confined to finance become a guidepost for the entire company. Team members can see how their daily actions are contributing to those goals with clear, beautiful dashboards that display complex information in an easy-to-understand way.

Lack of Clear Visibility

Especially as an early-stage SaaS company, every resource counts. Disconnected spreadsheets are not going to give you a clear, real-time view. You need a platform that integrates your working capital, cash flow from operating activities , ERP, and CRM data, to name just a few, in order to get data to key stakeholders right when they need it.

Instead of relying on templates, it’s also best to build your own financial models. That’s because free templates available on Google can be hard-coded with assumptions — assumptions that don’t reflect your unique org.

Getting Too Ambitious

We get it — startups want to grow fast. But, to save yourself a lot of pain in the future, you need to make sure that growth is sustainable.

Use financial models to see what’s realistic and what isn’t. Understand headcount costs and sales rep ramp rate to achieve the right balance between your largest expense and revenue, always keeping your cash runway in view.

Use sensitivity analysis to understand which of your business levers are most critical, then model best and worst-case scenarios.

Using Tools That Can’t Scale

When your goal is to grow, it doesn’t make sense to rely on spreadsheets in Excel. As you secure more and more customers, the amount of user and transaction data will outpace spreadsheet capacity. They’re also very prone to human error, which builds flaws into your financial models.

For operational success — not to mention your own sanity — it’s better to use tools that have built-in integrations so you can automatically consolidate data from your org’s enterprise software and financial statements.

Future-Proofing Your Operational Plan With Mosaic

For SaaS companies, a year is a long time — arguably much longer than it is for other types of companies. That’s because, in the SaaS world, things move very fast, and quite a lot can change, even quarter to quarter. Sources of funding can dry up, competition can increase, or your target audience may shift. Without the ability to pivot, your best-laid annual operating plans could be laid to waste.

That’s why it’s important to build flexibility into them right from the get-go. With an agile, resilient approach to financial modeling, Mosaic was designed with SaaS companies in mind. By combining driver-based planning with rolling forecasts , you get a moving picture of the future of your business. With 150 out-of-the-box SaaS metrics, staying on track with your operational goals has never been easier.

Create accurate rolling forecasts with real-time data

Your goal is to future-proof your plan so that, even if the market shifts, your day-to-day, week-to-week action plans can still remain on target towards your long-term, strategic goals, and you can bring your startup to the next level. Request a demo to see Mosaic in action.

Operational Planning FAQs

How does operational planning differ from strategic planning for saas companies.

The difference between strategic planning and operational planning is one of scale. Strategic planning involves building high-level, long-term goals for the company. Operational plans detail the work each department will put in month-to-month, week-to-week, or even day-to-day to help make those high-level, strategic goals a reality.

What are some common challenges in operational planning for SaaS businesses?

SaaS companies often grow quickly. This can make it difficult to keep tabs on all the data and metrics required to build successful operational models, especially if you’re relying on spreadsheets.

SaaS companies are also subject to a constantly changing landscape. High levels of competition, shifting customer preferences, and unreliable access to funding can all make it difficult to determine what to prioritize in a SaaS business strategy.

How can Mosaic help in operational planning for SaaS companies?

Successful operational planning ultimately comes down to financial models. With a catalog of over 150 SaaS metrics, Mosaic helps you benchmark driver-based financial models that guide daily tasks and decision-making.

For SaaS companies, it’s critical that operational plans remain flexible. Mosaic helps you do this by simplifying driver-based planning and helping you build continuously updating rolling forecasts tied to your objectives.

Related Content

• 9 Financial Dashboard Examples for Strategic Decision Making
• How to Use AI for Business Financial Planning
• Revenue Forecasting Guide: 4 Models For Planning Your Top Line

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Operational Plan: Everything You Need To Know (2024 Guide)

The old way of planning no longer works in complex and unpredictable business environments, and companies are struggling to find their feet on shaky ground. As we’ve seen with many of our customers and strategies in Cascade, organizations can no longer count on executing three or even five-year strategic plans.

The new reality forces companies and their operations teams to adapt their operational plans more frequently and within shorter time frames if they want to reap benefits faster than their competitors. Organizations need to work on their strategic instinct and fast adaptability to enhance their operational efficiency .  

And that requires big changes—including building a flexible operational plan, supported by the right tools and systems that help you achieve real-time centralized observability and empower a strategic response to external disruptions.

Read this article to build a bulletproof operational plan that includes all the key elements necessary to overcome unpredictable business chaos. You’ll also get free templates that will help you rapidly adapt and align your teams.

✨Bonus: We’ve included pro tips from business leaders in our network to help you identify gaps in your strategy execution and build resilient business operations.

What Is An Operational Plan?

An operational plan is action and detail-oriented; it needs to focus on short-term strategy execution and outline an organization's day-to-day operations. If your operations strategy is a promise, your operational plan is the action plan for how you will deliver on it every day, week, and month.

Put simply, an operational plan helps you bridge the gap between business strategy and on-the-ground execution and ensures that the organization is on track to achieve its long-term goals.

Benefits of operational planning

• Clear definition of relationships between cross-functional teams in different departments and responsibilities for each to eliminate duplicated efforts.
• Tighter alignment between corporate or business unit strategic plans and on-the-ground execution, helping the organization meet its business targets.
• Strong operating system that enables the company to quickly adapt, deliver operations goals, and monitor performance.

Operational planning vs. strategic planning

Operational planning deals with the day-to-day details and short-term goals, while strategic planning focuses on the big picture and long-term direction of an organization.

To put it in simpler terms, operational planning is about the "how" of daily tasks, while strategic planning defines the "what" and "why" for future success.

📚Recommended reading: Strategic vs. Operational Planning

Kickstart Your Operational Planning Process: Lay The Foundation

The quality of your operational plan will depend on your input. A successful operational planning initiative will consider these aspects:

• Who will be involved? Identify and include employees, customers, and the management team in the planning process to gain valuable insights from the front lines, ensuring better strategy and execution buy-in.
• What are your internal capabilities? Assess internal capabilities by conducting an internal analysis , including resource requirements, operating budget, and talent skills. Talent management and employee engagement are just a few of the many challenges that COOs will have on their operations agenda.
• What environment are you operating in? Conduct an external analysis (e.g., PESTLE or Porter’s 5 Forces ) to inform your approach and identify optimization opportunities and risks, keeping you agile in a changing market.
• Is it aligned with your organization’s strategy? Ensure alignment of your operational plan with your organization’s strategic plan to actively support the company's long-term vision and contribute to key business metrics.

👉🏻 Once you’ve gathered this information, you can develop an operational plan to help you execute business strategies.

Key Elements Of Your Operational Plan

Enough chit-chat; it’s time to put your operational plan together. We've built this based on our proven and tested approach, used by over +45,000 Cascade users.

See how Cascade Strategy Execution Platform enhances operational efficiency by reducing duplication and aligning teams toward common goals. It effectively eliminates waste resulting from misalignment, fostering smoother operations and improved performance.

Here’s a recap of the five key elements your plan must consider:

Choose key metrics aligned with the company goals

Selecting your operational plan's key metrics isn't a mere exercise in tracking numbers; it's about laser-focused alignment with your business needs and objectives. These metrics are the tangible indicators of your organization's efficiency and performance. They serve as the compass, guiding your daily decisions and actions toward achieving concrete results.

By precisely aligning these metrics with your company's core objectives, you ensure that every initiative and action within your operational plan directly contributes to achieving tangible results.

An aligned operational plan makes it easier to:

• Communicate roles and responsibilities to all employees so they know how their efforts contribute to overall business success.
• Identify and address operational bottlenecks and inefficiencies that could derail strategy execution.
• Motivate and engage employees to work toward strategic objectives and deliver on business outcomes.

Remember that the role of operations is to close the gap between your organization's strategic goals and what is being done on a daily basis to make them happen.

👉🏻 How Cascade can help:

With Cascade’s Metrics Library , you can bring your operating and financial business-level goals together with your strategy under one single roof. This makes reporting & governance easy, accurate, and less time-consuming by connecting your business data to your key business initiatives.

Through Cascade’s integrations , you can consolidate your metrics in one place, importing your data directly from business systems, data lakes, BI tools, or even spreadsheets.

Define the focus areas of your operational plan

The focus areas of your operational plan are the key areas of the business that the plan will address.

This will depend on your business plan. Think about how the business operates and how it succeeds. Do you need to pursue short-term cost reductions while simultaneously pursuing longer-term growth and transformation initiatives? Your operational plans must be built on these strategic priorities.

For example, you can prioritize your focus areas based on the most relevant business strategies or by specific departments. Some examples of focus areas could be:

• Administration
• Human Resources

💡Tips to help define the focus areas of your operational plan:

• Identify the business's key challenges and opportunities.
• Consider the business's overall long-term strategy and key metrics and how the operational plan's focus areas can support these objectives.
• Bring other people on board to help you identify what needs to be addressed by the operations plan.

Create strategic objectives for your operational plan

Strategic objectives are specific goals aligned with the operation’s strategy and focus areas. They represent what you want to achieve in each focus area and will serve as the building blocks of your plan, ensuring that it’s focused and actionable.

Some examples of strategic objectives:

• Reduce costs by 10% within the next year by implementing more efficient processes and streamlining the supply chain over the next year.
• Launch three new products in the next fiscal year to expand your product lines and increase revenue.
• Increase customer satisfaction scores by 5% within the next six months.

💡Tips for defining strategic objectives include:

• Ensure your objectives are specific, measurable, achievable, relevant, and time-bound (SMART).
• Consistently align objectives with your operational plan's focus areas and the company's goals.
• Don’t be afraid to get input from other people about your objectives.

Identify and prioritize projects

It’s time to identify and prioritize the projects that need to be executed. Remember, projects are action plans to help you achieve your strategic objectives.

Project planning should include thinking about time frames, task assignments, and deliverables (and prioritizing).

Here are some examples of project ideas:

• Localize sourcing for critical semi-finished materials.
• Streamline the supply chain to reduce costs and improve efficiency.
• Find and develop an alternative logistics channel.
• Implement a new customer service training program to improve customer satisfaction scores.
• Implement a new technology that will enable end-to-end supply chain visibility.

💡Tips for defining and prioritizing projects:

• Identify the specific actions and activities needed to achieve each strategic objective.
• Prioritize the projects based on their importance, feasibility, and potential impact on the business.
• Involve stakeholders in defining and prioritizing the projects to ensure their needs and concerns are heard.

Identify and track key performance indicators (KPIs)

Finally, you’ll need to know if your operational plan and day-to-day activities result in outcomes.

Set KPIs for key initiatives and strategic objectives to measure success, ensure alignment, and identify performance gaps in your operational plan.

Some examples of operations KPIs are:

• Inventory costs
• Costs of goods sold
• Revenue growth
• Employee retention rate
• Customer satisfaction score

💡Tips for defining and tracking KPIs:

• Align KPIs with your strategic objectives and focus areas so that you can track the plan's progress against these specific goals.
• Add both lagging and leading indicators .
• Instead of using multiple disconnected spreadsheets and project management tools, consider live dashboards or reporting systems to track the KPIs and monitor progress over time.

👉🏻 How Cascade can help build your plan:

Cascade’s planner feature enables you to build your operational plan with structure and ease by breaking down the complexity from high-level initiatives to executable outcomes. Define your key elements (focus areas, objectives, projects, and KPIs), and share the plan with your teams. You’ll get full visibility of the plan’s progress in real-time, allowing you to identify gaps, quickly update the plan, and communicate the change with your team with a single click.

👉🏻 If you don’t want to start building the plan from scratch, use our free Operational Plan Template pre-filled with examples of focus areas, objectives, projects, and KPIs that you can customize to meet your organization’s needs.

Operational Plan Examples & Templates

Here are five operational plan examples to help you create plans for your teams. You can use one master operational plan or set up an operational plan for each department.

Master Operational Plan Example

This Operational Plan Template will help you close the gap between business goals and day-to-day operations. You'll be able to set goals and KPIs for your top priorities and work with the operations team to deliver operational excellence and business results.

HR Plan Example

This HR Operational Plan Template can be used to meet staffing requirements, manage human capital and align human resources activities with your strategy. HR managers in any industry can create a clear operational plan that can be constantly monitored, adapted, and improved.

IT Plan Example

If you’re in the IT team, try out this IT Plan Template to get your IT operational planning up and running fast. It comes prefilled with focus areas and KPIs relevant to IT operations; you can easily customize workflows and deliverables to your needs.

Marketing Plan Example

This Marketing Plan Template can help you efficiently understand and plan your digital marketing operations using best practices. Use it to quickly set up priorities and get your social media and marketing teams moving on tasks that will make an impact.

Finance Plan Example

This finance-focused template is ideal if you want to get on top of your finance operations plan. Use it to allocate and distribute financial resources across your organization and get real-time updates through your dashboard and reports—which are great tools to create a visually compelling financial summary that clearly shows your key metrics.

💡Pro Tip: To ensure successful execution, it's crucial to align not just your master operational plan with your overarching strategic plan, but also all the operational department plans.

With the Alignment Maps feature, you’ll be able to visualize how your top-level business strategy breaks down into functional and operational plans. This empowers COOs and CFOs to consolidate their operational plans in one place, creating tighter alignment between the finance and operations teams and improving cross-collaboration to build more resilient operations.

Want to dig deeper? Use the Relationships feature to see the relationships between connected objectives from your plans and understand how your different department goals contribute to the core business metrics and goals. This view will allow you to clearly map dependencies, blockers, and risks that may lie along your journey.

5 Tips For An Effective Operational Plan And Its Execution

1. don’t underestimate the power of transparent communication.

Regularly communicate the operational plan and progress to all relevant stakeholders to build the necessary buy-in and support. Your employees must know your goals and the roadmap, and team members should understand their role in its execution. This business transparency will help everyone row in the same direction.

“Clarity regarding strategy is one of the key drivers of autonomous execution. If people understand what you’re working toward and have guardrails in place, they can be empowered to make their own decisions and don’t need everything to be ‘run up the chain’ to get approved. This allows you to move fast and at scale.” — Sam Sterling , Chief Strategy Officer, Akqa

2. Keep moving forward and adopt a growth mindset

Keep the momentum going and ensure that the plan is executed effectively. Regular monitoring and reviews can help identify and address any challenges or obstacles that may arise.

Schedule regular reviews and check-ins and provide the necessary support to ensure projects are on track and moving forward.

“I think adopting a growth mindset is super important. This means having the confidence to fail fast, try something new and empower people to do that.” — Ken Miller , General Manager, Azure Intelligent Cloud at Microsoft

With the Team Updates functionality, every team member can post updates on key measures, actions, and objectives. This will give you real-time visibility into performance and help you identify possible risks before it’s too late—without having to schedule extra meetings or nag your team members for updates.

3. Make strategic moves and change fast when you need to

Your operational plan should be flexible, adaptable, and open to adjustments. This means keeping an eye on progress, making corrections if needed, and being willing to adapt the plan to changing circumstances or new opportunities. As McKinsey suggests, you can consider creating a team that will be able to collect data, link analysis with action, and offer quick responses to rapid changes.

“Traditionally, companies would have taken that piece of paper and gone out and said: we're going to execute it, start to finish. Then get into the formulation of the strategy, what we need to hit, and what the end product result will be like. But what we do know is that’s never the case. Along the way, you're going to have bumps, and inevitably, you’ll need to change from that original picture.” — Annie Lucchitti , Marketing Manager, Unilever

4. Empower your operations team and boost efficiency

Effective operational planning requires the engagement and empowerment of your team. Involve stakeholders in the planning process and provide them with the necessary resources. Give them context and an opportunity to set goals and prioritize initiatives. This will help you boost engagement and hold them accountable for progress.

“I think it just works at every single level. Are people allowed to be themselves at work? Personally, are they at peace? Are they happy? Productivity happens when people have the right skills, but also when they are engaged and happy. If one of those fails a bit, productivity will start decreasing.” — Joan Torrents , Global Sourcing Manager, TESCO.

5. If it isn’t measured, it isn’t managed

Don’t underestimate the importance of tracking and measuring progress against the operational plan's goals and objectives. Set milestones, enforce KPIs, and stay on top of progress. Doing this will help you stay on course, empower you to act quickly, and provide valuable insights into what is going wrong.

“Data is a foundational element in the strategy definition phase as well as in the strategy execution phase as it helps create a baseline, identify key priorities, set goals, and measure progress.” — Erica Santoni , Principal, Diversity Equity & Inclusion, Intuit

Use Cascade’s Dashboards to monitor your day-to-day progress on key metrics and critical business and strategic information in real-time.

Compile the information in powerful reports and executive summaries in seconds with pre-built templates. Share them with your key stakeholders —internal and external— and invite them to collaborate on your strategy together.

Execute Your Operational Plan With Cascade 🚀

What good is an operational plan if no one executes it? If your organization wants to operate at a higher level, static tools like Excel spreadsheets, PowerPoints, Google Docs, and/or project management tools aren’t the solution.

❌They aren’t designed for adaptive strategy and planning.

❌They often lead to siloing and hinder effective cross-collaboration.

❌They make it challenging to measure progress and slow down decision-making.

With Cascade as your central operating system, you can stop running business operations blindfolded and embrace rapid, coordinated, and data-driven decision-making.

Get your Operational Plan Template to get started with a dynamic plan that will lead to actual outcomes for your business and see faster results from your strategy.

Or take Cascade for a spin! Start today for free or book a 1:1 product tour with Cascade’s in-house strategy expert.

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Blog Business 10+ Operational Planning Examples to Fulfill your Strategic Goals

10+ Operational Planning Examples to Fulfill your Strategic Goals

Written by: Danesh Ramuthi Oct 25, 2023

An operational plan is a comprehensive, action-driven document that maps out how daily activities within an organization fuel the journey towards achieving strategic objectives.

Essentially acting as the nexus between high-level strategy and practical execution, this plan ensures that every department, from human resources to specific departments, operates in synchrony, aligning their day-to-day activities with the broader strategic goals.

By streamlining processes, it fosters cohesive efforts amongst diverse cross-functional teams, ensuring that both individual team members and entire departments work together harmoniously towards the company goals.

Ready to sculpt your organization’s future? Start your journey with venngage business plan maker and leverage their expertly crafted operational plan templates . 

Click to jump ahead: 

Why is an operational plan important?

10 operational plan examples, what should an operational plan include, how to write an operational plan.

• Strategic plan vs operational plan: What is the difference? 

In summary 

An operational plan is crucial because it serves as a bridge between a company’s high-level strategic planning and its day-to-day activities, ensuring that the business operations align with the strategic goals. 

While a strategic plan provides a long-term vision, outlining the company’s objectives and goals to gain competitive advantages in the business environment, the operational plan outlines the specific actions, key elements and resource allocation required to achieve those objectives. 

For example, while the strategic plan might set a goal for revenue growth over the fiscal year, the operational plan provides a detailed roadmap, breaking down major projects, assigning responsibilities to individual team members or specific departments and setting key performance indicators to monitor progress and ensure the entire organization works together effectively.

Operational planning, in essence, transforms the strategic objectives into actionable plans, ensuring that the entire team, from department heads to diverse cross-functional teams, is aligned and works in tandem to support revenue growth, increase productivity, and achieve the desired outcomes. 

Operational plans, through a well-structured operational planning process, also provide a clear understanding of the day-to-day activities, allowing team members to know their roles, leading to better collaboration and synergy. 

Moreover, by having clear operational plan examples or templates, businesses can ensure realistic expectations, manage their operating budget effectively and track progress through key performance metrics, thus ensuring that the company stays on course to realize its long-term vision.

Operational plans play a pivotal role in the business landscape, bridging the gap between strategic vision and tangible actions. They translate the overarching goals of an organization into detailed procedures, ensuring that daily operations are in line with the desired strategic outcomes. 

In the section below, I will explore a few operational plan examples, shedding light on their structure and importance.

Business operational plan example

A business operational plan is a comprehensive document that elucidates the specific day-to-day activities of a company. It presents a detailed overview of the company’s organizational structure, management team, products or services and the underlying marketing and sales strategies. 

For businesses, irrespective of their size, an operational plan can prove invaluable. By laying down the business goals and objectives, it acts as a blueprint, guiding entrepreneurs through the creation and implementation of strategies and action plans. The planning process also incorporates mechanisms to track progress and performance. 

Additionally, for startups or companies looking to scale, a meticulously crafted operational plan can be pivotal in securing funds from potential investors and lenders.

Layered on this are details about the company’s organizational structure, its products or services and its marketing and sales strategies. 

The document also delineates the roles and responsibilities of each team member, especially the management and key personnel. Given the dynamic nature of the business environment, it is imperative to revisit and update the operational plan regularly.

Related: 15+ Business Plan Templates for Strategic Planning

Simple operational plan example

A simple operational plan, often used by startups or smaller enterprises, emphasizes the basics, ensuring that the fundamental aspects of the business operations are captured succinctly. While it might not delve into the intricacies of every operation, it provides an overview of day-to-day activities, highlighting the goals and objectives the business aims to achieve in the short term.

In essence, this plan revolves around core elements like the company’s main objectives for the fiscal year, key responsibilities assigned to individual team members and basic resource allocation. A straightforward market analysis might also be included, offering insights into customer needs and competitive advantages the business hopes to leverage.

Though simple, this operational plan example remains pivotal for the organization. It provides a roadmap, guiding team members through their daily responsibilities while ensuring that everyone is working together towards shared goals. It becomes especially essential for diverse cross-functional teams, where clarity of roles can lead to increased productivity.

Modern operational plan example

In today’s fast-paced business environment, the emphasis on efficiency and innovative processes is paramount. The modern operational plan example caters precisely to this demand. Ideal for organizations aiming to streamline processes and highlight workflow, this type of operational plan emphasizes a more dynamic approach to planning. 

It not only reflects the evolving nature of business operations but also provides a modern backdrop for content, ensuring that the presentation resonates with the current trends and technological advancements. The use of modern tools and platforms within this plan enables diverse cross-functional teams to work together seamlessly, ensuring that day-to-day activities are synchronized with the company’s long-term vision.

Furthermore, such an operational plan helps the entire organization stay agile, adapting rapidly to changes in the business environment and ensuring alignment with strategic goals.

Minimalist operational plan example

The minimalist operational plan example champions simplicity and clarity. By focusing on clear and concise business strategies, it eliminates any potential ambiguity, ensuring that team members and stakeholders have an unclouded understanding of the company’s objectives and goals. 

The minimalist design not only promotes easy comprehension but also aligns with the modern trend of decluttering, ensuring that only the most vital components of the operational planning process are highlighted. 

This approach leaves no room for confusion, streamlining the planning process and making sure that individual team members and departments are aligned with the business’s key objectives. 

Moreover, the flexibility offered by a minimalist design allows businesses to craft an operational plan template that is not only functional but also accurately reflects their brand image and core values, ensuring cohesion across all aspects of the business strategy.

Clean operational plan example

The clean operational plan example stands as a testament to this principle. Ideal for businesses that prioritize clarity and directness, this format seeks to convey goals and strategies without overwhelming stakeholders. 

While maintaining a neat and organized layout, it ensures that tasks are managed effectively, helping team members grasp their roles and responsibilities without getting lost in excessive details.

One of the primary advantages of a clean operational plan is its ability to eliminate distractions and focus solely on the critical aspects of operational planning. 

Such a design aids in making sure that diverse cross-functional teams can work together harmoniously ensuring that day-to-day activities align seamlessly with the company’s long-term vision. 

The simplicity of the clean operational plan not only supports revenue growth by ensuring efficiency but also reinforces the company’s strategic goals, making it an excellent tool in the arsenal of businesses that believe in clear communication and precise execution.  

An effective operational plan acts as a roadmap, directing how resources should be allocated and tasks should be performed to meet the company’s objectives. Here’s what a comprehensive operational plan should encompass:

• Goals and objectives : Whether short-term or long-term, the operational plan should define clear goals and objectives that align with the company’s strategic plan. This gives direction to the entire organization, ensuring everyone is working towards a common aim.
• Clear responsibilities for team members : It’s essential that team members understand their roles within the operational plan. By outlining who is responsible for what, the plan ensures that there are no overlaps or gaps in duties and that everyone has clarity on their day-to-day activities.
• Assigned tasks: Alongside responsibilities, specific tasks need to be allocated to individual team members or specific departments. This granularity in assignment ensures that every aspect of the operational plan is covered.
• Timeline: This provides a clear schedule for when each task or objective should start and finish. A well-defined timeline assists in monitoring progress and ensures that the plan stays on track.
• Budget and resources : Every operational plan needs to factor in the budget and resources available. This includes everything from the operating budget to human resources, ensuring that the business has everything it needs to execute the plan effectively.

Read Also: 6 Steps to Create a Strategic HR Plan [With Templates]

As businesses evolve, it’s essential to have a comprehensive and adaptive operational plan in place to navigate the complexities of the business environment. Here’s a step-by-step guide to help you craft an effective operational plan:

Step 1: Define your goals and objectives

Begin with a clear understanding of your strategic goals and objectives. This will act as a foundation for your operational plan. Ensure that these goals are in alignment with your company’s strategic plan and provide both short-term and long-term visions for the business.

Step 2: Determine roles and responsibilities

Identify the key stakeholders, department heads and team members who will play pivotal roles in executing the plan. Assign responsibilities to ensure that everyone knows their part in the planning process and day-to-day activities.

Step 3: Develop a timeline and milestones

Establish a clear timeline that breaks down the operational planning process. Include key milestones to track progress and ensure the plan remains on target.

Step 4: Allocate budget and resources

Determine the resources required to achieve your goals and objectives. This includes estimating the operating budget, identifying human resources needs and other resource allocations, ensuring you have everything in place to support revenue growth and other business needs.

Step 5: Outline day-to-day operations

Detail the day activities that are integral to the business operations. This will provide clarity on how different tasks and functions work together, ensuring efficiency across diverse cross-functional teams.

Step 6: Monitor and measure performance

Integrate key performance metrics and indicators to regularly monitor progress. Using both leading and lagging indicators will provide a comprehensive view of how well the operational plan is being executed and where improvements can be made.

Step 7: Review and adjust regularly

The business environment is dynamic and as such, your operational plan should be adaptable. Regularly review the plan, comparing actual outcomes with desired outcomes and adjust as necessary to account for changes in the business environment or company goals.

Step 8: Document and communicate

Create an operational plan document, potentially using operational plan examples or an operational plan template for guidance. Ensure that the entire team, from individual team members to the entire organization, is informed and aligned with the plan.

Related: 7 Best Business Plan Software for 2023

Strategic plan vs operational plan: What is the difference?

When running an organization, both strategic and operational planning play pivotal roles in ensuring success. However, each has a distinct purpose, time horizon and scope. Here’s a breakdown of the differences between these two essential business plans:

• Strategic plan : This plan sets the course for the organization’s future. It embodies the long-term vision and mission, detailing the objectives necessary to achieve it. The essence is how everyone, from C-suite executives to individual team members, collaborates towards realizing this vision.
• Operational plan : This is the roadmap for the day-to-day activities of the organization. While the strategic plan looks at the bigger picture, the operational plan hones in on the tactics and execution. It is crafted to support organizational goals with a focus on short-term activities specific to departments or functions.

Time horizon :

• Strategic plan : Long-term in nature, usually spanning three to five years.
• Operational plan : Concentrates on the short-term, with plans laid out yearly, quarterly, or even monthly.

Modification and updates :

• Strategic plan : This evolves over longer intervals, typically three to five years. There might be minor adjustments year over year based on changing business needs and the external business environment.
• Operational plan : Due to its short-term focus, it requires frequent assessments. Plans might be adjusted yearly, quarterly or even monthly to ensure alignment with the strategic objectives and current business environment.

Created by :

• Strategic plan : Crafted by the upper echelons of management – think CEO, CFO and other C-suite members.
• Operational plan : These plans come to life through mid-level management and department heads, ensuring alignment with the broader strategic vision while catering to specific departmental needs.
• Strategic plan : Broad in its outlook, it takes into account external factors like market trends, competition, customer needs and technological innovations.
• Operational plan : This narrows down the focus to the internal workings of the organization. It revolves around technology in use, key performance indicators, budgeting, projects, tasks and the allocation of responsibilities among team members.

As we’ve traversed through the importance of operational planning to various operational plan examples, it becomes evident that having a detailed and efficient operational plan is pivotal. 

From the business-centric to the minimalist approach, every operational plan serves as the backbone, guiding team members and ensuring that day-to-day activities align with the long-term vision and strategic goals.

By knowing what should be included in these plans and how to craft them, businesses can navigate the complexities of their operational environment with greater confidence.

For those looking to refine their planning process or start from scratch, the world of digital tools has made it significantly easier. Venngage offers business plan maker and operational plan templates designed to simplify the process. 

Whether you need to create an operational plan or draft a business strategy, their intuitive platform can guide you every step of the way.

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Operational Planning Creation, Key Elements and its Benefits

• 10 Comments
• Published on 15 Jun 2023

Table of Contents

Introduction to Operational Planning

What is Operational Planning?

Importance of an Operations Plan

Impacts of an Operations Plan:

Operational Planning vs Strategic Planning

Process of Creating an Operational Planning

Seven Steps to Create an Operational Planning Process

Bottom Line

Frequently Asked Questions

Out of the main 12 principles of project management , planning is the most important principle of all. An essential tool that can help you achieve your goals is effective Operations Plan. The importance of a well-defined operations plan in today's active business environment cannot be overstated.

Adding up to a strategic plan alone is not enough, which is why an operation plan in the daily work activities of any organization is essential. This is the reason why companies likely fail and lose good employees when they have a wonderful strategy but without rich planning.

An Operational Planning outlines how your organization will achieve its objectives efficiently and smoothly, acting as a guide for your organization towards achieving its objectives with efficiency and finesse. You may make your project objectives drive your company's success and give it the structure and direction needed for sustained growth with the help of well-crafted operational planning.

Most of the outcome expected from the resources with their work is known, so it's apt to prevent the  cost of poor quality  in your business with the applicable operating planning process. How do you start, though? How do you make an operational plan for your firm that is effective and covers every important component? What are the applications?

This blog post will guide you through the steps of creating an extensive operations plan that positions your company for success. We shall also discuss what is operational planning, its importance, tips to create one, and related FAQs.

An operational plan is a process of executing your strategic planning into a map that describes detailed level work processes for specific outcomes. It is a document that outlines and aligns task activities, key events, and timelines that accounts for the finish to execute the strategic plan. Operational planning focuses on day-to-day running, and execution by teams and managers with short or long-term goals, capabilities, and budgets of the company. 

There are three levels of planning i.e., strategic plan, tactical plan, and operational plan. To properly understand how operational plans work and run the first step is to focus on the whole planning process within a business. 

Creating an operational plan not only keeps the teams and their tasks on track but aids in decision-making and in alignment with a long-term strategy.

An Operations Plan plays a pivotal role in ensuring that your business operations are aligned with your overall strategic goals. It helps in establishing a clear direction, defining responsibilities, and coordinating activities across different departments.

By detailing the important aspects of your tasks, starting with resources and schedules, operational planning offers a foundation for efficient decision-making, allocation of resources, and managing risks. All stakeholders can use this framework as a reference, which guarantees that everyone working on the project stays on a similar path and pursue the same objective.

Now that we have understood the importance of an Operational Planning process, let's now discuss and understand how Operational Planning is going to benefit the organization and the project management team.

Advantages:

Improved Efficiency-

You may find inefficiencies, simplify procedures, and better allocate resources with the aid of an operations plan. You can increase productivity and lower operating expenses by getting rid of bottlenecks and redundant processes.

Strategic Alignment-

If your operations follow your overall business strategy, your efforts will be focused on achieving your long-term objectives. Making decisions that are consistent with your strategic aim is made possible by having an operations plan, which helps you stay on track.

Resource Optimization-

With an Operations Plan, you can effectively allocate and manage your resources, including human capital, equipment, and finances. This optimization leads to improved productivity and cost-effectiveness.

Disadvantages:

An overly rigid Operations Plan may hinder adaptability and responsiveness to unforeseen circumstances or market changes. It is essential to strike a balance between structure and flexibility in your plan.

Resource Constraints-

The creation and implementation of an operations plan may need additional time and financial resources. It is crucial to ascertain whether allocating these resources is viable before committing to a full plan.

Clear Direction and Focus-

An operations plan provides a clear direction and focus for your organization. It aligns everyone towards common goals, ensuring that efforts and resources are directed towards achieving desired outcomes.

Improved Efficiency and Effectiveness-

By analyzing and optimizing processes, an operations plan improves efficiency and effectiveness. It helps identify bottlenecks, streamline workflows, and eliminate unnecessary steps, ultimately leading to cost savings and improved performance.

Risk Mitigation-

An operations plan enables proactive risk management. By conducting a thorough analysis of potential risks and incorporating contingency plans, you can minimize the impact of unforeseen events and maintain operational stability.

Enhanced Decision-Making-

Decision-making is improved by having an operations plan in place since it is more organized and informed. It offers a framework for weighing trade-offs, assessing possibilities, and coming to data-driven decisions that are in line with the overarching corporate strategy.

Though the two plans are interconnected, the planning strategies vary.

  Operational Planning:

Operational planning (work planning) is the process of outlining work to execute a strategy that focuses on the immediate future or in the next fiscal year. It verifies that all the action items, activities, and timelines are on track to complete the work proficiently.

Strategic Planning:

Whereas, strategic planning describes the high-level goals, identifies the pipeline, features how to work, and develops a plan to achieve the long-term goals for the next 2 to 5 years.

For creating an effective operational plan, project managers follow a few steps that help them clearly understand the requirements and objectives of the project. This helps create an effective plan and ensures that the team is ahead of the deadlines. This allows every project team and its members to have a clear idea of the project and its deliverables.

1. Define Objectives

Begin by clearly defining your operational objectives using the SMART (Specific, Measurable, Achievable, Relevant, Time-bound) framework. To ensure alignment with your overall business goals, these objectives should be precise and quantifiable. In order to boost customer satisfaction, for instance, you can set a target to cut the time it takes to respond to client enquiries by 20% within the next six months.

2. Identify Key Activities

Identify the key activities necessary to achieve your defined objectives. Break them down into smaller, manageable tasks. Prioritize these activities based on their importance and impact on the overall operations. This step helps you establish a clear roadmap and focus your efforts on the most critical tasks.

3. Allocate Resources

Determine the resources required for each activity. This includes human resources, equipment, technology, and finances. Assess the availability of resources and allocate them effectively to ensure smooth execution. Optimize resource allocation to maximize efficiency and minimize waste.

4. Establish Timelines

Set realistic timelines and milestones for each activity. Consider the dependencies between tasks and the availability of resources. Establishing clear timelines helps you track progress and ensures that activities are completed within the desired timeframes. Regularly monitor and adjust timelines as needed to stay on track.

5. Assess Risks and Develop Mitigation Strategies

Identify potential risks that may impact your operations. Evaluate the likelihood and potential impact of each risk and develop mitigation strategies to address them proactively. This could involve creating contingency plans, implementing backup systems, or establishing alternative suppliers. By anticipating and managing risks, you can minimize disruptions and ensure continuity in your operations.

6. Monitor and Evaluate

Continuously monitor and evaluate the progress of your operations against the defined objectives. Regularly review performance metrics and key performance indicators (KPIs) to assess the effectiveness of your operations plan. This enables you to identify areas for improvement, make necessary adjustments, and optimize efficiency. Gather input from key stakeholders and utilize it to continuously improve your operations plan.

You may construct a thorough and efficient Operations Plan that ties your operations to your business goals by following this step-by-step procedure. This makes it possible for you to optimize resource use, streamline operations, reduce risks, and promote success.

Below are the seven core steps on how to craft an operational plan and keep your teams on track with your strategic approach.

Step 1: Begin with a strategic plan

To start with any tasks to process, you definitely need a strategy! Come up with a strategic plan on the first note. It is very important to look at the overall goals, determine position, and risk factors, and monitor the plan and other factors of your business before outlining the tasks in detail.

Step 2: Categorize activities as per the relevancy order

What makes work focusable is figuring out the weights of important tasks to complete within the given deadlines. 

Given that, the goals set up can align with the priority tasks for the subject areas to achieve them. It is a fantastic way to sort resources, tasks, and team efforts in the right manner.

Step 3: Define your Mission, Scope, and Objectives

Keep the question in your mind - Each enterprise, organization, or individual needs to set up a proper vision, mission, goals, objectives, and strategies to achieve and profit their business.

To start and analyze, here is a set of questions to ask;

- What are the goals and vision of the company for the next few years and approaches that might brace for the operation plan?

- What are the changes and progress been done in the previous years?

- What is the round of capital?

- What are the strategic approaches taken over the last few years and KPIs?

- Are the resources enough to reach the number of goals set?

In this way, it’ll be helpful to have a mapping view of your company's performance with the objectives, missions, and business strategies to achieve or meet those set goals.

Step 4: Know your key stakeholders

It’s important to decide who and what will be considered in the operational planning process before making the operation plan. On creating the operation plan, the team must share, discuss and review it with the head of marketing for approval or further changes. Once they’ve created their operational plan, the team should share the plan with the head of marketing for final approval.

By identifying your stakeholders, you will include team members who are interested and engaged in your business. According to it, the teams making the operation plan will take on the plan map. Moreover, the key stakeholders assist in decision-making, reduce risks and boost business growth.

Step 5: Make an effective operation plan

Now that you have all the core areas ready, the next step would be to create an operational plan for your immediate future. 

These will include:

- Goals to achieve from the plan

- Sets of tasks to reach the SMART goals

- Distribution roles and responsibilities with a solid hiring plan

- Provide a budget summary

- Stipulate performance indicators

- Approaches to monitoring and reporting on progress

- Evaluate, optimize, and improve for success

Step 6: Discuss, Share & Update

It’s advantageous to share, present, and update your operational plan with your team members and key stakeholders. A good operational plan not only helps to concentrate on the precise steps to make business ideas obtainable but assists directly and indirectly with short-term goals or long-term goals.

This way, it will help you to add up ideas or measure of missing out on the competitive view into your business and execute properly.

Step 7: Consistent communication

Make certain to keep clear communication with your team members as they take the center on to complete the goals set, strengthen the business, and increase the profits for an organization.

In a nutshell, any silos in between the work processes and confusions will likely get solved and drive to more approachable ideas or solutions.

Operational planning comes in handy for day to day running of the organization. This plan is very useful for individuals and remote workers apart from enterprises.  It documents and gives control through daily/weekly/monthly reports. Thus, learning how to create and implement the operational plan requires key factors of regular meetings, assigning activities, reviewing and revising position descriptions, conducting training, mentoring, tracking, monitoring, and measuring the expected outcomes and systems.

Knowing how to define responsibilities, day-to-day tasks, and activities to support the whole team or goals and outcomes to measure to achieve the plan is remarkable for any industry.

Therefore, it is worth it to gain knowledge and hone skills with career opportunities, especially in the management of projects and quality measures.

In this article, you’ve learned how to create an effective operations plan to drive your business towards success.

To conclude, an operations plan provides a roadmap, but consistent evaluation and adaptation are vital for sustained growth. For companies of all sizes, developing an operations plan is essential to streamlining operations, increasing efficiency, and achieving strategic goals.

You may optimize your operations and produce outstanding results by properly aligning your resources, objectives, and plans. The essential steps and strategies will help you build your operations plan. Adaptability and consistent evaluation are the keys to sustained growth.

Ready to streamline your business operations and achieve success? Enroll in our Project Management Professional (PMP) Certification Training to discover the top techniques and methods for formulating and putting into action a successful Operations Plan. Take your business to new heights.

Sprintzeal also offers courses in quality management that can level your career and get a certification. To get full details or queries for  all courses , reach us by email or  chat with our course expert .

You will be given the knowledge and skills necessary to succeed in this important sector through this in-depth course's comprehensive insights regarding operations management procedures. So why do you still wait? Start building your operations plan today and let your business thrive!

Visit Sprintzeal today and enroll in your desired course to unlock your full potential. Take charge of your business's success and embrace the power of a well-crafted operations plan.

What is the purpose of operational planning?

The purpose of an operation plan can be multiple but the common one can be;

- New product

- Upgrade facilities

- Improvisation of working procedures 

- Expansion of business

- New project goals

- The impact of marketing campaigns

- Describes short-term business strategies

- Progress toward the accomplishment of business goals

What are the four steps in operational planning?

Below are the four steps in operational planning

- Determine your company position

- Establish your business strategy

- Create a strategic plan

- Present, track, and control your strategic plan.

What are the 3 operational plans?

The three operational plans are strategic, tactical, and operational.

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How to Do an Operational Plan: Everything You Need to Know

An operational plan outlines the tasks each employee will need to carry out to accomplish the goals laid out in the strategic plan. 3 min read updated on September 19, 2022

Steps in how to do an operational plan should incorporate the following as you outline your strategy:

• Develop a strategic plan.
• Prioritize your goals.
• Use leading indicators.
• Draw on your organization.
• Communication is key.

What Is an Operational Plan?

An operational plan outlines the tasks each employee will need to carry out to accomplish the goals laid out in the strategic plan. The operations section of a business plan expands on the company:

• Objectives.
• Procedures.

In other words, your operational plan should, clearly and in detail, elaborate on the physical, financial, and human resources you will allocate on a day-to-day basis in support of your company's broader strategic objectives.

Creating an Effective Operational Plan

The best operational plans have a clearly articulated objective that everyone in your company is focused on achieving. Your operational plan will, therefore, be a useful document for your investors. However, it can also help you and your employees by encouraging you to think carefully about deadlines and tactics.

The operations plan should provide answers to the following questions:

• Which personnel and departments are responsible?
• What tasks is each employee or department responsible for?
• Where precisely will daily operations occur?
• How much should be budgeted to each department to complete these tasks?
• What are the deadlines for the completion of each task?

An operational plan must have clearly articulated goals. This section should state in clear terms what the company's operational objectives are. Operational objectives should be thought of as your plan to achieve your company's strategic objective. A good operational objective should be:

• Measurable.

While each department should have a different operational objective, these should assist in achieving the company's overall objective.

Once you have generated objectives, you must create a strategic plan to meet them. Each department or team must be appropriately resourced. You should think about the following resources:

• Appropriate equipment and technology.
• Each department's budget .

In addition to describing the production process, you should describe the operating process in detail. Questions you should answer include:

• Where will employees be working, and will you need to find additional facilities?
• Will employees have a set work schedule or flexible hours?
• Which employees are tasked with ensuring each department completes its objectives?

Steps to Create a Strong Operational Plan

• Develop a Strategic Plan: You should already have a strong strategic plan in place before you begin developing an operational plan since the operational plan is the roadmap to achieving your strategic objectives.
• Prioritize Your Goals: The simpler an operations plan is, the more likely it is to succeed. Avoid creating an overly complicated operations plan by prioritizing your goals and focusing on the most important ones. Focus on three to five initiatives that are likely to contribute to your long-term goals; then develop metrics that can measure your performance.
• Use Leading Indicators: It is important to choose the appropriate key performance indicators, or KPIs . Leading indicators, or predictive measurements that help you to project into the future, are more useful than lagging indicators or measurements of the past, as they help you make adjustments as you go.
• Draw on Your Organization: The KPIs you choose will be a critical component of the entire organization's work over the next year. Instead of developing them in a vacuum, you should try to draw on as many points of view within your team as possible. For example, you could hold an annual planning session that encourages team collaboration and discussion to develop your KPIs. Ideally, you should include enough diverse perspectives to strengthen the outcome, but without having too many voices that decision-making becomes unwieldy.
• Communication Is Key: It is critical that the entire organization understands why your KPIs were chosen, how they will help you to achieve your objectives, and what each employee's role is in working towards your stated objectives. Therefore, you should create a designated time at the beginning of each year to share your KPIs with your entire organization and get feedback. Getting your team's buy-in is critical, and for this reason, the importance of communication truly cannot be overstated. Additionally, each employee should have the means to track his or her progress toward his or her personal KPIs, whether that is through a dashboard, regular meetings, or some other mechanism.

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📣 Plan your best year yet with our annual planning checklist.

Operational Planning

Operational planning definition.

What does operational planning mean? Operational planning is a process that involves creating a detailed roadmap to align with a strategic plan.

The operational plan itself is a document that outlines timelines, action items, and critical milestones for executing the strategic plan. This document defines the organization’s objectives and goals and clarifies how to achieve them.

An operational planning process involves examining how a business operates and laying out who’s responsible for what and when.

Remember, every company approaches this differently, and annual operational plans are constantly updated or changed. The key to making it work? Clear and collaborative communication.

The timeframe to execute a plan typically depends on an organization’s velocity. For example, creating an annual operational plan is a fluid, changing process.

A well-conceived business operational plan keeps team members collaborating smoothly, ensures everyone knows what needs to be done and what their part is, and guides critical decisions about long-term strategy.

Critical steps of operational planning

Clearly define the goal or vision for the operational plan.

Analyze and identify essential business stakeholders, team members, budgets, and resources.

1. Clearly define the goal or vision for the operational plan.

2. Analyze and identify essential business stakeholders, team members, budgets, and resources.

3. Accurately plan for risk.

4. Consistently track performance.

5. Communicate to team members and stakeholders about progress.

6. Adapt the operational plan to broader company goals as needed.

What Is Operational Planning?

Operational planning faqs, what is operational planning.

What is operational planning for the business? Operational planning in business entails a team or department working to carry out a strategic plan. It’s a forward-looking process that outlines departmental goals, resources, and budget to ensure team-based activities align with the strategic plan.

Effective operational business plans rely on the commitment of the entire team or department. This buy-in ensures issues are promptly reported, goals are identified, timelines are adhered to, and business collaboration is optimized.

When there’s transparent communication between the finance department and the rest of the business, operational plans become even more efficient in driving the organization toward its objectives.

Examples of operational planning:

• A manufacturing company is developing a plan to boost revenue by 30%.
• Finance collaborating with sales, marketing, operations management, and other vital areas to align strategies supporting revenue growth and achieving business goals.
• A brand planning to launch a new product involves market research, R&D, manufacturing, supply chain, logistics, distribution, sales, marketing, and customer support.

Why is Operational Planning Important?

Just as a roadmap helps you navigate a physical journey, an operational plan guides your organization on its path to success.

Everyone on the team can refer to a single source of truth to understand the organization’s direction and how their roles contribute to achieving the overall goals. An operational plan is a living document that should be reviewed and updated regularly. It should be adaptable to changing circumstances and also provide stability and direction for your organization.

What are the Benefits of Operational Planning?

As we said, think of operational planning as the roadmap that keeps your business on the right track, regardless of size.

One of the most significant advantages of operational planning is getting everyone on the same page, working together like a well-oiled machine to reach your strategic company goals.

Operational planning helps leadership define responsibilities, daily tasks, and activities in detail. It also shows how team members support overall department and organizational goals and describes outcomes to measure against daily tasks.

It also boosts team productivity. Operational planning enhances efficiency, productivity, and profits by ensuring employees in each department and across the company know their daily responsibilities and objectives.

Here are some of the benefits of having a robust operational plan:

• Improved communication: An operational plan ensures everyone understands the organization’s goals and priorities.
• Increased efficiency: An operational plan streamlines your organization’s operations and improves its efficiency.
• Reduced risk: An operational plan allows organizations to identify and mitigate risks.
• Enhanced decision-making: An operational plan can help your organization make better decisions by providing a framework for evaluating different options.
• Improved accountability: An operational plan can hold your organization accountable for its performance.

Remember, operational plans are built by humans and are susceptible to human error. But when you weigh the pros against the cons, it’s clear that all organizations benefit from an operational plan in place to support growth.

Who is Responsible for Operational Planning?

Typically, an operational plan lives in the realm of middle management — in contrast to the C-suite’s strategic plan.

Operational plans have a narrower scope and focus on routine tasks that continuously evolve. Changes to the strategic plan are typically less frequent compared to operational plans.

There are several factors to consider when determining who creates operational plans: <H3>

• Scope. An operational plan is laser-focused on the initiative itself and the team, ensuring the scope is manageable. It should include the “who, what, and when” for every activity.
• Timeline . The duration of an operational plan can vary depending on the organization’s speed and velocity. It can cover a quarter, six months, or a fiscal year.
• Stakeholders. To accurately plan the work, involve operational planning stakeholders who are close to the work. Finance, in particular, plays a vital role in aligning tactical details with strategic execution.

Strategic Planning vs Operational Planning

Strategic, tactical, and operational planning are distinct yet interconnected processes organizations use to achieve their goals. Each level of planning has a specific focus and timeframe.

Let’s look at each type of plan in detail.

What is a strategic plan?

A strategic plan describes an organization’s high-level goals, long-term vision, and mission, usually over the next three to five years.

This type of plan also details any significant projects or initiatives that must happen to meet this vision and how the organization will broadly measure the goals.

A strategic plan provides a big-picture view of the organization’s direction and broad objectives. In other words, it’s a visionary plan that doesn’t address the steps needed to achieve them.

What is an operational plan?

An operational plan (also known as an operation plan, work plan, or operations plan) is a detailed outline of what a team or department will focus on in the immediate future, typically within the upcoming year.

The operational plan answers questions about weekly goals, tasks, and responsibilities, ensuring alignment with the organization’s strategic goals and mission.

What is a tactical plan?

A tactical plan maps out the steps an organization or team must take after creating their strategic and operational plans.

It involves breaking down strategic and operational plans into smaller, more manageable goals and objectives.

Tactical plans define the steps and actions needed to achieve the desired outcomes.

Critical differences between strategic planning, operational planning, and tactical planning

• Strategic plans focus on long-term goals and the overall direction of the organization.
• Operational plans focus on short-term, day-to-day activities and implementation.
• Tactical plans bridge the gap between strategic and operational planning, ensuring that the goals outlined in the strategic plan are achievable through specific actions.

The Best Plan for Your Team

Remember, strategic, tactical, and operational planning work together to ensure organizations have a clear and actionable roadmap for achieving their goals.

Strategic planning is essential for setting the long-term direction, while operational planning is crucial for executing day-to-day activities. Tactical planning can break down goals into smaller, achievable steps.

What is the Operational Planning Process?

Remember these best practices and operational planning techniques when building an operational planning cycle.

Research and Identify Goals

The goal of an operational plan is to address foundational questions.

Start by reviewing your strategic plan. Ask yourself, “How will our actions shape our organization?”

From there, consider the following factors:

1. Resources. What is your operating budget? How does it compare to previous years?

2. Staffing. Do you have enough talent to achieve your goals? How do you want to grow your workforce over one, two, and three years?

3. Tools. What operational planning methodology will you use to carry out your plan? What are the operational planning tools you will use?

4. Team alignment. Have you effectively communicated your organization’s vision for the future to your team members?

5. Performance benchmarks. How will you measure progress?

6. Prioritize feedback. Be willing to accept feedback and adjust the operational plan as necessary.

Visualize the Operational Plan

To bring your operational plan to life, you must clearly articulate it to your team.

Project management software can offer all stakeholders a high-level view of tasks and progress. Identify which operational business planning techniques and tools will best achieve the organization’s goals.

Operational planning software can be a valuable asset throughout the process.

Assign People and Budget

In operational planning, budgeting involves assigning tasks and allocating resources to team members to achieve specific financial goals.

Each budget item should align with the strategic objectives outlined in the operational plan, with corresponding timelines and deliverables.

Tracking and Informing Progress

To ensure effective monitoring and progress reporting, establish a reporting system that aligns with the goals, targets, deliverables, resource allocation, and timetables outlined in the operational plan.

This reporting process allows stakeholders to provide regular feedback on the plan’s implementation and track advancements toward achieving the desired outcomes.

Adjust the Operational Plan as Needed

The most effective operational plans can identify areas for improvement. The team can then strategically adjust the plan, involve additional members, and proceed toward the next benchmark with a refined approach.

What Should Operational Planning Include?

No two operational plans are alike. What is consistent across plans is that the primary goal is to create a functional operational plan that aligns with the organization’s mission and strategic plan.

A clearly defined operational plan ensures that every manager and employee understands their specific responsibilities and the methods and timing of their execution.

Here are key elements of an operational plan:

• A title page. This summarizes the operational plan.
• An executive summary. This provides a few sentences with a rough idea of the overall plan and its primary sections.
• Mission statement. A clear and concise statement of your organization’s purpose and values.
• Vision statement. A description of what your organization will achieve. This will come from your strategic plan.
• Goals and KPIs. Specific, measurable, achievable, relevant, and time-bound objectives your organization wants to achieve.
• Timeline. A schedule of when your organization plans to achieve its goals and objectives.
• Financial summary. A detailed plan of how your organization will allocate its financial resources.
• Hiring plan. Determine how many monthly/quarterly team members to hire across different departments.
• Strategies. The methods your organization will use to achieve its goals.
• Tactics. The specific actions your organization will take to implement its strategies.
• Key assumptions and risks. Provide a risk analysis to mitigate issues before they arise.
• Metrics. The measures your organization will use to track its progress and evaluate its success.
• Next steps. Suggest next steps, if any.

Learn more: Download our annual planning checklist to ensure you cover all the essential bases.

What are the Steps to Build an Operational Plan?

Operational planning aims to create a practical plan that supports existing strategic goals, not to generate new ones.

Like project planning, operational planning is never a one-and-done task but a continuous process.

Here are the steps you need to get started:

1. Start with a strategic plan

Before diving into operational details, establish the long-term vision and goals through a strategic plan.

The leadership team should create and monitor the strategic plan, making necessary adjustments.

2. Sharpen the scope

Narrow down the operational plan’s scope to a specific department, team, or focus area.

Start big with the strategic plan, then narrow down to the operational plan. From there, focus on the tactical areas you need to see your plan through — in other words, a supporting action plan.

3. Identify key stakeholders

Before executing the operational plan, it’s crucial to recognize the key stakeholders involved in the operational planning process.

These team members play a vital role in leading and informing others. Identifying these team members in advance ensures effective communication and successful execution of the operational plan.

4. Create the operational plan

Your operational plan outlines the timeframe for achieving specific goals and presents the team’s actions. It must include objectives, deliverables, quality standards (if any), desired outcomes, operating budget, staffing and resource requirements, and progress and monitoring information.

5. Share the operational plan

Share the operational plan with key stakeholders so they understand mission-critical goals and the daily tasks that support them.

Track progress in real-time for best results. This also allows you to update the operational plan and report on progress to team members and stakeholders as needed.

Does Planful Help With Operational Planning?

Absolutely! Planful’s Financial Performance Management platform seamlessly integrates the demand for structured planning in finance with the business’s need for dynamic planning.

With Planful, you can create collaborative financial plans that align resources with strategic goals. Planful also automates the data collection process for operational planning, saving you from a time-consuming, manual process.

The platform’s agility enables you to adapt and pivot quickly in response to changing business conditions. You can reliably model numerous scenarios and effortlessly convert annual plans into quarterly or monthly rolling forecasts, all tailored to the organization’s current requirements.

Learn more about Planful’s Operational Planning solution .

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• Sales and operations planning (S&OP): A ...

Sales and operations planning (S&OP): A project manager’s guide

Sales and operations planning is a six-step process that can help you achieve focus and alignment in all areas of your organization. Learn what the steps are and the impact this type of plan can have on your team.

Have you been struggling to align teams at your organization? It’s a problem many project managers face. Thankfully, there’s a solution. 

Sales and operations planning is a six-step business process where a leadership team achieves focus and alignment in all areas of an organization. This involves aligning everything from the supply chain to product demand and adjusting needs where necessary. While it might sound tough, you can improve organizational clarity and alignment with this step-by-step guide. 

What is sales and operations planning (S&OP)?

Sales and operations planning is an essential process that aligns operational plans with strategic business goals. It entails working together across different departments to balance supply and demand, improve business performance, and increase customer satisfaction.

Accurate demand forecasting, coordination of inventory levels, production capacity, and resource allocation are essential for this process. Such coordination fosters efficient operations that align with the overarching business objectives. Maintaining operational efficiency requires adapting plans based on market trends.

S&OP example

Consider a consumer electronics company that uses S&OP to prepare for an anticipated surge in customer demand for its latest product. By incorporating simulations and analyses into its demand forecast, the company can align its procurement schedules, manufacturing plans, and logistics strategies accordingly. Advanced analytics and dashboards provide real-time visibility, enabling adjustments to be made proactively to avoid supply chain disruptions. As a result, when the surge occurs, the company has the necessary working capital to meet the surge without falling into the pitfalls of overstocking or inventory shortages.

This example highlights how S&OP helps businesses make informed decisions and respond flexibly to market demands to safeguard customer satisfaction while optimizing inventory management.

Sales and operations planning process

Are you optimizing your S&OP process to its full potential? S&OP unfolds through a series of steps, typically observed in monthly meetings. Although the exact terminology and sequence might differ from one organization to another, they invariably share certain indispensable elements.

1. Forecasting

The first step in the sales and operations planning process is forecasting, which involves gathering the data needed to properly forecast future sales. The types of data gathered will depend on your line of focus but might include internal factors—such as current processes, cash flow, and inventory—as well as external factors—such as industry trends and competition.

These initial forecasts will help you properly plan and execute your S&OP and ensure that your data is recent and accurate. Along with internal and external forecasting, there are a few different types of forecasting methods you can use. These include lead analysis, opportunity stage, and intuition planning. 

The type of forecasting method you use is up to you and may require some trial and error to find the right match. Whichever one you use, aim to collect enough data to move onto step two, which involves adjusting product demand based on forecasting findings.

Lead analysis forecasting

Lead analysis forecasting focuses on building relationships with your customers and analyzing lead sources to convert qualified traffic into sales. By assigning values to different leads, you’ll be able to better predict revenue generation and sales forecasting. 

A sales pipeline template, like the one pictured below, is a simple workflow to help you document, track progress, and prioritize leads. You can then analyze past pipelines to forecast future sales.

This method involves analyzing:

The number of leads acquired

The conversion rate of acquired leads

The revenue generated per lead

The medium by which the leads were acquired

Analyzing this data from recent months or even years can help your team properly estimate which numbers to include in your S&OP.

Opportunity stage forecasting

Opportunity stage forecasting involves breaking each sales pipeline into smaller stages. A sales pipeline is a summary of upcoming sale opportunities. By reviewing sales opportunities, you can create a manageable plan and a clear strategy for each step of the customer lifecycle.

A sales pipeline can help you anticipate revenue and cash flow, discover resource gaps, and identify skill shortages. To do this, separate your pipeline into eight different stages:

Prospecting: In this stage, narrow down the potential company or contact and begin communicating with the prospect. This is usually achieved with an initial meeting.

Demonstration: In the second stage, use your meeting to give an elevator pitch and product demonstration to your prospect. 

Investigation: During the investigation stage, take the information you learned from your demonstration and determine if your product or service is the right fit for your prospective customer.

Trial: Once you’ve determined that it is the right fit, your customer tests your product to see if it solves their problem. 

Proposal: After the customer determines that they want to use your product, send them a proposal with additional details, including the price of the partnership.

Roadblocks: Once your product is implemented within the customer’s business, work together to solve any initial roadblocks. A roadblock could be an issue with the contract or product.

Negotiations: After solving the roadblocks, make any last-minute changes to the proposal before closing the sale with any necessary legal paperwork. 

Closed win/loss: A successful negotiation results in a closed win, where the proposal has been signed and accepted. If the proposal is rejected, it is considered a closed loss.

Once each pipeline is broken down into the above stages, sales teams analyze the data to predict future outcomes.

Intuitive forecasting

Intuitive sales forecasting relies on verbal data given by sales reps. To use this forecasting method, communicate with the sales team about new leads in the pipeline, anticipate revenue from said leads, and configure the likelihood of the deal being closed. 

While more subjective than the other two methods, intuitive forecasting is a good fit for teams looking for a quick and general forecast rather than a precise and accurate forecast. It’s also a good choice if your organization doesn’t have historical data to analyze. 

2. Demand planning

The next step in the planning process is adjusting your demand according to the forecast you gathered in the previous step. Analyze your forecasts based on internal and external factors, and make adjustments to inventory numbers as needed. Then, use that information to create a project schedule . 

There are three parts to a successful demand planning process, including: 

Trade promotion

Product portfolio management

Statistical analysis 

Advanced inventory management software often includes features that support these aspects of demand planning, offering tools for promotional impact analysis, product lifecycle management, and sophisticated statistical modeling.

You may also choose to perform demand shaping in this stage, which is where you implement tactics such as price incentives and cost modifications to meet your demand goals. While helpful, it’s not always required.

Trade promotion management

Trade promotion management is the planning and processing of trade spend, sometimes with the help of software tools. Trade promotion is used during demand planning to implement special product pricing, which then increases demand for said products.

Trade promotion includes a variety of activities, including:

Discounts: Some of the most common promotions companies use are discounts. This is when one or many products are sold at a lower price to incentivize sales. 

Bundles: A bundle promotion is when a variety of product families are sold together, sometimes at a discounted price, instead of individually. Not only does this incentivize purchasing multiple products, but it’s also a great way to show how your products work together. 

Rebates: A rebate is an after-purchase product discount. Since they require consumers to claim or send their offer in some way, they have a lower completion rate, ranging between 5 and 80% . 

Contests: Another form of promotion is through contests. A contest campaign involves offering a prize for purchasing, such as a free product or cash offer.

Trade promotion is heavily intertwined with marketing, but whereas marketing can focus on a variety of different performance metrics, trade promotion focuses solely on driving direct sales. Implementing these tactics can help increase demand for your product and, in turn, drive sales.

Product portfolio management can help you manage all aspects of the products your company sells, otherwise known as your product portfolio. These aspects can include anything from evaluating performance to prioritizing product value.

Product portfolio management may also include:

Product alignment: Aligning products based on offering, branding, uniqueness, and price to create a cohesive product portfolio. 

Product analysis: Analyzing products based on their position in the market and the impact they have to help grow your portfolio.  

Low profitability elimination: Eliminating less profitable products to keep your portfolio performing well and help bring in steady value growth. 

Resource allocation : Allocating and scheduling resources for product development to meet market demand.

Portfolio managers lead these aspects of your product roadmap and ensure the team has the right tools to create efficiency.  

Statistical analysis

Statistical analysis is the collection and interpretation of data to identify patterns and trends. This involves using data analytics to spot needed changes to product demand. 

Statistical analysis includes the following steps:

Identify the nature of the data

Explore the relation of the data to market trends

Summarize how the data relates to market trends

Prove, or disprove, the validity of the relationship

These steps help build a comprehensive understanding of product data such as demand, price, and market demand. This can help clarify your strategic plan and ensure your demand planning is backed up by data.

3. Supply planning

Addressing supply chain disruptions requires cross-team collaboration in the planning phase, with finance, operations, and product leaders working together to adjust their supply chain needs. 

This step is based on the previous inventory adjustments and aims to determine whether there are constraints associated with people, suppliers, machinery, or technology. After analyzing those factors, the team can create a supply plan that outlines what changes need to be made. 

If you only need to make simple changes, organize your supply plan similar to a business case . Otherwise, schedule recurring meetings with supply stakeholders for team alignment. You might also want to implement additional measures, including unifying supply chain and enterprise planning, anticipating the end customer, and leveraging data.

Unify supply chain and enterprise planning

While supply planning involves adjusting supply and demand needs, enterprise planning involves managing the strategic and operational goals of product supply. 

Unifying both the goals and the needs of your supply chain ensures all areas, from executive to consumer, are aligned and forecasted for the same outcome. 

Anticipate demand

You may begin anticipating supply and demand during the initial forecasting phase of your S&OP based on internal data. But during the supply phase, you will anticipate demand based on the end consumer.

You can do this by reviewing internal data from your demand forecasts and external data that you’ve gathered on your customers. This information is typically obtained through data gathering activities that track customer patterns, such as shopping behaviors, frequented competitors, and target market research.

Leverage real-time data

Using real-time data in your supply planning phase can ensure that the data you collected in the initial phases is being leveraged appropriately across all areas of your supply chain. 

This task can be performed manually or enhanced with AI tools, such as business process automation , that apply advanced analytics and dashboards to automate data gathering and ensure information is correctly assigned to consumer profiles.

Collecting this data can help you adjust supply chain processes to enhance efficiency and make the necessary inventory adjustments. 

4. Pre-S&OP meeting

Once the forecasting and product plans have been made, it’s time to begin the implementation process with an initial kickoff meeting . This is a chance for department heads from the previous phase—as well as human resources, marketing, sales, and any other teams that may be affected—to meet to discuss the changes. 

A meeting agenda template can help you prepare for your meeting and ensure you cover the important topic points the first time around.

Some questions to discuss during this meeting include:

What are the financial implications of these changes?

How will they affect cash flow?

Will this help prevent business uncertainty?

The purpose of this meeting is to consider the financial and customer-facing implications of the supply changes. Since no one person will be able to speak to each of these considerations, it’s important to bring each leader in to speak to their unique knowledge.

5. Executive S&OP meeting

Once the initial meeting has taken place and the implications have been identified and resolved, it’s time for the executive meeting. The purpose of this meeting is to get the executive team's approval for the previous supply change plans, also known as your aggregate S&OP plan. 

Since you’ve already had an initial meeting, it should be easy to supply the executives with the necessary information. Consider sending out a meeting brief the day before about what you plan to discuss. 

If the proposal gets rejected, you’ll need to make revisions to the initial project plan . If it gets approved, you can move on to implementing your S&OP. 

6. S&OP finalization

In order to finalize and ultimately implement your S&OP process, you should delegate tasks to the appropriate project stakeholder . In addition, store information in a shared space to create team visibility and give access to resources in real time.

Once tasks have been completed and the S&OP has ultimately been implemented, keep a close eye on changes to your supply-and-demand system. This is especially important as it pertains to cash flow and ensuring your business is safe from financial mishaps. 

You can do so by reviewing KPI metrics such as:

Demand and production forecast

Inventory turnover

Capacity utilization

On-time delivery

Accuracy in order delivery

Total sales 

Gross margin

Keeping an eye on these changes can help correct any issues in real time before they have negative effects on profitability.

Sales and operations planning benefits and impact

Implementing a sales and operations plan can have a positive impact on a number of different aspects of your organization. From streamlining value to cross-functional collaboration and teamwork, S&OP can improve your overall sales strategy. Let’s look at some of the benefits and the impact they can have on your team.

Streamline value focus

By bringing the executive team together frequently to analyze business alignment, an S&OP plan creates a cohesive value focus for each department. 

Not only is this important in order to create organizational clarity from the top down, but it also makes problem-solving and tough decision-making easier to solve. This is because everyone has clear expectations of where the value lies and what steps are needed to get there. 

Team impact: Drives value for your internal team and your external customers, as well as helps you create a cohesive business plan backed by data.

Increase supply chain visibility

In large organizations, it can be challenging to create supply chain visibility with various teams working in their own silos. With an S&OP, the department leaders have more visibility into the supply chain management plan. As a result, they can choose to continue this visibility to lower-level team members. 

The benefit of supply visibility is that it allows various departments to make decisions based on the organizational demand plan. 

Team impact: Leads to a more streamlined production plan and delivery rate, which supports customer satisfaction and improves sales.

Improve cross-functional collaboration

Another key benefit of an S&OP plan is improved collaboration between teams, departments, and leaders. This is a direct result of the recurring teamwork between leaders to align all aspects of the business. 

Cross-functional collaboration can create a more cohesive dynamic between business units and help foster a more enjoyable team-centric environment. 

Team impact: Improves cross-departmental communication and efficiency, which means fewer missed deadlines and a quicker product lifecycle.

How to choose sales and operations software

In order to get started with a sales and operations planning solution of your own, it can be helpful to use software tools that can streamline and automate tasks for you. In addition, they coordinate information in one place, making it accessible in real time, no matter where your team is located. Use a sales planning template to track and manage tasks in one place. By sharing this template with stakeholders, you can also organize plans and keep project objectives clear across multiple teams.

Along with implementing sales and operations planning software, it’s helpful to integrate other aspects of supply chain planning, such as inventory planning, demand planning, and supply planning, in order to create the most effective plan possible. 

Here are some solutions based on select needs that you can implement to create a more robust S&OP process:

For large teams

For large businesses that are looking to scale their sales and operations processes, it’s important to reduce waste and automate as many tasks as possible. This will create a more efficient process and give more time back to those who need it. 

Here are some software features to consider when looking to scale a large business:

Automation : Business process automation can save your team time by eliminating the busywork and creating more efficiency throughout your organization. 

Risk management : In order to reduce project waste, you need to prevent risks from happening in the first place. A risk register can help to track these issues in real time.

Advanced analytics : Evaluating analytics before, during, and after projects can help your team make continuous improvements. 

While these aren’t the only features an S&OP tool offers, it’s important to check these boxes in order to properly plan for business growth. 

For supply chain needs

Supply chain management has multiple moving parts, which is why implementing software can help streamline and improve your current product development processes. 

Some software features that can help teams hedge against supply chain disruptions are:

Product planning: The right tool can make launching a new product a breeze by providing a way to plan and communicate with team members. It can also help with the inventory management process by tracking your team’s progress along the way to ensure deadlines are met.

Forecasting: Forecast accuracy is essential when creating an efficient supply chain. Not only for internal purposes but even more so for customer-facing needs to prevent poor experience on their end. The right tool will help by providing digestible data in visual spreadsheets. 

Production: Production needs consist of everything from a sales plan to product sourcing and lead times. S&OP software can help organize these tasks and ensure team members are notified when production dependencies are met. 

The bottom line? The right tool can help your supply chain meet your bottom dollar. 

For collaboration capabilities

If there’s one thing that sets teams up for success, it’s collaboration. Empowering your team to work together can help create transparency and accountability.

Here are some features the right software tool can offer:

Aligned communication: The right tool should host communication in one central dashboard, making it easy for teams to connect about projects, tasks, and tactical plans. 

Assigned tasks: Assigning team members to tasks can create accountability and can also organize dependencies to ensure work doesn’t fall through the cracks. 

Aligned work and goals: Connecting work to project goals can keep team members on the same page and help keep OKRs top of mind. 

Automated task reminders: With collaboration software , you can automate reminders and ensure they get to the right stakeholders without unnecessary manual work. 

While collaboration can help with many business areas, it’s especially important when looking to create a robust S&OP plan that helps align multiple teams within your organization. 

S&OP best practices

Effective sales and operations planning is essential for managing the intricacies of market demands and supply chain obstacles. One common problem that S&OP can solve is the misalignment between various departments that leads to inefficiencies, stock discrepancies, and missed opportunities.

By adopting best practices in sales and operations planning, organizations can synchronize cross-functional efforts and ensure a cohesive approach to meeting market demands and achieving business goals.

Are you leveraging the latest data?

How recent are the data inputs fueling your strategy? Effective sales and operations planning hinges on using real-time inputs for all planning activities. This involves rigorous data gathering and the application of advanced analytics to uncover insights that inform your actions. Ensuring your data is up-to-date allows for agile responses to market changes and more accurate forecasting.

Have you tested your strategies with simulations?

How resilient are your financial plans? Simulations offer a powerful tool for stress-testing your strategies against various market scenarios. By incorporating decision-making trials that factor in budget constraints and working capital, you can identify the most productive strategies for resource allocation, risk mitigation, and seizing growth opportunities.

Who owns your S&OP process?

Is there a clear leader steering your S&OP efforts? Identifying an internal owner for your sales and operations planning process is critical for ensuring focus and accountability. This person should have a thorough understanding of your business goals and the ability to coordinate across departments. Assigning this responsibility ensures that strategies are executed cohesively and aligned with overall business objectives.

Align your team with an S&OP

Implementing a sales and operations planning process to keep your teams and ultimately your entire organization aligned. From streamlining your value focus to improving cross-departmental collaboration, use an S&OP to take your business to new levels. 

Pair an S&OP plan with work management software to reduce busywork and improve overall efficiency. Ready to make the move? Check out how Asana can help you implement an S&OP process of your own.

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Businesses may utilize operational plans to lay out objectives, set reasonable timelines, and define expectations. They can increase productivity and efficiency at work by studying how to write compelling and thorough operational plans. An operations plan specifying goals and objectives may be made using various techniques.

What is an Operational Business Plan?

An operational business plan is a detailed document that gives a window into the company's mission, vision, goals, and operational techniques that will steer it in the right direction. It is a pathway, a helpful instrument for the organization that gives answers on, for example, resource allocation, the running of operations, and efficiency measurement. 

An operational business plan is an indispensable tool for entrepreneurs to make the right decisions, create new opportunities, and ensure the business's sustainable long-term development goals. By establishing strategic directions, dealing with risks, procuring funding, and promoting accountability, businesses can overcome barriers and get the maximum benefit.

Why Do Businesses Need an Operational Business Plan?

A proper business plan is a must for any business, regardless of its size and industry, as it is like a roadmap to help reach success. It is common as it gives a clear vision and a specific direction, defining tactics, strategies, and objectives to achieve them. Companies must prioritize their chores and delegate resources adequately with a clear plan.

Let’s look at the reasons why an operational plan is a significant part of your business strategy: 

1. Providing Strategic Direction and Focus.

An operational business plan delivers strategic orientation and specialization by describing short-term and long-term goals. It lays out the boxes of reaching these objectives; this allows the companies to stay focused even when the market changes or the customers embrace different products.

2. Ensuring Risk Mitigation and Adaptability.

Companies can identify business threats and problems using inclusive market studies and competitors' analysis. An operational business plan provides a way to preemptively manage such risks and change strategies to take advantage of opportunities in a changing business environment.

3. Overcoming the Fear of Funding and Stakeholder Consent.

A properly drafted business plan is vital in getting investment funds from investors or lenders. You can use Google Workspace to draft a solid business plan streamlining operations. It shows you have researched the market, identified the business plan’s growth potential, and have a path to profit, thus inspiring confidence in stakeholders to provide you with the financial support needed for business initiatives.

4. Measuring Performance and Holding the Leadership Accountable.

An operational business plan is an important accountability tool, ensuring that the organization's goals and performance metrics are set. Teams can monitor growth, pinpoint mistakes, spot and reward accomplishments, build a culture of persistent improvement, and earn overall business influence. You must schedule appointments with your clients and discuss the minutes with the team to enhance the outcomes. 

Key Components of an Operational Business Plan

An operational business plan comprises several key components essential for guiding the organization toward its objectives: 

1. Executive Summary

The executive summary introduces the whole business plan and highlights its salient points, such as the company's mission, the aims, and the proposed strategies.

2. Business Description

This business plan component is highly focused and provides details, such as type of venture, products and services, market segment, competitive environment, and unique selling points.

3. Market Analysis

Market analysis is a comprehensive process involving the evaluation of industry trends, customer needs, competition, potential market openings, and information critical for making strategic decisions. Based on the market analysis, you need to create marketing strategies. There are various forms of marketing, including email marketing through email newsletters , social media marketing, and many other things.

4. Operational Strategies

Operational strategies essentially describe how the business plans to function effectively, utilizing methods such as production processes, supply chain management, quality control, and technology utilization.

5. Financial Projections

The financial projections involve expected revenues, expenses, cash flow statements, and breakeven analysis to evaluate the business's financial viability and long-term sustainability.

6. Implementation Plan:

The plan encompasses the project schedule, tasks, responsibilities, and milestones. It outlines the implementation of how the execution strategies were developed in the business plan and how the progress was effectively monitored.

7. Risk Management

Preparing for assessing possible risks and developing contingency plans to respond to them is what the business should do to protect itself against unpredictable obstacles or threats.

8. Monitoring and Evaluation

The setting of metrics and performance indicators facilitates performance monitoring and evaluation of the business progression towards its objectives in a continuous fashion, thus permitting the implementation of timely changes and upgrades when needed.

Crafting an Operational Business Plan

Crafting an operational business plan is critical to any business as this is the key to setting the business's targeted goals, strategies, and tactics. It defines the strategies and guidelines for success, thus ensuring productive use of available resources and effective decision-making.

1. Conducting Market Research for Your Operational Business Plan.

Market research is the most important part of creating an operational business plan . It means getting data on your intended audience, competitors' market trends, and the industry. This will assist you in defining your target market, familiarizing yourself with their needs and preferences, and analyzing the competition. After conducting thorough market research, you can decide on pricing, positioning, and marketing strategies. This is the right way to create opportunities for success.

2. Setting Realistic Goals and Objectives in Your Operational Business Plan.

To ensure the success of any work plan, it is essential to set clear and achievable aims and objectives. To do this, you must have a sense of direction and purpose. Goals should be defined in a way that makes them specific, measurable, attainable, relevant, and time-bound. When defining goals and objectives for your company, it's important to consider its core strengths and weaknesses, trends in the market, and industry standards. Setting attainable goals and objectives can motivate your team, keep track of progress, and make any necessary changes.

3. Building Plans and Techniques to Reach Your Objectives.

After you have identified your target and objectives, the next thing to do is develop the strategies and tactics to help you achieve these goals. Strategies are the broad approaches that tell you how you will attain your goals, while tactics are the specific actions or initiatives you will take to support those strategies. In strategy and tactics of development, consider your market segment, competitive advantages and resources, and market trends. By doing so, you can produce a comprehensive and well-thought-out action plan.

4. Creating an Organizational Structure and Assigning Responsibilities.

The operational business plan requires a well-defined organizational structure, and roles and responsibilities must be clearly defined. As a result of such an approach, people from all company positions unanimously know their role. While developing an organizational structure, establish the optimal size of the company, the complexity of the production, and the skills and needs of your employees. Closely define the reporting lines, generate communication channels, and share the responsibility to roll out smooth operations and make the staff accountable.

5. Financial Analysis and Budgeting in Your Operational Business Plan.

Financial analysis and budgeting are the key features of an operational plan of action. They guide you in your business's profitability and break-even point determination, investment allocation, and monitoring performance. Perform a financial statement analysis by investigating your earning streams, expenses, break-even points, and cash flow. Bring this information to learn how to create a realistic budget that matches your priorities and objectives. Make it a point to periodically assess and revise your financial projections to ensure that, from a financial standpoint, your business remains stable and on track.

6. Implementing and Monitoring Your Operational Business Plan.

To make your operational business plan successful, you need full communication, execution well, and continuous control. Communicate the plan to your team so everyone understands their roles and contributions. Create a set of key performance indicators (KPIs) to help you track progress and monitor them regularly to ensure you hit your targets. Monitor market conditions, customer feedback, and performance metrics to identify problems and adjust appropriately. Consistently deliver information on the achieved milestones and result in positive outcomes.

7. Updating and Reviewing Your Operational Business Plan.

An operational business plan is a dynamic document that requires constant updating and review. When your business is going through changes and markets are expanding and contracting, it is wise to audit and update your plan. Make sure to carve out time to review the main plan at least once yearly, if needed. Assess your strategies and tactics to see if they need adjustment, update the financial projections, and implement any further revisions. By constantly revising and monitoring your operational business plan, you can make it widely applicable and efficient in achieving your business success.

Common Mistakes to Avoid in Operational Business Planning

An operational business plan constitutes detailed work and an advanced strategic approach. Nevertheless, frequent mistakes often obstruct the implementation and may prevent the plan’s success.

Avoiding mistakes in operational business planning is worthwhile, as it can facilitate the development of more effective and sustainable strategies. Through creating specific goals, keeping risks low, designing realistic financial projections, planning the implementation, and monitoring progress, businesses can greatly increase their success potential and achieve their long-term objectives. Look for some key pitfalls to avoid when building a successful operational business plan.

1. Inadequate Definition of Goals.

If definite and attainable goals are specified, the organization will be in a state of haze and clarity. Establishing clear, specific, measurable, attainable, relevant, and time-bound (SMART) goals is vital to staying focused on achieving the overall objectives of the business plan.

2. Inadequate Market Research.

Ignoring market research can lead to poor estimations about buyers’ expectations, market tendencies, and competitors’ strategies. Thorough market research is essential in an organization's branding since it gives the management the knowledge they need to make good decisions and develop good strategies.

3. Overlooking Risk Management.

Neglecting to recognize and address risks can leave the business vulnerable to unexpectedly challenging situations or disruptions. Integrating risk management strategies into the business plan mitigates risks and enhances resilience.

4. Unrealistic Financial Projections.

Financial mismanagement can occur from overly optimistic financial projections, damaging the business plan's credibility and implementation. Financial projections must rely on credible data, anticipated plausible outcomes, and lower probable estimations.

5. Planning Implementation.

A zero focus on the implementation plan indicates that execution will likely fail. A practical implementation strategy, including timelines, tasks, assignments, and resources, is necessary for the plan to be successful.

6. Lack of Monitoring and Failure to Respond Accordingly.

Failure to monitor progress and manage changes that arise after implementing the business plan will likely result in missed opportunities or inefficient strategies. The major performance indicators (KPIs) should be routinely monitored and evaluated to adjust and refine them for continuous betterment.

Wrapping Up,

To sum up, building a working operational business plan is an inseparable part of a successful business strategy. In doing so, you’ll have a detailed strategy that fits your expectations, explains your goals, and indicates direction for progress. It is essential to conduct thorough market research, have feasible goals, objectives, strategies, and tactics, build the organizational structure, analyze the financials, implement and control the plan, and constantly update and review it.

Frequently Asked Questions

1. what is a business plan for the operations.

A business plan to implement operations includes the company's daily procedures and strategies to realize its strategic goals. It portrays how these operational areas, including production, marketing, finance, and human resource management, will support the business goals.

2. Why is a business operating plan important?

A complete business plan indicates who will do what and helps the company achieve its strategic goals. It strengthens efficiency, minimizes risks, and guides decision-making to ensure the strategy moves in the right direction.

3. What are the main parts of the operational guide?

The main components include mission, vision, operational strategies, organizational structure, resource allocation, performance metrics, risk management, and contingency alternatives.

4. What steps involve drawing up an operational business plan?

The business creates operational planning by

• Comparing current organizational status and goal setting as well as strategy development
• Resource allocation and implementation,
• Re-rolling to results and changing the environment.

5. How often should businesses revise and amend their operational plans?

The operational business plan should undergo a periodic review and revision, usually every quarter or annually, to keep it in line with the changes in market conditions, business priorities, and internal issues. Periodic reviews are imperative for keeping up-to-date with the dynamics and consistency in realizing business goals.

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Operational Planning – Key things you need to know

Table of Contents

What Is Operational Planning?

Operational planning is the process of turning a strategic plan into a detailed roadmap that outlines exactly what action your team will take on a weekly, or sometimes even daily, basis. It is the process of translating the organization’s goals and objectives into specific actions that can be taken by individuals or teams. Operational planning is typically conducted at the departmental or functional level, and it focuses on the short-term (one year or less).

Operational planning is also an integral aspect of organizational success. In a world where businesses are constantly evolving and adapting to new challenges, having a well-thought-out operational plan is crucial for achieving goals efficiently. This article delves into the intricacies of operational planning, its components, benefits, and its distinction from strategic planning.

Operational planning is important because it helps organizations to:

• Stay on track with their strategic goals
• Make better decisions about resource allocation
• Improve efficiency and productivity
• Identify and mitigate risks
• Respond to changes in the market or the environment

How to Make an Operational Plan?

Creating an effective operational plan requires a structured approach. The following steps can be used to create an operational plan:

• Start with your strategic plan. What are your organization’s long-term goals? What are the key objectives that you need to achieve in order to reach those goals?
• Break down your goals into smaller, more manageable tasks . What are the specific actions that need to be taken in order to achieve each objective?
• Assign tasks to individuals or teams and assign Responsibilities. Who is responsible for each task? When is each task due? Clearly assign responsibilities to individuals or teams for each activity. This ensures accountability and clarity in execution. 
• Set deadlines and milestones. How will you track progress and ensure that tasks are completed on time? Establish realistic timelines for each activity. This will help in tracking progress and ensuring that the plan stays on course.
• Identify and allocate resources. What resources will be needed to complete each task? Determine the resources needed for each activity, including human resources, finances, technology, and equipment. 
• Monitor and adjust your plan as needed. The environment is constantly changing, so it’s important to regularly review your operational plan and make adjustments as needed. Identify potential obstacles that may arise during the execution of the plan. Having contingency plans in place can help handle these challenges. Regularly monitor the progress of the plan and be open to making adjustments as needed. Flexibility is key to adapting to changing circumstances.
• Set Clear Objectives: Begin by clearly defining the objectives you aim to achieve. These objectives should align with the overall strategic goals of the organization.
• Identify Key Activities: Break down the objectives into specific tasks and activities. These activities should be actionable and measurable.

What Should Be Included in an Operational Plan?

An effective operational plan should contain the following elements or components:

• A summary of the organization’s strategic goals also known as Executive Summary. This executive summary provides a concise overview of the plan’s objectives, strategies, and expected outcomes.
• A list of specific objectives that need to be achieved in order to reach those goals and a mission statement. Clear articulation of the organization’s mission and the specific objectives the operational plan aims to achieve.
• A list of tasks (actionable steps) that need to be completed in order to achieve each objective. Detailed breakdown of the tasks and activities required to reach the objectives.
• A timeline for completing each task. Clear and realistic timelines for the completion of each task.
• A list of resources or resource allocation. Specification of the resources, including financial, human, and technological, needed for each activity.that will be needed to complete each task
• A list of risks that could impact the plan. You should identify a list of potential risks and strategies to handle them.
• A plan for mitigating those risks
• Performance Indicators: Metrics to measure the progress and success of each activity.
• Communication Plan: Outline of how information will be shared among team members, stakeholders, and leadership.
• Monitoring and Evaluation: Methods for tracking progress, evaluating results, and making necessary adjustments.

What Are the Benefits of Operational Planning?

There are many benefits to operational planning, including:

• Improved efficiency and productivity: Operational planning can help organizations to identify and eliminate waste, streamline processes, and improve coordination between departments. With a well-structured plan in place, teams can work more efficiently, as everyone knows their roles and responsibilities.
• Better decision-making: Operational planning provides a framework for making better decisions about resource allocation, pricing, and marketing.
• Increased visibility and accountability: Operational planning helps to ensure that everyone in the organization is aware of the goals and objectives, and that they are held accountable for their performance.
• Reduced risk: Operational planning can help to identify and mitigate risks, such as changes in the market or the environment.
• Increased agility: Operational planning can help organizations to respond quickly to changes in the market or the environment.
• Enhanced Communication: Clear communication of objectives and tasks fosters better collaboration among team members.
• Resource Optimization: Allocating resources judiciously reduces wastage and ensures optimal utilization.
• Goal Alignment: Operational plans ensure that daily activities align with the larger strategic goals of the organization.
• Adaptability: Having contingency plans allows organizations to respond effectively to unforeseen challenges.
• Performance Tracking: Defined metrics enable organizations to track progress and identify areas for improvement.

Operational planning vs. strategic planning

Operational planning and strategic planning are two different types of planning that are often confused with each other. However, there are some key differences between the two:

• Timeframe: Operational planning typically focuses on the short-term (one year or less), while strategic planning focuses on the long-term (three to five years or more).
• Level of detail: Operational planning is more detailed than strategic planning. Operational plans typically include specific tasks, deadlines, and resources, while strategic plans are more general in nature.
• Focus: Operational planning focuses on how the organization will achieve its goals, while strategic planning focuses on what the organization’s goals should be.

In other words, while operational planning and strategic planning are interconnected, they serve different purposes:

Operational Planning: Focuses on the execution of specific tasks and activities necessary to achieve short-term goals. It deals with the “how” of achieving objectives and is more detailed and immediate.

Strategic Planning: Involves setting long-term goals and defining the broad strategies to achieve them. It focuses on the “what” and “why” of organizational objectives and provides a roadmap for the future.

Who should create an operational plan?

The person who should create an operational plan will vary depending on the size and complexity of the organization. In small organizations, the owner or CEO may be responsible for creating the operational plan. In larger organizations, the operational plan may be created by a team of managers or executives.

Operational plans are typically developed by department heads, team leaders, or project managers in collaboration with their teams. These individuals are closest to the day-to-day activities and possess the necessary insights to create actionable plans. However, it’s crucial that these plans are aligned with the overarching strategic goals set by top leadership.

No matter who creates the operational plan, it is important to get input from all levels of the organization. This will help to ensure that the plan is realistic and achievable.

Operational planning is an essential tool for any organization that wants to achieve its goals. By taking the time to create a detailed operational plan, organizations can increase efficiency, improve decision-making, and reduce risk.

In conclusion, operational planning is the backbone of successful execution in any organization. It transforms high-level strategic aspirations into actionable steps, ensuring that objectives are achieved efficiently and effectively. By following a structured approach, including key components in the plan, and understanding its benefits and distinctions from strategic planning, organizations can chart a course towards achievement and growth.

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Operational Planning: Types, Steps & Advantages Explained

Operational planning is a documented plan that outlines the goals and key objectives of an organization, and how they can be achieved. It ensures that team members understand their responsibilities as well as what they need to do.

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Table of Contents

Overview: Operational Planning

A company needs a strategy plan, but that’s not enough. To ensure that your organization’s larger goals are achievable, you need an operational plan to manage the day-to-day tasks.

Operational plans do not have to be reserved for large companies. Individuals and small businesses can also benefit with operational planning.

This article will explain, what is operational planning is and how to make one without feeling overwhelmed.

What is an Operational Plan?

The operational plan guides and helps the teams to stay on the required project timeline and to make crucial decisions about the company’s long-term goals.

Who should develop an Operational Plan?

An operational plan is necessary to capture who is doing what and when. An operational plan should be smaller than your  strategic plan  in terms of scope and timeline. 

Instead of creating an operational plan for the entire company, you can create one for each department or team. You could create an operational plan for one initiative in a larger company. This is similar to a detailed plan.

To illustrate, you might create an operational plan that outlines the daily tasks your IT department must perform to support the company. 

The operational plan for your IT department might include details such as how often IT team members will check the IT request project inbox and budget details. It also may detail how IT team members will onboard new employees and how they will equip them.

An operational plan should be created at three levels:

• Scope:- Your operational plan will detail the who, what, and when for each activity. This plan should be focused on one team or initiative.
• Timeline:-  Depending on the speed of your organization’s movements, your operational plan should be spread over a quarter, six months, or a full fiscal year.
• The stakeholder:-  Make sure that the people involved with operational planning are near the work so they can accurately project the work and predict the work to be included in it.

Types of Operational Planning

There are basically two types of operational plans: Standing or single-use.

• A single-use plan  is operational planning that relates to one project. It is discarded after the project is completed. This is useful if the project doesn’t align with another project or won’t be used again in the future. It can be customized to suit each project.
• A standing program  is operational planning that’s repeated. This plan is used by a department for tasks or projects that arise frequently. These plans will save you the hassle of having to reinvent the wheel every time. However, you will lose some flexibility.

5 Steps For Operational Planning

You are not expected to create new plans or set new goals during the operational planning process. To create an operational plan, you should assess the work of your team and what you need to do daily or weekly to reach your strategic goals.  Here’s how:

1. Get started with a strategy plan

Create a strategic plan if you don’t have one. Before you can begin to break down the details, you need a long-term vision. A strategic plan can be created in four steps:

• Identify your position
• Develop your strategy
• Your strategic plan should be created
• Manage, share, and monitor your strategic plan

2. Reduce your scope

To create an operational plan that is detailed-oriented, it is important to limit the scope of your project to a specific team, department, or focus area. Your company’s size will determine the scope of your operational plans.

Imagine, for example , that you are breaking down your strategic plans into action plans for different company departments. 

Marketing teams can include design, product marketing, and social media. You should develop an operational plan for each of the smaller teams to capture daily functions.

3. Identify key stakeholders

Before you create an operational plan, determine who will be involved in it. The members of the team responsible for creating the operational plan should have a good understanding of the actions described in the plan.

Depending on the size of your team, the head of the design group and the team leaders should create the operational plan for the design team. After creating their operational plan, they should share it with the head of marketing to finalize approval.

Your operational plan describes the actions that your team will take to reach your goals within a given timeframe. 

You can outline an operational plan here:

• The goals of your team
• The deliverables will be realized by the operational plan
• Any desired outcome or quality standards
• Your operating budget, as well as your staffing and resource needs
• How to monitor progress and make reports

These are the questions to ask yourself if you have difficulty figuring out the details of your operational plan.

• What are we supposed to do? This information should be derived from your strategic plan or yearly goals.
• What are the daily tasks we must complete to reach our goals? These could be your daily tasks or new work you need to do.
• Who is responsible for these tasks? Each task should have a single owner to ensure that there is no confusion as to who to contact for updates or questions.
• What are the metrics that will help us achieve our goals? If you don’t have SMART, create it.

5. Update and share your operational plan

Once you have created your plan, share it with  key stakeholders  to make sure they know the team’s main goals and the daily tasks required to achieve them. You can manage your plan and update it on a shared platform that tracks real-time progress.

Things will change, just like any other element of project planning. You must monitor the progress of your operational plan, and provide updates to key stakeholders and team members about how you are tracking towards your goals. Written status updates provide a monthly progress report.

What are the things should be included in Operational Planning?

The things that should be included in Operational planning are:

Operational Budget:   An operational budget is a forecast of projected running expenditures and income for a specific time period. The operational budget, like other types of budgets, outlines the amount of money available to buy raw materials, equipment, or anything else required for corporate operations. It is critical to keep your expenditure under your operating budget; otherwise, your firm will run out of resources to carry out its routine operations.

Operational Objectives:  It is critical to link your operational goals with your strategic goals. For example, if one of your strategic goals is to boost sales by 25% over the next three years, one alternative operational goal is to hire more salespeople. Always take your strategic plan objectives and transform them into one or more action items.

Operational Timeline:  It is critical to create a timetable for your operating plan. Most of the time, your operational plan will be the same length as your strategic plan, but in other circumstances, you may need to produce numerous operational plans for different goals. Because not all operational plans are created equal, the length of your operational timetable will be determined by the length of your projects, workflows, and procedures.

Quality Assurance and Control:  Most businesses have quality assurance and control methods in place for a number of reasons, including consumer safety and regulatory compliance. Furthermore, quality assurance concerns may cost your company millions of dollars, thus creating quality management practices is an important stage in operational planning.

Executive Summary:   An executive summary is a short document that highlights the content of longer papers such as business plans, strategic plans, or operational plans. Their primary goal is to offer a short summary for time-pressed stakeholders.

Key Performance Indicators:  Establishing key performance indicators (KPIs) to monitor the productivity of your business operations is critical. You may create as many KPIs as you need for each of your business operations. You may, for example, set KPIs for marketing, sales, product development, and other critical departments in your organization. Product launch dates, the number of manufactured items, the number of customer care cases closed, the number of 5-star reviews received, the number of clients acquired, revenue increased by a specific percentage, and so on are examples of this.

Advantages of Operational Planning

Clarifies your organizational goals.

Managers and department heads can use an operational plan to define their daily tasks, activities, and responsibilities.

This also shows how each team member contributes to the overall goals of the company or department. Managers and employees cannot measure the success of their daily tasks against predetermined outcomes if they don’t have a plan.

Team productivity is increased

Businesses are always on the lookout for ways to improve productivity. This in turn leads to higher profits. An operational plan is one of the most influential and simple ways to increase efficiency.

Employees who know their daily responsibilities and objectives are more productive. If they aren’t clear on what is expected of them, their productivity could suffer.

This vital information is provided to employees across the company and in every department by an operational plan.

Boost your organization’s profitability

A plan can help keep teams and projects on track.  Teams can increase their revenue and create new products when they are well managed.  Innovation pays off. According to a BCG survey, 60% of innovation-focused companies report steady increases in revenues year after year. Teams can innovate faster and better when they have an operating plan.

Increases Competitive Advantage

Components and multiple levels are combined to get competitive advantages.

Your workflows will run more smoothly if you coordinate the various parts using an operational plan. This will allow you to deliver high-quality deliverables on time, providing a great customer experience and helping you stay ahead of your competitors.

Operational Planning Disadvantages

Human error possible

Human error is a problem in manufacturing. It can happen when a product goes from production to sales.

Operations management teams must coordinate with cross-functional teams like finance, engineering, and Human Resources. Each team will be able to clearly understand the department’s end goals.

Interdependency amongst parts

Implementing an operations planning process can be a problem because it depends on the coordination between parts.

One component failing can cause a plan to fail, which can have a negative impact on the next. One process disruption can lead to a breakdown in the whole process and render the operational plan useless.

Operational Planning vs. Strategic Planning

Although they are related,  operational planning vs strategic planning  both have a different focus.

Operational planning refers to the daily work involved in executing your strategy. This ensures that you have the right resources and people to do your work efficiently.

Strategic planning, on the other hand, is about planning for the future and identifying the pipelines that will be needed.

The U.S. Bureau of Labor estimates that nearly 7 million Americans are self-employed, while another 10 million are employed by small businesses.

Chances are that your company has a form of strategic planning if you work for a large corporation. If you are one of the millions working remotely, however, success will depend on your operational planning.

An operational plan isn’t rocket science. But you have to do the work. An operational plan that is well-designed will include detailed information about manpower, resources, and the steps to be taken.

Although it may seem like a lot of work, the result will be worth it when your department completes a highly-rated project on schedule and within budget.

However, to get help in managing/creating your operation plan, we are OnDemand International, here we are to help you out in each & every step of yours.

Once the company’s goal is established, the team will create a strategic plan that includes three components: sales, marketing, and operations.

A solid plan is essential for any operation. There are five main components that you should focus on: Preparation (marketing), logistics, human resources (HR), financial limits, and preparation.

The most common difference between the two types are ongoing and single-use plans

Rohit Sharma

Operational Excellence: Key Principles and How to Implement Them

By Kate Eby | October 11, 2019

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In this article, you’ll learn the key principles of operational excellence and how to avoid failure from leading practitioners and the Institute for Operational Excellence, and also find examples and tips.

Included on this page, you'll find detail s on the phase-by-phase implementation plan, operational excellence KPIs , case studies of operation excellence improvements , and much more

What Is Operational Excellence?

Operational excellence is a framework for businesses to focus on growth and execute their strategy better than their competitors. 

The first step toward organizational excellence is building efficient processes that make it clear to all employees whether or not an organization’s systems are running smoothly and make it possible for team members to step in with improvements when necessary. 

These processes, also known as value streams, can produce tangible products like cars or intangible ones like services. Drawing from continuous improvemen t and other tools, companies pursuing operational excellence adopt a mindset of problem solving, teamwork, and top-line growth, allowing them to create more value for customers.  

The drive to keep improving in order to have the capacity to pursue innovation and growth (also known as execution excellence) rests on two primary pillars: the systematic management of operations and the commitment to a positive culture that focuses on customers’ needs and empowers staff. Empowered staff members have a clear understanding of goals and plans, feel secure in taking initiative, and come up with ways to fix problems. 

“Operational excellence enables an organization to do more with the same staff through better employee engagement and streamlined processes. It is not about cutting resources, but rather about figuring out together how we can better apply our resources,” says Sergei Brovkin, Principal of organizational performance consulting firm Collectiver Inc . 

Practicing operational excellence requires you to see the concept as a culture that permeates everything you do, rather than as an isolated initiative or event.

Operationally excellent companies manage their operations with the goal of delivering their product or service to the customer at the exact moment they desire it, at the lowest cost, with the smallest effort, and at the price the customer wants to pay.  

Many people struggle to understand operational excellence because the concept has inspired many definitions. Some of these definitions are vague and hard to put into practice, such as “being the best” or achieving “world-class” performance.

To arrive at an actionable definition of operational excellence, leading experts promote key concepts in continuous improvement methodologies.

Operational Excellence Focuses on Value

Like the related theories of Lean and Six Sigma , operational excellence shares a focus on the concept of value. These theories define value from the customer’s viewpoint. Value, in essence, represents what the customer really wants and is willing to pay for.   

Value streams are the processes for building products or services that your customers want. The systematic improvements in operational excellence are geared toward creating efficient value streams, meaning that they flow at the rate of customer demand. 

Operational excellence specialists make the timing of value streams visual and visible. In a manufacturing plant, the assembly line is an instantly visible value stream. When the production rate is occurring at the proper pace, you can see that every process is running smoothly. In other words, when the rate is ideal, there are no bottlenecks, there is no backup of semi-processed goods, and there is no downtime in which workers wait for material to arrive from the previous station.

If you produce an intangible product or service, such as software or consulting, you can still make value streams visible by creating visual signals for the rate of flow. We will discuss how you achieve this later in this article. But, the important point to keep in mind for now is that when the value stream is visible, every member of your organization can see when things are working properly or can act to solve a problem. 

This idea is so important to the tenets of operational excellence that the Institute for Operational Excellence defines operational excellence as “the point at which each and every employee can see the flow of value to the customer and can fix that flow before it breaks down.”

At the risk of stating the obvious, remember that the focus of operational excellence is  operations. This approach does not deal with strategy, such as decisions about which products to offer, how to distribute them, or which geographic markets to enter. Those strategic questions are the domain of senior management, who, when operational excellence is in place, can concentrate on revenue growth, rather than involving themselves in day-to-day operations. 

Some experts liken operational excellence to a journey rather than a destination. You can always get a little bit better, so your definition of excellence is relative to your current status and will change over time. 

However, it’s also crucial to remember that this improvement is not just for its own sake. As Kevin Duggan, Founder of the Institute for Operational Excellence , notes, “What good is an efficient factory if the customer no longer needs our product?” Operational excellence’s goal is to ensure that your operations create and deliver products that customers want so that the business keeps growing.

“Operational excellence is not just about bottom-line efficiencies and productivity. It’s about top-line growth in the business. The point of seamless flow without management intervention is that you want management to be facing the market,” Duggan says.

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What Are Operational Excellence Principles?

As mentioned earlier, there are many definitions of operational excellence, so it’s not surprising that there have been many attempts to capture the concept’s main principles. For the purposes of this article, we’ll highlight three particular expressions of these principles because they have been the most influential and widely adopted.

Institute for Operational Excellence

Below is Duggan’s concept of the operational excellence principles. These eight precepts link closely to the ideas of value, flow, and work visibility that we discussed previously: 

• Design Lean Value Streams: Design future-state value streams based on principles for achieving end-to-end flow, not Kaizen improvement events or brainstorming. 
• Make Lean Value Streams Flow: Implement the design through customized, formal training and education, followed by implementation in the target areas to make the design come to life. 
• Make the Flow Visual: Establish visuals that let each and every employee see how the flow connects from raw material all the way to the customer. 
• Create Standard Work for the Flow: Establish standard work for the flow between the processes to define normal flow for the entire value stream. 
• Make the Abnormal Flow Visual: Enable each and every employee to see when the flow has become abnormal, simply by looking with their eyes, by using different tools such as color coding. 
• Create Standard Work for the Abnormal Flow: Work with employees on a menu of choices for how they respond to abnormal flow. This will eliminate the need for management intervention. 
• Have Employees in the Flow Improve the Flow: Continuously improve the performance of the flow to meet customer demand, and aggressively work to prevent abnormal flow. 
• Perform Offense Activities: Management spends time on offense , which are the activities that grow the business, including becoming a solution or technology provider to customers, innovating future products with customers, and more.

Shingo Guiding Principles

Another authoritative set of principles, called the Shingo Guiding Principles or Shingo Model ,  comes from the work of late Japanese industrial engineer Shigeo Shingo, who was a landmark figure in manufacturing design and the Toyota Production System.

Shingo’s ideas and 18 books were hugely influential in the West, and, in 1988, Utah State University’s Jon M. Huntsman School of Business created the Shingo Prize for Operational Excellence in order to recognize companies that excel in applying Shingo’s principles. Past winners have included insurers, military departments, pharmaceutical makers, and consumer products manufacturers. 

Shingo Guiding Principles are grouped into four areas that build on one another like a pyramid:

• Respect every individual.
• Lead with humility.
• Seek Perfection.
• Assure Quality at the Source: Do work right the first time and correct mistakes when they occur.
• Flow and Pull Value: Maximize customer value by creating an uninterrupted, continuous production flow that responds to true customer demand. 
• Embrace Scientific Thinking: Follow a disciplined process of problem solving through experimentation and learning, and encourage employees to consider new ideas without fear of failure. 
• Focus on Process: Many organizations blame failure on individuals. But, you need strong processes to produce consistently good results.  
• Think Systemically: Break down silos and think of your organization holistically. Recognize that processes and people are interconnected and work to break down barriers.
• Create Constancy of Purpose: Be absolutely clear about your mission, strategy, and plans, and tie your daily activities to your larger purpose and goals. 
• Create Value for the Customer: This is your raison d’etre, so you must constantly strive to know what your customers need and expect.

Practitioners Offer More Operational Excellence Principles

Practitioners have developed many other formulations of the principles of operational excellence. Marvin Wurtzel, an independent consultant and a faculty member of BPMInstitute.org , says operational excellence depends on the performance of the following seven criteria:

• Strategy: Leadership creates the vision and values and distills them into strategic focus and direction.
• Metrics: Balanced scorecards and strategic planning tools cascade down through an organization.
• Culture: Staff members understand the strategy and are accountable for the results.
• Processes: The organization has an integrated business process architecture.
• Methodology: You apply discipline and rigor to continuous improvement through a method such as Lean Six Sigma (LSS) .
• Project Management: In accordance with the Project Management Book of Knowledge (PMBOK) , you apply discipline and rigor to projects.
• Tools:   Embrace tools for solution delivery, problem solving, and continuous process improvement .

Reasons that Operational Excellence Efforts Fail

Operational excellence initiatives are highly popular, but research by McKinsey & Company finds that more than 70 percent of organizational transformations like operational excellence fail. Flawed leadership and poor communication are common causes. 

Your company can beat those odds, McKinsey finds, by taking a “rigorous, action-oriented approach” that includes effective communication, active leadership, empowered staff, and an environment of continuous improvement. The firm identifies 24 practical actions that foster success. Companies that perform these actions see their operational excellence programs succeed 79 percent of the time. 

Experts say that the causes for failure usually fall under the headings of leadership, mindset, and execution.

Reasons that leadership causes operational excellence programs to fail include the following: senior management either lacks understanding or expertise in operational excellence and embarks on the effort for the wrong reasons; leadership is unclear or inconsistent; leaders don’t model the changes they ask of staff; senior management focuses too much on short-term results; and they lose sight of the significance of the customer.

Operational excellence can run aground if the right mindset is not in place. You cannot view your effort as a one-off initiative; it must become your culture. Resistance to change among staff can also derail an operational excellence program.

Execution-related reasons for failure include the following: implementing your effort top down without bottom-up feedback; making too many changes in a short time; confining improvement efforts within silos so the whole organization does not benefit; not aligning roles with the strategy; having poor communication; having a lack of accountability; and failing to measure results. 

Duggan of the Institute for Operational Excellence ties failure to a poor grasp of what operational excellence represents. In these cases, leaders often concentrate too much on Lean’s waste elimination or the idea of continuously improving. Instead, he encourages them to picture and achieve a goal of seamless delivery of value. “Lean and continuous improvement are very good things. But, the biggest driver of moving the operation from point A to point B is knowing what point B is,” Duggan explains.

What Are the Benefits of Operational Excellence?

Operational excellence yields tangible results. A company that achieves operational excellence will have lower costs, higher revenues, less risk, and more satisfied customers than a competitor that does not. 

Here are some of the commonly cited benefits of operational excellence:

• Efficiency in processes and use of resources
• Cost reduction or containment
• Engaged, stable workforce
• Cohesive management
• Strong shareholder value
• High-quality standards
• Beneficial partnerships with suppliers

Why Is Operational Excellence Important?

Operational excellence matters because it is a big competitive advantage. Relatively small process improvements have large impacts. Research in the Harvard Business Review found that companies with peak operational excellence have 25 percent higher growth and 75 percent higher productivity than laggards.

Operational excellence is one of the three value propositions that can act as an organization’s competitive foundation, according to authors Michael Treacy and Fred Wiersema in their book The Discipline of Market Leaders. (The other two value propositions are product leadership and customer intimacy.)

So, what’s the secret? Operational excellence helps you succeed in good times and bad because of the way it impacts key characteristics and behaviors of your organization.

• Agile: Operational excellence is oriented around ongoing adaptation, so it is flexible and dynamic. Markets change, customer tastes shift, innovators introduce new technology, and problems arise. When you apply the principles of operational excellence, you naturally have a self-correcting mechanism to ensure you meet customer needs and that your business continues to grow.
• Strategic: When you practice operational excellence, your company leadership does not need to get involved in solving low-level problems and managing daily operations. Instead, senior executives are able to work on new products or markets and revenue opportunities. So, rather than fighting fires, leaders focus on the big picture, fending of threats and keeping the business growing. 
• Efficient: By homing in on value streams, you achieve efficient operations that cut out waste. By doing this, you can deliver value to customers at the best possible price and keep quality high. Efficiency also results in greater profitability.
• Workforce: Empowering employees to solve problems creates a strong organizational culture, which will help you attract and retain staff. In this climate, team members are more willing to consider new ideas and are motivated to bring suggestions to management. These improvements can lead to new opportunities, cost cuts, or increased demand. 
• Growth: Operational excellence relies on using standardized processes and continually improving them. These imperatives provide a template for running your business that is easy to transfer to new locations or teams, facilitating growth. Once you optimize every aspect of your operation and codify best practices, training new staff becomes easy.

Roots of Operational Excellence

For as long as modern business has existed, leaders and managers have sought to improve the way they work. Operational excellence as an approach owes debts to many management theories and thinkers.

These include the originators of so-called scientific management: Adam Smith, the 18th century author of The Wealth of Nations , who introduced ideas around the division of labor; Frederick Winslow Taylor, a leading proponent of scientific management in the 19th century, who sought to engineer workflows for improved efficiency; and Henry Ford, Founder of the Ford Motor Co., who played a leading role in the development of the assembly line. 

With its contributions of Lean, the Toyota Production System, just-in-time (JIT), and the Toyota Way, Japan’s industrial revolution also shaped operational excellence. People like Toyota engineer Taiichi Ohno were instrumental in developing Toyota’s methods.

Business process improvement methods, such as Six Sigma, root cause analysis processes DMAIC and 5 Whys,  Hoshin Kanri , Kanban , business process mapping , Lean Six Sigma’s DMADV and other tools , as well as data-driven decision making ideas, have all left an imprint on operational excellence.

Operational Excellence Models

Operational excellence models are frameworks for improving your process execution. Models usually cover executing deployment, managing performance, refining processes, and elevating culture. 

“Operational Excellence is made up of four main categories. They include strategy deployment, performance management, high performance work teams, and process excellence,” notes Peter Peterka, CEO of training company Global Six Sigma and Chairman of the International Society of Six Sigma Professionals.

Under the operational excellence mode, beneath the four main categories, fall tools and methodologies to achieve such objectives as vision and risk management.

“The key is a good framework, sometimes referred to as the operational excellence house . This framework includes things like Six Sigma, Lean, Kaizen, and other key methods that you use together to complete the structure. You can’t have a completed house without each piece,” Peterka says.

Organizations can use these models in various ways — for working with entirely new ventures, for fixing existing businesses, or for filling in selected gaps in the cross-functional management of operations.

Here are some well-known operational excellence models:

• Baldrige Excellence Framework: This framework lays out criteria, concept, and scoring guidelines for performance excellence in organizations. Named for the late U.S. businessman and Secretary of Commerce Malcolm Baldridge, the model helps companies assess their improvement processes and identify where they should focus their efforts.  The criteria are also used to select winners for the Malcolm Baldrige National Quality Award, which recognizes businesses and nonprofit organizations for performance excellence as part of a mission to make U.S. organizations more competitive.  Here are the core concepts of the Baldrige model:
• Visionary leadership
• Customer-driven excellence
• Organizational and personal learning
• The valuing of employees and partners
• Focus on the future
• Management for innovation
• Management by fact
• Social responsibility
• Focus on results and creating value
• Systems perspective The Baldridge framework forms the basis of more than 70 other national business excellence programs around the world. Canada has a similar initiative, called Excellence Canada, that awards the Canada Awards for Excellence and created the Canadian Framework for Business Excellence as a model for businesses to improve. Its principles include the following:  
• Leadership through involvement
• Primary focus on stakeholders/customers and marketplace
• Cooperation and teamwork
• Prevention-based process management
• Factual approach to decision making
• Continuous learning and people involvement
• Focus on continuous improvement and breakthrough thinking
• Fulfillment of obligations to all stakeholders and society

European Foundation for Quality Management: In Europe, the EFQM model created by the European Foundation for Quality Management is the most well-known operational excellence framework. Fourteen leading European CEOs started this effort in 1988 with a goal of helping businesses become more competitive by benchmarking them where they are, outlining gaps, and identifying solutions. An update to the EFQM model is due in 2020, but here are the core values identified in its 2013 version:

• Adding value for customers
• Creating a sustainable future
• Developing organizational capability
• Harnessing creativity and innovation
• Leading with vision, inspiration, and integrity
• Managing with agility
• Succeeding through the talent of people
• Sustaining outstanding results As with the Baldrige model, the EFQM model has inspired efforts in other nations. There are also models that combine elements of these two models. These hybrid models are in use in such places as in Singapore. 

Total Quality Management (TQM) : This is a management system for operational excellence that involves all staff in continual improvement. This framework arose in the 1970s as Western companies struggled to compete in the face of Japan’s quality excellence. This model became closely associated with the work of W. Edwards Deming, who pioneered quality improvement processes and advanced statistical quality control. His ideas contributed greatly to Japan’s economic rise after World War II.  The Union of Japanese Scientists and Engineers created a prize in 1951 in honor of Deming, and the Deming Prize is awarded annually to organizations that excel in TQM.  Originally, the winners were all Japanese companies, but Florida Power & Light became the first non-Japanese winner in 1989. Since then, companies elsewhere in Asia, including India and Indonesia, have used the model and won the Deming Prize.  Summarizing TQM’s principles, the American Society for Quality says TQM is “a management approach to long-term success through customer satisfaction. TQM is based on all members of an organization participating in improving processes, products, services, and the culture in which they work.”

How Do You Achieve Operational Excellence?

While each model is slightly different, they all consider certain concepts as core to operational excellence, so an operational excellence program will typically address these elements. These include performance management, continuous improvement, culture, organizational excellence, and process excellence.  

• Performance Management: This covers such things as setting SMART goals , implementing balanced scorecards, using Gemba walks, making sure all team members have the information to do their jobs well, measuring performance with key indicators, collecting performance data, and sharing performance data with the team.  To perform a Gemba walk, observe the process targeted for improvement first-hand and talk to the staff involved to find what is working and what isn’t. This template guides you through the Gemba walk, questions to ask, and how to identify opportunities for improvement.

Download Gemba Walk Worksheet Template — PDF

• Continuous Improvement: This category includes steps to ensure that incremental improvement continues through such strategies as Kaizen events. This idea contrasts with the notion of big, disruptive breakthrough changes. Frontline employees often drive continuous improvement efforts.  
• Culture: This element concerns mindset and people practices. You want to instill a culture of operational discipline that strives to do the right thing, the right way, every time. You also want to promote the core values of integrity, problem solving, teamwork, and the willingness to question. Leadership must create an environment that attracts the best people, cultivates staff growth, and supports team members.
• Organizational Excellence: Here, you work on such things as organizational structure, including making sure that your structure aids rather than hinders your improvement efforts. You can employ such tools as the McKinsey 7S framework to assess seven key elements of your organization (strategy, structure, systems, shared values, style, staff, and skills), or a RACI matrix . 
• Process Excellence: This area prioritizes ensuring that your business processes are streamlined and repeatable. Some tools you commonly use here are SIPOC diagrams and value stream mapping. 

An operational excellence management system (OEMS) represents a set of policies that lay out how your company will function to achieve operational excellence. An OEMS sets expectations across the organization, provides a common language for everyone in the company to talk about this effort, shares best practices, tracks accountability for operational excellence improvement, and advances the continuous improvement process.

The elements discussed above are a first step toward operational excellence, an enabling process that is not the same as executing operational improvement. Still, the process illustrates important groundwork to introduce employees to operational excellence, curtail top-down thinking, and ensure that goals and accountability align.

Operational Excellence Implementation Plan: Phase by Phase

By this point, you may be ready to get your own operational excellence program under way and be wondering how to set up your organization for success. There are eight main phases, starting with organizing your program and ending with consolidating your gains. 

“A typical operational excellence effort starts with an assessment, and it is during this assessment phase that we decide with the key stakeholders what it is that we are going to achieve, creating a hierarchy of goals,” explains Brovkin.

“Uppermost in this effort is establishing the purpose (or mission) of the company. Lofty as it may sound, defining your organization’s purpose is the goal of the operational excellence project. Of course, we then agree on the lower-level goals that roll up into that company purpose and that will serve as indicators of our progress and eventual success,” he notes. 

Here are the main phases to implement your effort:

• Organize the initiative by picking a team and describing your vision and mission.
• Analyze your current state and document your value stream.
• Identify areas with the highest potential for improvement.
• Determine your strategies and tactics.
• Set concrete improvement goals.
• Execute your projects.
• Assess the impact.
• Consolidate gains and restart at step two. 

Download this operational excellence implementation plan template to map out the phases of your effort and learn key milestones for each phase.

Download Operational Excellence Implementation Plan Template - Excel

Duggan, who is the author of Design for Operational Excellence: A Breakthrough Strategy for Business Growth , says that rather than starting with a gap analysis, companies should define what an optimal value stream looks like and then work to achieve that vision.

 Here are some of the best practices that experts recommend:

• Make sure that you have the support of senior management and that the operational excellence effort has a strong sponsor or champion.
• Select a first project that will produce quick, noticeable results to solidify organizational support for the effort and show the financial benefits.
• For there, expand your deployment, ideally by building an operational excellence team with expertise in the field. Have this group pick and manage your portfolio of improvement initiatives.
• Regularly recognize and reward staff who contribute to the effort.
• Don’t forget to make sure that the improvements are integrated into the organization’s way of doing things. When you move on to the next projects, continue to monitor and reinforce the current steps.

What Are Operational Excellence Roles and Responsibilities?

The team you task with operational excellence improvements will vary in number based on the size of your organization. Still, this group should have at least some members with expertise in the subject. Typical roles include a director of operational excellence who is responsible for developing and executing improvement initiatives. 

Other members may include staff with experience facilitating Lean management and implementing related projects. The goal is to make operational excellence a core strength of the company.

Frequently, staff with training and certifications in improvement methodologies like Six Sigma will lead the effort and may include master black belts and black belts. 

The operational excellence group’s responsibilities will span such duties as overseeing process improvement events, participating in cross-functional project teams, defining and monitoring performance metrics, fostering culture, and mentoring frontline operational excellence leaders.

Operational Excellence Core Competencies

Leaders in the field cite the following as core competencies for operational excellence staff: the ability to drive performance in line with strategy, strong leadership and engagement skills, cultural fluency, vision, expertise in continuous improvement, knowledge of process transformation, and risk management .

What Are Operational Excellence Goals?

As you have seen, operational excellence flows from a highly intentional effort to improve performance. First, define what you want your operational excellence initiative to achieve. Setting goals will give you a basis against which you can measure success. 

Generally, you can classify operational excellence goals under four main categories: finances, operations, culture, and enterprise. Let’s look at some specific examples in each category.

 Examples of Financial Operational Excellence Goals:

• Higher sales
• Capacity utilization  
• Cost control or reduction 
• Stronger cash flow
• Greater asset productivity
• Higher capital efficiency
• Shorter payment cycles
• Reduced receivables
• Efficiencies in supply chain

Examples of Operational Excellence Goals for Operations

• Decreased accident rates or time lost to injuries
• Improvement in defect or error rates
• Fewer regulatory or compliance issues
• Higher customer satisfaction 
• Less waste in value stream
• Smaller environmental footprint
• Reduced downtime
• Greater customer retention 
• Higher output or productivity

Examples of Operational Excellence Goals for Culture

• Increased training and number of employees with key skills
• Greater employee engagement
• Enhanced accountability by individual team members
• Improvement in cross-department cooperation
• Higher employee satisfaction scores

Examples of Operational Excellence Goals for the Enterprise

• Closing the addressable gap between the current state and optimal performance
• Realizing the financial value of that gap
• Reaching a level of operational excellence maturity relative to industry standards

What Are Operational Excellence Metrics?

Businesses that seek to realize operational excellence need to articulate these goals in terms of metrics that they can track, so they can evaluate performance objectively over time. These metrics may measure quality, productivity, or efficiency.

At the enterprise level, metrics include the number of simultaneous operational improvement initiatives under way, the estimated value of those initiatives if successful, the percentage risk of failure for each initiative and the entire portfolio, and the value derived from operational improvements over the past 12 months.

Metrics for operational excellence generally fall into the following categories:

• Effectiveness
• Productivity
• Profitability
• Competitiveness

What Are KPIs for Operational Excellence?

Key performance indicators (KPIs) tell you how your operational excellence program is performing. Your team can create a dashboard for your most meaningful metrics, so you can keep close tabs on them. 

Tom Carpenter, Principal Consultant at Clarasys , says that when assessing operational excellence improvements, “Most people tend to measure processing time, such as the time from start to end, exceptions, such as the number of cases that fall outside the standard process, the output, or the error rate.”

“But, what can be more important is the impact on overall customer experience: employee satisfaction, customer satisfaction (if the program impacts them in any way), customer retention, customer satisfaction score, and net promoter score,” he explains. 

Here are some KPIs by category:

• Customer Satisfaction: Net promoter score, overall satisfaction metric, complaint rate, service-level agreements met ratio, call pickup time, time to resolution of issue, e-commerce abandon rate, and renewal and retention rates
• Quality: Percent rework, error/defect rate, order accuracy rate, cost of poor quality, rejected materials cost or volume, and number of change requests 
• Productivity: Capacity utilization, downtime, overall equipment effectiveness, operating rates, output, labor utilization, operating margin, on-time delivery, and ratio of revenue to employees
• Sales Efficiency: Deals closed per month, calls made, sales volume, win-loss ratio, social media contacts, and customer lifetime value
• Culture: Training completed, employee satisfaction score, employee retention, and ratio of internal to external hires
• Manufacturing: Accident and injury rates, equipment alarm rates, energy footprint, and percentage of processes under automated control
• Information Technology: Uptime, application performance and availability, percentage of batch service-level agreements met, project cost, error rates, time to resolution of faults, and project satisfaction 
• Financial: Gross margin, cash flow (days sales outstanding [DSO], days payable outstanding [DPO]), EBITDA, audit performance, asset values and lifecycle cost projections, compliance risk measure, and disaster recovery readiness metric

What Are Companies With Operational Excellence?

Operational excellence methodologies have powered performance gains at many well-known companies, including Ford, Toyota, Exxon, General Electric, Motorola, Bank of America, Johnson & Johnson, and Amazon.

“Operational excellence is not a new phenomenon,” says Peterka of Global Six Sigma. “The concept and term have been around for almost 20 years. The first known use was… at Allied Signal, now Honeywell.”

The Business Transformation & Operational Excellence Awards recognize companies whose case studies demonstrate outstanding operational excellence results. Recent winners include the following:

• Sanofi Pasteur: The vaccine manufacturer suffered from a weak manufacturing quality culture. Using operational excellence principles, it did a complete turnaround in two years, achieving increased supply, restoring the trust of health authorities, and reaping savings of more than $250 million.
• Philips Lighting: The company was experiencing market share and revenue declines, low customer satisfaction, unreliable service, and uncompetitive product lead times. The organization launched an operational excellence team that used multiple tools, including Lean and Six Sigma, to implement improvements based on the voice of the customer. The results included a $125 million increase in revenue, a 20 percent sales growth in covered products, a rise in net promoter score for affected areas from minus 56 to plus four, and a sharp improvement in lead time and service reliability. 
• Black & Veatch: The Kansas-headquartered global engineering firm launched its excellence program to strengthen its energy business. The effort yielded new business in power and oil and gas, employee retention, higher productivity, and cost savings.
• Mentis Neuro Health (Now Neuro Restorative): The Texas-based organization provides rehabilitation care for people with brain and spinal cord injuries and saw that it was taking too long to onboard trauma patients arriving from hospitals. Those delays meant revenue lost to competitors. Through an operational excellence drive, within three months the organization cut patient onboarding from as long as three weeks to two days. The firm increased patients served at its five sites by 21 percent.

What Is Operational Excellence In Manufacturing?

Some of operational excellence’s greatest impact has been in manufacturing, owing in part to its successes at companies like Toyota and Ford. Transformations in manufacturing often seek to achieve significant waste reduction and leveling of the flow of production. 

Lean is a common approach to operational excellence in manufacturing, and flow is an important Lean concept. So-called one-piece flow concerns moving each unit through production individually, rather than in batches. Employing this method increases efficiency by connecting processes and, thereby, enhancing flow in the value stream. By incorporating first-in/first-out and Kanban techniques, you also improve flow in the supply chain.

The Institute for Operational Excellence emphasizes the importance of making flow visual, meaning that you provide visible signals and indicators for the timing of production. A red light that illuminates when a machine is jammed or a Kanban card that signals it is time to replenish raw materials makes the state of the value stream instantly apparent.

As a result, an interruption or problem does not go unnoticed. Employees in the flow are able to fix the issue, cultivating self-correcting or “self-healing” value streams. 

Hypertherm Inc., a New Hampshire-based manufacturer of industrial cutting systems and software, is one of Duggan’s favorite case studies of operational excellence in manufacturing. Duggan says the company has optimized its production system so that orders can go straight to manufacturing. Hypertherm now has this ability (even though it makes multiple product types) because it uses a principle called the mixed-model value stream.

Having a very flat organizational structure without a production control department is part of what makes Hypertherm extraordinarily efficient, Duggan says. The company has been highly innovative in introducing new products without doing any offshoring or layoffs. As a result, the manufacturer has been winning awards for social responsibility, environmental awareness, and best workplace. Hypertherm is so efficient that it is competitive even in low-cost countries, such as China and India, and the company exports 25 percent of its output. 

“We continuously push the envelope for how autonomous our operations can be in terms of not relying on management intervention,” reports Jim Miller, Vice President of Operations for Hypertherm. 

Warren Stokes , Assistant Director in the Office of Continuous Improvement at the Arizona Department of Economic Security, cites another operational excellence case study; an aerospace electronics manufacturer reduced the costs of variation in its product line by 18 percent, saving $1.4 million. The company “focused on the improved quality at each process step, the elimination of rework and line stoppage, and the improved pre-kitting of supplies, point-of-use tooling, and standardized work,” he reports.

What Is Operational Excellence In Information Technology?

Information technology organizations that are operationally excellent focus on continuously improving their processes and their culture. The Agile and Scrum methodologies are natural complements to the operational excellence of these IT firms. 

At these companies, the operational excellence approach translates into making sure they have employees with versatile skills. This way, team members can adapt to changing needs and see the big picture, instead of having only deep but narrow technical expertise. Strong hiring processes, onboarding, and training for both staff and managers support this kind of workforce.

Work processes that revolve around reliable schedules, continuous integration, and continuous release are the IT equivalent of smooth and level flow in manufacturing. In the IT industry, drastic integrations, disruptive releases, and technical debt undermine the value stream. 

Similarly, operationally excellent IT companies are passionate about quality, which means they possess strong processes around fixing bugs, reviewing code, and catching problems early.

What Is Operational Excellence In Healthcare?

Operational excellence has swept healthcare, and it’s not surprising because quality, value, and waste are top-of-mind concerns for policymakers and healthcare providers. Efforts at hospitals and other health institutions focus on improving processes to use resources more efficiently, eliminating mistakes and unnecessary procedures, and improving health outcomes. 

As with operational excellence initiatives in other industries, healthcare organizations are recognizing that small process improvements can have major results. For example, a Johns Hopkins University program gave doctors and nurses a five-step safety checklist to follow when they place central-line catheters in intensive care unit patients. The program also helped promote a culture of safety, empowering all caregivers to speak up if employees do not follow safety rules. 

The effort reduced deaths by 10 percent, virtually eliminated bloodstream infections in participating hospitals, and saved billions of dollars in the costs of treating infections. The safety checklist is a prime example of the process standardization that lies at the heart of operational excellence. 

Other healthcare initiatives aim to solve problems at the frontline, rather than using the traditional top-down approach. As part of its operational excellence program, SickKids Hospital in Toronto gives departments the authority to solve problems at their own level. For example, using the Lean A4 analysis process, all units hold 15-minute huddles in order to act on quality and safety problems.

What Is Operational Excellence In Marketing?

For marketing teams, operational excellence often emphasizes the value of the customer and of systems. The customer may be an internal or external stakeholder, but it is still the customer who determines value. 

Systems thinking means managing a marketing operation with a view to the whole company, especially by breaking down silos between marketing and sales and seeing each marketing initiative as part of a single value stream. 

Another facet of operational excellence in marketing is the adoption of data-driven management. Tracking the performance of marketing efforts, establishing benchmarks, evaluating effectiveness, and tying this performance to business outcomes enable marketers to identify process improvements.

What Is Operational Excellence In Banking?

The operational excellence movement has driven financial service companies such as banks to develop more efficient processes, streamline their organizations, make the best use of technology, and improve their accuracy and consistency.

The hallmarks of operational excellence in financial services are a low cost-to-income ratio and a high number of customers per full-time equivalent employee. These metrics are indicators of cost efficiency and high productivity, respectively. 

Process improvements at banks and similar companies have focused heavily on automation, such as electronic data capture, automated decision making, fraud detection, and so-called straight-through processing, for many products. This means that at the opening of an account, an automated system enters every piece of customer information and simultaneously shares that information with all lines of operation, eliminating the need for manual data re-entry. For example, when a checking-account customer applies for a credit card, their information will already be in a financial institution’s system.

Other operational excellence goals include improved process effectiveness such as shortening the amount of time between a loan application and loan funding and streamlining operations to increase the ratio of staff in customer-facing positions to those in back office roles.

What Is Operational Excellence In HR?

Human resources teams are pursuing operational excellence by looking for ways to make their processes (such as recruiting and onboarding) more efficient, to work more closely with other parts of the business, and to act as a growth catalyst rather than an administrative function.

Here too, computerization has played a big role, with many companies embracing automated recruiting solutions and self-service HR portals. 

Another major trend has been to try different operating models, rather than to use the traditional central human resources department. Many of these models seek to increase HR’s contribution to a company’s competitiveness and integrate HR with the rest of the business. For example, the talent-segmented model assigns different members of an HR team to a company’s various key employee demographics, such as computer engineers, millennial workers, or emerging markets staff. This way, HR can focus on the company’s most critical talent priorities. 

In the professional services model, HR people work as an internal consulting group, which provides its services where departments ask for it. The JIT model places HR people on cross-functional teams that advise on talent-related projects when necessary.

What Is Meant By Functional Excellence?

Operational excellence is sometimes confused with functional excellence . While the two terms sound very similar, functional excellence describes when a company’s support functions (such as finance or legal) perform in a superior way that helps the business excel. 

These functions are critical to an organization’s success. The specific needs for functional excellence vary by industry. In retailing, functional excellence in marketing and sales is paramount; in a manufacturing operation, product engineering is central to functional excellence. Most companies need functional excellence in finance, HR, or procurement.

Functional excellence’s focus on functional capability contrasts with operational excellence’s emphasis on process. Functional excellence depends more heavily on skill and expertise, while operational excellence occupies itself with optimizing repeatable processes. 

Moreover, there is a tension between these two concepts. Operational excellence promotes breaking down divisions among departments and encouraging all staff members to view themselves as part of a single organization and value stream. Functional excellence sees support functions as discrete entities, and the people who have these support roles usually do not consider themselves to have a direct role in generating revenue or delivering value to the customer.

What Are Operational Excellence Tools?

As you strive for operational excellence, use tools to support this effort, such as business process management applications. Software can gather voice-of-customer feedback, track continuous improvement projects, monitor KPIs, and quantify results. 

Today’s cloud-based software makes it straightforward for organizations of any size to access the resources they need in a cost-effective way, without accruing technical debt. Some of its advantages include mobile interfaces, easy collaboration, ease of use, and pre-built integration with other common enterprise applications. 

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Methods & Techniques Used in Operational Management

by Emily Hunsaker

Published on 10 Dec 2018

Operational management refers to the ways in which a business manages the resources responsible for creating goods or services including materials, machines, people and technology. The discipline is rooted in the planning and creating processes that make the business run more efficiently by focusing on factors such as cost control, quality assurance and profitability. In the field of operational management, managers and business owners must continually improve these processes to remain competitive.

While the principles discussed in the field of operational management typically refer to large corporations, small business owners can also benefit from creating operational structures. Operational management techniques can give small business owners the chance to decrease costs, increase customer satisfaction, boost revenue and improve the overall operation of the company by putting processes in place for future production.

Designing Processes

The foundation of operational management revolves around putting a set of processes in place to ultimately improve your business’s bottom line. A process is an automatic system that a business uses to address a specific problem. Processes offer small businesses a host of benefits including saving time, eliminating problems and improving productivity.

While some processes are instinctively created, others require more planning to implement. To develop processes in your business, you must first identify issues that happen regularly and take up a lot of your employees’ time or issues that frustrate you. Then, create a well-defined plan to alleviate the issue at hand. Finally, execute your plan over and over again until it becomes routine.

Project Management

Successful operational management includes the use of project management techniques. Business owners must continually make decisions regarding scheduling, work assignments and sequencing of various projects or processes in the short-and-long-term confines of the business. Small businesses can make use of a variety of project management tools or software to simplify the task of managing projects.

When managing various projects within your business, there are four factors to consider: schedule, financing, controls and evaluation. Each project completed in a business must be finished in a limited time frame. Effective project management means ensuring that each individual component of the project is completed in a timely manner so the project as a whole remains on schedule. Additionally, a project’s manager must also track project costs using cost functions or a traditional budget. To ensure your project stays on track and on-budget, controls are a necessity. Consider controls that place a limit on spending among individual team members or setting milestones as deadlines for each component of the project. And as the project wraps up, it is important to evaluate the project as a whole and the controls within it to determine what aspects were a success and areas where the team can improve.

Continuous Improvement

The best organizational managers are never satisfied with their results. Instead, they always seek to improve upon what they have done. The concept of continuous improvement is based on a Japanese philosophy called Kaizen, which involves identifying benchmarks and allowing your employees to take ownership of their improvements. A business’s processes can always be improved upon, whether you seek to save additional time or increase revenue.

Long-term planning requires that you build upon the improvements achieved through your operational management strategies. To create an environment of continuous improvement in your business, instill a sense of employee involvement in all business processes, emphasize the importance of teamwork throughout each process and encourage employees to develop a sense of ownership of the business’s processes.

A better way to drive your business

Managing the availability of supply to meet volatile demand has never been easy. Even before the unprecedented challenges created by the COVID-19 pandemic and the war in Ukraine, synchronizing supply and demand was a perennial struggle for most businesses. In a survey of 54 senior executives, only about one in four believed that the processes of their companies balanced cross-functional trade-offs effectively or facilitated decision making to help the P&L of the full business.

That’s not because of a lack of effort. Most companies have made strides to strengthen their planning capabilities in recent years. Many have replaced their processes for sales and operations planning (S&OP) with the more sophisticated approach of integrated business planning (IBP), which shows great promise, a conclusion based on an in-depth view of the processes used by many leading companies around the world (see sidebar “Understanding IBP”). Assessments of more than 170 companies, collected over five years, provide insights into the value created by IBP implementations that work well—and the reasons many IBP implementations don’t.

Understanding IBP

Integrated business planning is a powerful process that could become central to how a company runs its business. It is one generation beyond sales and operations planning. Three essential differentiators add up to a unique business-steering capability:

• Full business scope. Beyond balancing sales and operations planning, integrated business planning (IBP) synchronizes all of a company’s mid- and long-term plans, including the management of revenues, product pipelines and portfolios, strategic projects and capital investments, inventory policies and deployment, procurement strategies, and joint capacity plans with external partners. It does this in all relevant parts of the organization, from the site level through regions and business units and often up to a corporate-level plan for the full business.
• Risk management, alongside strategy and performance reviews. Best-practice IBP uses scenario planning to drive decisions. In every stage of the process, there are varying degrees of confidence about how the future will play out—how much revenue is reasonably certain as a result of consistent consumption patterns, how much additional demand might emerge if certain events happen, and how much unusual or extreme occurrences might affect that additional demand. These layers are assessed against business targets, and options for mitigating actions and potential gap closures are evaluated and chosen.
• Real-time financials. To ensure consistency between volume-based planning and financial projections (that is, value-based planning), IBP promotes strong links between operational and financial planning. This helps to eliminate surprises that may otherwise become apparent only in quarterly or year-end reviews.

An effective IBP process consists of five essential building blocks: a business-backed design; high-quality process management, including inputs and outputs; accountability and performance management; the effective use of data, analytics, and technology; and specialized organizational roles and capabilities (Exhibit 1). Our research finds that mature IBP processes can significantly improve coordination and reduce the number of surprises. Compared with companies that lack a well-functioning IBP process, the average mature IBP practitioner realizes one or two additional percentage points in EBIT. Service levels are five to 20 percentage points higher. Freight costs and capital intensity are 10 to 15 percent lower—and customer delivery penalties and missed sales are 40 to 50 percent lower. IBP technology and process discipline can also make planners 10 to 20 percent more productive.

When IBP processes are set up correctly, they help companies to make and execute plans and to monitor, simulate, and adapt their strategic assumptions and choices to succeed in their markets. However, leaders must treat IBP not just as a planning-process upgrade but also as a company-wide business initiative (see sidebar “IBP in action” for a best-in-class example).

IBP in action

One global manufacturer set up its integrated business planning (IBP) system as the sole way it ran its entire business, creating a standardized, integrated process for strategic, tactical, and operational planning. Although the company had previously had a sales and operations planning (S&OP) process, it had been owned and led solely by the supply chain function. Beyond S&OP, the sales function forecast demand in aggregate dollar value at the category level and over short time horizons. Finance did its own projections of the quarterly P&L, and data from day-by-day execution fed back into S&OP only at the start of a new monthly cycle.

The CEO endorsed a new way of running regional P&Ls and rolling up plans to the global level. The company designed its IBP process so that all regional general managers owned the regional IBP by sponsoring the integrated decision cycles (following a global design) and by ensuring functional ownership of the decision meetings. At the global level, the COO served as tiebreaker whenever decisions—such as procurement strategies for global commodities, investments in new facilities for global product launches, or the reconfiguration of a product’s supply chain—cut across regional interests.

To enable IBP to deliver its impact, the company conducted a structured process assessment to evaluate the maturity of all inputs into IBP. It then set out to redesign, in detail, its processes for planning demand and supply, inventory strategies, parametrization, and target setting, so that IBP would work with best-practice inputs. To encourage collaboration, leaders also started to redefine the performance management system so that it included clear accountability for not only the metrics that each function controlled but also shared metrics. Finally, digital dashboards were developed to track and monitor the realization of benefits for individual functions, regional leaders, and the global IBP team.

A critical component of the IBP rollout was creating a company-wide awareness of its benefits and the leaders’ expectations for the quality of managers’ contributions and decision-making discipline. To educate and show commitment from the CEO down, this information was rolled out in a campaign of town halls and media communications to all employees. The company also set up a formal capability-building program for the leaders and participants in the IBP decision cycle.

Rolled out in every region, the new training helps people learn how to run an effective IBP cycle, to recognize the signs of good process management, and to internalize decision authority, thresholds, and escalation paths. Within a few months, the new process, led by a confident and motivated leadership team, enabled closer company-wide collaboration during tumultuous market conditions. That offset price inflation for materials (which adversely affected peers) and maintained the company’s EBITDA performance.

Our research shows that these high-maturity IBP examples are in the minority. In practice, few companies use the IBP process to support effective decision making (Exhibit 2). For two-thirds of the organizations in our data set, IBP meetings are periodic business reviews rather than an integral part of the continuous cycle of decisions and adjustments needed to keep organizations aligned with their strategic and tactical goals. Some companies delegate IBP to junior staff. The frequency of meetings averages one a month. That can make these processes especially ineffective—lacking either the senior-level participation for making consequential strategic decisions or the frequency for timely operational reactions.

Finally, most companies struggle to turn their plans into effective actions: critical metrics and responsibilities are not aligned across functions, so it’s hard to steer the business in a collaborative way. Who is responsible for the accuracy of forecasts? What steps will be taken to improve it? How about adherence to the plan? Are functions incentivized to hold excess inventory? Less than 10 percent of all companies have a performance management system that encourages the right behavior across the organization.

By contrast, at the most effective organizations, IBP meetings are all about decisions and their impact on the P&L—an impact enabled by focused metrics and incentives for collaboration. Relevant inputs (data, insights, and decision scenarios) are diligently prepared and syndicated before meetings to help decision makers make the right choices quickly and effectively. These companies support IBP by managing their short-term planning decisions prescriptively, specifying thresholds to distinguish changes immediately integrated into existing plans from day-to-day noise. Within such boundaries, real-time daily decisions are made in accordance with the objectives of the entire business, not siloed frontline functions. This responsive execution is tightly linked with the IBP process, so that the fact base is always up-to-date for the next planning iteration.

A better plan for IBP

In our experience, integrated business planning can help a business succeed in a sustainable way if three conditions are met. First, the process must be designed for the P&L owner, not individual functions in the business. Second, processes are built for purpose, not from generic best-practice templates. Finally, the people involved in the process have the authority, skills, and confidence to make relevant, consequential decisions.

Design for the P&L owner

IBP gives leaders a systematic opportunity to unlock P&L performance by coordinating strategies and tactics across traditional business functions. This doesn’t mean that IBP won’t function as a business review process, but it is more effective when focused on decisions in the interest of the whole business. An IBP process designed to help P&L owners make effective decisions as they run the company creates requirements different from those of a process owned by individual functions, such as supply chain or manufacturing.

One fundamental requirement is senior-level participation from all stakeholder functions and business areas, so that decisions can be made in every meeting. The design of the IBP cycle, including preparatory work preceding decision-making meetings, should help leaders make general decisions or resolve minor issues outside of formal milestone meetings. It should also focus the attention of P&L leaders on the most important and pressing issues. These goals can be achieved with disciplined approaches to evaluating the impact of decisions and with financial thresholds that determine what is brought to the attention of the P&L leader.

The aggregated output of the IBP process would be a full, risk-evaluated business plan covering a midterm planning horizon. This plan then becomes the only accepted and executed plan across the organization. The objective isn’t a single hard number. It is an accepted, unified view of which new products will come online and when, and how they will affect the performance of the overall portfolio. The plan will also take into account the variabilities and uncertainties of the business: demand expectations, how the company will respond to supply constraints, and so on. Layered risks and opportunities and aligned actions across stakeholders indicate how to execute the plan.

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Trade-offs arising from risks and opportunities in realizing revenues, margins, or cost objectives are determined by the P&L owner at the level where those trade-offs arise—local for local, global for global. To make this possible, data visible in real time and support for decision making in meetings are essential. This approach works best in companies with strong data governance processes and tools, which increase confidence in the objectivity of the IBP process and support for implementing the resulting decisions. In addition, senior leaders can demonstrate their commitment to the value and the standards of IBP by participating in the process, sponsoring capability-building efforts for the teams that contribute inputs to the IBP, and owning decisions and outcomes.

Fit-for-purpose process design and frequency

To make IBP a value-adding capability, the business will probably need to redesign its planning processes from a clean sheet.

First, clean sheeting IBP means that it should be considered and designed from the decision maker’s perspective. What information does a P&L owner need to make a decision on a given topic? What possible scenarios should that leader consider, and what would be their monetary and nonmonetary impact? The IBP process can standardize this information—for example, by summarizing it in templates so that the responsible parties know, up front, which data, analytics, and impact information to provide.

Second, essential inputs into IBP determine its quality. These inputs include consistency in the way planners use data, methods, and systems to make accurate forecasts, manage constraints, simulate scenarios, and close the loop from planning to the production shopfloor by optimizing schedules, monitoring adherence, and using incentives to manufacture according to plan.

Determining the frequency of the IBP cycle, and its timely integration with tactical execution processes, would also be part of this redesign. Big items—such as capacity investments and divestments, new-product introductions, and line extensions—should be reviewed regularly. Monthly reviews are typical, but a quarterly cadence may also be appropriate in situations with less frequent changes. Weekly iterations then optimize the plan in response to confirmed orders, short-term capacity constraints, or other unpredictable events. The bidirectional link between planning and execution must be strong, and investments in technology may be required to better connect them, so that they use the same data repository and have continuous-feedback loops.

Authorize consequential decision making

Finally, every IBP process step needs autonomous decision making for the problems in its scope, as well as a clear path to escalate, if necessary. The design of the process must therefore include decision-type authority, decision thresholds, and escalation paths. Capability-building interventions should support teams to ensure disciplined and effective decision making—and that means enforcing participation discipline, as well. The failure of a few key stakeholders to prioritize participation can undermine the whole process.

Decision-making autonomy is also relevant for short-term planning and execution. Success in tactical execution depends on how early a problem is identified and how quickly and effectively it is resolved. A good execution framework includes, for example, a classification of possible events, along with resolution guidelines based on root cause methodology. It should also specify the thresholds, in scope and scale of impact, for operational decision making and the escalation path if those thresholds are met.

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In addition to guidelines for decision making, the cross-functional team in charge of executing the plan needs autonomy to decide on a course of action for events outside the original plan, as well as the authority to see those actions implemented. Clear integration points between tactical execution and the IBP process protect the latter’s focus on midterm decision making and help tactical teams execute in response to immediate market needs.

An opportunity, but no ‘silver bullet’

With all the elements described above, IBP has a solid foundation to create value for a business. But IBP is no silver bullet. To achieve a top-performing supply chain combining timely and complete customer service with optimal cost and capital expenditures, companies also need mature planning and fulfillment processes using advanced systems and tools. That would include robust planning discipline and a collaboration culture covering all time horizons with appropriate processes while integrating commercial, planning, manufacturing, logistics, and sourcing organizations at all relevant levels.

As more companies implement advanced planning systems and nerve centers , the typical monthly IBP frequency might no longer be appropriate. Some companies may need to spend more time on short-term execution by increasing the frequency of planning and replanning. Others may be able to retain a quarterly IBP process, along with a robust autonomous-planning or exception engine. Already, advanced planning systems not only direct the valuable time of experts to the most critical demand and supply imbalances but also aggregate and disaggregate large volumes of data on the back end. These targeted reactions are part of a critical learning mechanism for the supply chain.

Over time, with root cause analyses and cross-functional collaboration on systemic fixes, the supply chain’s nerve center can get smarter at executing plans, separating noise from real issues, and proactively managing deviations. All this can eventually shorten IBP cycles, without the risk of overreacting to noise, and give P&L owners real-time transparency into how their decisions might affect performance.

P&L owners thinking about upgrading their S&OP or IBP processes can’t rely on textbook checklists. Instead, they can assume leadership of IBP and help their organizations turn strategies and plans into effective actions. To do so, they must sponsor IBP as a cross-functional driver of business decisions, fed by thoughtfully designed processes and aligned decision rights, as well as a performance management and capability-building system that encourages the right behavior and learning mechanisms across the organization. As integrated planning matures, supported by appropriate technology and maturing supply chain–management practices, it could shorten decision times and accelerate its impact on the business.

Elena Dumitrescu is a senior knowledge expert in McKinsey’s Toronto office, Matt Jochim is a partner in the London office, and Ali Sankur is a senior expert and associate partner in the Chicago office, where Ketan Shah is a partner.

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How to Do Strategic Planning Like a Futurist

You don’t need a time line; you need a time cone.

Chief strategy officers and those responsible for shaping the direction of their organizations are often asked to facilitate “visioning” meetings. This helps teams brainstorm ideas, but it isn’t a substitute for critical thinking about the future. Neither are the one-, three-, or five-year strategic plans that have become a staple within most organizations, though they are useful for addressing short-term operational goals. Futurists think about time differently, and company strategists could learn from their approach. For any given uncertainty about the future — whether that’s risk, opportunity, or growth — we tend to think in the short- and long-term simultaneously. To do this, consider using a framework that doesn’t rely on linear timelines or simply mark the passage of time as quarters or years. Instead, use a time cone that measures certainty and charts actions.

I recently helped a large industrial manufacturing company with its strategic planning process. With so much uncertainty surrounding autonomous vehicles, 5G, robotics, global trade, and the oil markets, the company’s senior leaders needed a set of guiding objectives and strategies linking the company’s future to the present day. Before our work began in earnest, executives had already decided on a title for the initiative: Strategy 2030.

• Amy Webb is a quantitative futurist, CEO of Future Today Institute, and professor of strategic foresight at the New York University Stern School of Business. She is the author of The Signals Are Talking: Why Today’s Fringe Is Tomorrow’s Mainstream ,  The Big Nine: How the Tech Titans and Their Thinking Machines Could Warp Humanity , and The Genesis Machine: Our Quest to Rewrite Life in the Age of Synthetic Biology .

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Predictive Maintenance: A Comprehensive Guide for Facilities Managers

Predictive maintenance: The key to smarter, more efficient facility management. Learn how to implement this transformative approach and boost your operations.

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Applying effective and efficient maintenance strategies is a crucial responsibility for facilities managers. A predictive maintenance strategy offers a proactive approach, enabling facility managers to anticipate potential issues and address them before they disrupt operations. A predictive approach can enhance asset reliability, reduce unplanned downtime, and achieve cost savings.

What is Predictive Maintenance?

Predictive maintenance is a strategy for facility and equipment upkeep that uses data analytics and inspection results to anticipate current and future maintenance needs. 

A Look at Commonly Used Maintenance Strategies

• Maintenance strategies typically fall into one of three categories, preventive, predictive, and reactive.
• A preventative maintenance approach uses predetermined schedules and conditional thresholds to trigger maintenance activities.
• Predictive maintenance anticipates potential breakdowns and triggers specific maintenance tasks to avoid failures.
• Reactive maintenance triggers once an equipment failure or breakdown has occurred, making it suitable for low-value and non-critical assets.

How Predictive Maintenance Works

Predictive maintenance uses real-time data analytics to predict potential equipment failures, alerting your facility’s maintenance team to take corrective maintenance action before a problem arises. This usually involves shutting down the equipment as soon as possible, gathering the necessary tools and replacement parts, and bringing in specialized third-party service providers when necessary.

Key Components of a Predictive Maintenance System

Predictive maintenance solutions utilize a variety of mechanisms to gather and analyze the data necessary to anticipate problems. These include:

• IoT Sensors for Data Collection

Predictive maintenance technologies rely heavily on sensors that monitor the condition of equipment and components during operation. Internet of Things (IoT) connections enable sensors to transmit the data to a central server for data analysis. 

• Data Analysis and Machine Learning Algorithms

Predictive maintenance plans utilize advanced data analysis to compare current equipment conditions and asset performance with historical data of equipment failures. AI and machine learning algorithms continually grow in their ability to anticipate problems, increasing in accuracy over time. 

• Computerized Maintenance Management Systems (CMMS)

Facilities managers often utilize CMMS software platforms to aggregate and analyze IoT data to inform predictive and preventive maintenance activities.

Benefits of Predictive Maintenance for Facilities Managers

Predictive maintenance technology provides many advantages to facilities, including reduced maintenance costs, more dependable equipment, and safer working conditions. By anticipating problems before they arise, the predictive approach offers these benefits and much more:  

1. Cost Savings and ROI

Predictive maintenance pays for itself many times over in the long-term. Catching issues before they arise substantially reduces unnecessary maintenance costs, as well as reducing equipment failures that can result in significant unplanned expenses.

2. Improved Asset Reliability and Longevity

By continuously monitoring equipment performance and identifying wear and tear early, predictive maintenance programs enable maintenance teams to address issues before they lead to equipment failure. Catching minor problems and preventing small issues from escalating into major breakdowns extends equipment lifecycles and optimizes efficiency, ultimately increasing asset value.

3. Reduced Downtime and Increased Productivity

A predictive maintenance program puts the power of foresight into facility managers’ hands, enabling them to attack non-critical issues during preventive maintenance and addressing critical issues immediately. This proactive approach to maintenance reduces the likelihood of malfunctions and failures that lead to extended periods of unplanned production downtime, greatly improving equipment and employee productivity as a result.  

4. Enhanced Safety and Compliance

Through continuous monitoring teams are alerted when malfunctions that could lead to hazardous conditions are likely to occur, and safety-critical systems such as high-speed rotating equipment, usually automatically shut down at the first sign of a dangerous situation. These mechanisms significantly reduce the chances of unsafe events and prevent the likelihood of falling out of compliance with industry safety standards and government safety regulations.

Implementing Predictive Maintenance: A Step-by-Step Guide

Predictive maintenance solutions require some planning and strategic implementation. These following steps will help guide you toward rolling out a program that helps predictive maintenance work effectively for your organization.

1. Assess Current Maintenance Practices

Review all maintenance SOPs and historical documentation. Perform a cost analysis that includes unplanned downtime costs, material expenses, and the cost of lost production. Identify areas for consolidation. Run projections for alternative processes that compare the potential effectiveness and cost with current maintenance practices.

2. Identify Critical Assets for Predictive Maintenance

Evaluate all maintenance-dependent assets, identifying those that are high-risk, high-value, and safety-critical. Predictive maintenance provides an effective safeguard against possible events that could significantly impact the company budget and occupant safety.

3. Select and Deploy IoT Sensors and Monitoring Tools

Find high-quality IoT sensors and monitoring devices that are compatible with your current CMMS/EAM system. Install the devices into critical assets and calibrate as needed. Perform startup tests to ensure they work together as expected.  

4. Integrate Predictive Maintenance with Existing CMMS/EAM Systems

Bring your predictive maintenance devices and controlling software together with your current CMMS or EAM system. Ensure monitoring tools directly feed into your maintenance system for real-time alerts and comprehensive reporting. Integration is vital for seamless data flow, streamlining operations, and giving your organization effective, efficient predictive maintenance capabilities.  

5. Train Staff and Manage Change

Educate staff on new predictive maintenance processes to ensure a smooth transition. Highlight the benefits of a predictive maintenance program, such as efficiency improvement and reduced unplanned downtime. Proper training and clear communication are essential to managing this shift in maintenance practices.

Common Predictive Maintenance Techniques for Facilities

Predictive maintenance relies on a variety of techniques to monitor asset conditions and identify potential issues. Some methods can be performed by IoT devices to provide sensor data for predictive analytics, while other techniques may require a service provider with specialized equipment to detect defects that could potentially impact asset integrity.

Vibration Analysis

Sensors continuously monitor vibration levels in high-speed rotating equipment like motors and pumps. These sensors feed real-time data to a central system for immediate analysis and alerts.

Power Quality Analysis

Integrated sensors monitor electricity levels and feed real-time sensor data to the central system. Power quality analysis is often part of an energy management program or for monitoring critical electrical equipment. 

Infrared Thermography

Trained technicians use specialized infrared cameras to identify fatigue and microscopic cracks accumulated through wear and tear over time. Fluid leaks and potential fire hazards from overheated components are some other common issues that infrared cameras can detect.

Oil Analysis

Oil analysis typically involves collecting oil samples and sending them to a laboratory for a comprehensive analysis. Analysis can help detect a variety of issues by identifying contaminants such as wear particles or fluid intrusion. This technique requires specialized equipment and expertise, which makes off-premises services a common choice.

Ultrasonic Testing

Ultrasonic testing works by reflecting high-frequency sound waves off of a surface and translating the waves into data as they echo back into the device’s sensor. Ultrasound can detect the smallest flaw, perfect for inspecting welds and high-stress components. While some sensors offer limited ultrasonic capabilities, a trained technician with specialized ultrasonic testing equipment typically yields more thorough results.

Overcoming Challenges in Predictive Maintenance Implementation

While a successful predictive maintenance program can help enhance the performance and extend the life of assets, facilities managers can face some obstacles when trying to adopt this strategy.

Initial Cost and ROI Justification

The equipment and training a predictive maintenance plan requires can call for a substantial initial investment. It may take some effort to get leadership on board. When weighing the long-term benefits to production and the budget, the savings in operational costs and worker safety typically far outweigh the upfront costs.

Data Quality and Integration Issues

It’s vital to purchase sensors and software compatible with your current maintenance management system. Saving money on incompatible components may cost a company significantly as IT staff work to make new devices and existing systems work together.

Skill Gap and Training Requirements

The concepts are relatively easy to grasp, but predictive maintenance programs have a lot of moving parts. Various levels of staff play different roles in the processes. It takes some time and investment to build proficiency.

Resistance to Change

People tend to prefer the comfort of systems and practices that they already know. Clear, honest communication is essential for earning buy-in from veteran personnel and receiving full cooperation throughout the transition.

Data Analysis and Interpretation for Facilities Managers

Predictive maintenance relies heavily on data streamed from a variety of sources. Understanding the data as it’s presented is key to taking appropriate action.

Key Performance Indicators (KPIs) for Predictive Maintenance

Key maintenance metrics such as mean downtime (MDT) and mean time between failures (MTTBF) paint a broad picture that helps estimate how long a piece of equipment can operate before needing essential maintenance. This information can help inform anticipatory action before an expected failure time arrives.

Understanding Predictive Maintenance Reports and Dashboards

Every software system is a little different. Familiarize yourself with the predictive analytics, dashboards, and reports that your maintenance management platform provides. Most dashboards color code their metrics to inform users when equipment is approaching its limit. Review equipment manufacturer recommendations for alert levels and automatic emergency shut-down thresholds.

Making Data-Driven Maintenance Decisions

The data analytics that predictive maintenance mechanisms provide give an abundance of information to help make informed asset and equipment choices that can improve efficiency and drive down operating costs. Sensor data can help make a variety of determinations for your facility, such as shutdown planning for repairs, replacing outdated equipment prone to failure, and consolidating maintenance efforts to tackle additional upkeep tasks during planned downtime.

When to Choose Predictive Maintenance

The benefits of a predictive maintenance plan is far-reaching and companies typically choose predictive maintenance to help extend the lifespan of high-value equipment and ensure that critical assets perform optimally.

Industries utilizing safety-critical equipment such as chemical vats or smelting furnaces prioritize safety as much as operational efficiency. Predictive maintenance helps ensure equipment safety and adherence to compliance standards.

Conclusion: Embracing Predictive Maintenance for Smarter Facility Management

Predictive maintenance is a smart, proactive solution for ensuring equipment works optimally and facilities operate efficiently. Predictive mechanisms make it possible to accurately anticipate maintenance needs and provide insights into equipment patterns of behavior that can inform a wide variety of executive decisions. By forecasting issues, the strategy keeps maintenance teams ahead of the game, helping ensure that they won’t run into any unwanted surprises.

Ready to transform your facility maintenance strategy? Contact us for a personalized predictive maintenance consultation and start optimizing your operations today.

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