Operations planning: driving OX growth within your company

Operational efficiency, more than a luxury, is a top-level necessity in today's business world, so having operations planning in place should be one of the first steps in driving business growth.

With increasing market competition and pressure to reduce costs and meet customer demands, it is essential to prioritise efficient operations management for companies of all sizes and industries.

In this article, we will learn all about operations planning, and how you can implement and improve each of the processes to achieve business success. 

What is operations planning?

Operations planning is a decision-making process that focuses on balancing market demand with a company's production processes.

It aims to improve communication between the areas involved, from production to logistics, in order to minimize operational inefficiencies.

In essence, operations planning allows businesses to understand their strategies and develop plans that are aligned with demand behaviors and objectives.

This alignment is vital to ensure that they are in sync with their long-term goals.

Keep in mind that this is not a static process, but a dynamic one that requires constant adjustments to adapt to changes in the marketplace. 

Why is it important to have an operations plan?

Regardless of the size or sector of a company, it is necessary to have this type of plan, which must be effective in addressing the challenges and difficulties that can impede growth and success.

One of the main problems is low profitability, as without a proper prioritization scheme for products and customers, companies may face difficulties in maximizing their profits.

In addition, they may experience high costs in several areas, including warehousing, logistics, transportation and raw material procurement, which can negatively affect their margins.

Lack of synchronization between different areas is another common problem and can lead to operational inefficiencies, with different departments working in silos rather than collaborating to achieve common business objectives.

In addition, without an operations plan, organizations cannot strive to meet market demand. Orders may not be filled on time, resulting in low service levels and customer dissatisfaction.

Finally, it can lead to low working capital utilization due to a lack of alignment and communication, so they may find themselves with underutilized resources, affecting their efficiency and profitability.

The importance of operations planning

It must be taken into account that we are talking about a dynamic process that requires constant adjustments to adapt to changes in the market.

It is at this point where operations planning becomes critical, as it provides not only an anticipatory framework but also an effective response to solve problems and mitigate the impact they may have.

By aligning operations with market demand, companies can ensure that they are meeting the needs of their customers in a timely and efficient manner, allowing them to enhance their level of service and increase people's satisfaction.

Benefits of operations planning

There are many benefits to implementing a plan of this type, both quantitative and qualitative, all aimed at boosting the growth of a business.

Below, we will explain each of these advantages.

1. Quantitative benefits

First of all, we have the quantitative ones, among which the following stand out:

a) Increase in the level of service to customers

With effective operations planning, companies can improve customer satisfaction by ensuring that their needs are met in a timely and efficient manner.

b) Reduced lost sales

Helps companies anticipate market demand and adjust their operations accordingly, which can minimize lost sales.

c) Increased company profitability

By prioritizing production and order delivery, businesses can maximize their profitability.

d) Reduced production downtime

When planning is aligned with production, companies can reduce downtime and maximize production efficiency.

e) Reduced transportation costs

By optimizing the number of trips per defined route, they can reduce transportation costs and improve their bargaining power on freight rates.

f) Improved operational efficiency

By reducing downtime in the supply chain, companies can optimize their operational efficiency.

g) Reduced warehousing costs

It also allows for an increase in inventory levels required, which can result in significant savings at the end of a financial cycle. 

h) Optimization of raw material, packaging material and indirect manufacturing material purchasing costs.

When it is possible to anticipate all the demands that will exist, it is possible to plan purchases efficiently in order to reduce costs.

2. Qualitative benefits

On the other hand, we have the qualitative benefits, among which are:

a) Establishing an effective interdisciplinary synchronization between the areas involved in the process

This improves communication and collaboration between departments, which can result in greater operational efficiency.

b) Increasing customer satisfaction and improving product positioning within the market

When you have a good product and service, customers feel valued and are satisfied to have purchased from a business, allowing organizations to improve their reputation and market positioning.

c) Detect risk factors in the operation in a timely manner and proactively avoid them in advance

Operations planning allows anticipating problems and benefits of a business to mitigate the impact, saving significant capital over time. 

d) Increase adherence to market demand and increase the ability to react to changes.

This allows businesses to adapt quickly to fluctuations in demand.

e) Timely decision-making with digital transformation of tools embedded in processes

When digital tools are used to streamline the entire process, each organization can make more informed and effective decisions.

f) Develop agile leadership in those responsible for contributing to the development of comprehensive solutions within the improvement committees

Thanks to this advantage it is possible to provide greater resolution to each of the problems and continuously improve each process within a business. This can result in more effective problem-solving and continuous improvement.

g) Improve the follow-up and monitoring of the delivery of the activities of the different areas for the achievement of the proposed objectives

By improving tracking and monitoring, companies can ensure that they are achieving their objectives.

h) Optimize workloads and volumes through automation and digitization of processes

This point is important because it makes a difference in the productivity that employees can have within an organization.

Operations planning methodology

It is divided into several key components, which play a crucial role in achieving the company's objectives.

It is important to note that this type of methodology is not included in all operations plans; only first-level digital solutions.

This is our case, as in London Consulting Group our method is effective and complete, following a series of steps in this implementation: 

Macro model

This is the overall framework that guides the entire operations planning process, i.e., where the main components of the process and how they interact with each other are defined.

Demand planning

In this stage, a commercial forecast model is developed to maximize the alignment between market demand and supply chain planning.

An S&OP (Sales & Operations Planning) model is also designed and implemented to improve the assertiveness between demand and production, thus increasing the level of service to the end customer.

Sourcing planning

A sourcing model is designed to ensure an optimal inventory composition to maximize productivity.

Also, a purchasing plan model is developed for an efficient negotiation with suppliers.

Production Planning

Models are designed and implemented for the master production plan and for the definition of operating capacity.

These allow us to determine the optimal allocation of production and maximize profitability.

Logistics planning

This stage involves the design of a route/destination planning model and a dispatch plan model, which help maximize logistics efficiency and service level.

Innovation and digitalization

In this step, end-to-end digitization of the process of controlling and managing key performance variables is implemented through the design and integration of a technological ecosystem.

By introducing this methodology, companies can improve their operational efficiency, meet market demand and achieve their strategic objectives.

Successful implementation of operations planning with London Consulting Group

Operations planning is an essential component of any company's success in today's competitive business environment.

However, implementing it can be a challenge without the right guidance and support.

At London Consulting Group, we are leaders in business solutions and offer a service designed to help you balance market demand with your production processes.

Our approach is based on improving communication between the areas involved and minimizing operational inefficiencies.

With our help, you will be able to understand your business strategies and develop plans that will allow you to achieve your strategic objectives.

In addition, with the use of technological tools, we will provide you with visibility into demand behaviors, helping you to make collective decisions in real-time and increasing your ability to react to market changes.

Don't let the lack of an effective operations plan keep you from reaching your full potential. Contact us today to find out how we can help you implement operations planning that will drive your growth and success.