- characteristics
- Limited to specific divisions
- Detailed
- Short terms
- Made by the department that will apply it
- Operating budget
- Contents of an operational plan
- Than
- Who
- When
- How much
- Categories
- Single use plans
- Continuous plans
- Importance
- Example
- References
The operational planning is a management tool that facilitates the coordination of organizational resources (human, financial and physical) to make it possible to achieve the goals and objectives contained in the strategic and tactical plans of the company.
Assuming that senior management has prepared a strategic plan and middle management a tactical plan, lower management should have a clear idea of what it is trying to achieve. You just have to come up with a detailed operational plan to make it happen.
The main objective of operational planning is to provide the organization's staff with a clear vision of their tasks and responsibilities, consistent with the goals and objectives contained in the strategic plan. It focuses on the services and products (production, equipment, personnel, inventories and processes) of a company.
The purpose is to deploy plans in order to develop financial projections and maximize the participation of the company in the market. An operating plan uses an organization's financial ratios to analyze its profitability.
The plan may include a contribution analysis to determine what processes are required to increase profits. This could mean focusing on selling premium products or reducing variable costs.
characteristics
Limited to specific divisions
The operational plan is limited to a single part of the organization. For example, a large corporation (strategic plan) has a manufacturing division (tactical plan) that produces products A, B, and C.
Each of these products is manufactured separately in different plants, managed by different plant managers, who prepare their operating plan separately.
Therefore, the operating plan is created by the lower-level management of a unit belonging to a business division.
Detailed
It includes specific plans for the day-to-day and low-level activities and processes that will support and enable the tactical plan. It is extremely detailed (who, what, where and when).
Short terms
You should establish the activities and budgets for each area of the organization for the next 1 to 3 years. They link the tactical plan with the activities that the organization will carry out and the resources necessary to carry them out.
Operational planning describes milestones, conditions for success, and explains how (or what part of) a tactical plan will be put into operation during a given operational period.
Made by the department that will apply it
It must be prepared by the people who will participate in its implementation. Significant interdepartmental communication is often required, as plans created by one part of the organization inevitably have implications for other parts.
Operating budget
It is based on and justified by the requirement of an annual operating budget. Therefore, a five-year strategic plan would typically require five operating plans, based on five operating budgets.
The operating plan is both the first and last step in preparing the operating budget. As a first step, provide a plan for resource allocation; As a last step, the operating plan can be modified to reflect political decisions or financial changes made during the budget development process.
These plans and budgets should be considered living documents and should be revised to reflect changes. Its periodic verification is the key to its sustainability.
Contents of an operational plan
An operational plan is based directly on tactical plans that describe missions, objectives, goals, and activities.
Like a tactical plan, an operational plan addresses four questions: Where do we stand now? Where do we want to be? How will we get there? And how do we measure our progress?
The operational planning must contain:
- Clear objectives.
- Activities to be delivered.
- Quality standards.
- Desired results.
- Personnel and resource requirements.
- Implementation schedules.
- A process to monitor progress.
The operational plan presents highly detailed information intended for the people who will perform the daily tasks required in managing the organization.
Management and staff should consult the operating plan frequently to carry out their daily work.
Operational planning indicates the what, who, when and how much:
Than
The activities and tasks that must be carried out.
Who
The people who are responsible for each of the activities.
When
The deadlines in which the activities must be completed.
How much
The amount of financial resources provided to complete each activity.
Categories
The operational plan can be divided into two categories:
Single use plans
They only address the current period or a specific issue. They carry out a course of action that is not likely to be repeated in the future. These plans are used only once to achieve unique goals for the business.
An example of this is when a company has a unique special event coming up. They may have a one-time plan to cover everything related to this event, such as reducing costs over the next year.
Continuous plans
They are carried over to future periods and modified as necessary. They are developed for activities that occur repeatedly over a period of time to help the company solve repetitive problems.
An example of this would be a large company that has recurring activities and must have a structure that allows everyone to know what happens all the time. Another example would be a long-term plan to retain workers instead of firing them.
Importance
An operational plan is important because it helps the work team to:
- Be clear about where the necessary resources will be obtained.
- Use those resources efficiently.
- Clearly define the most critical resource requirements.
- Reduce risks where possible and prepare contingency plans when necessary.
- Think about the long-term future of the project, including its sustainability.
One benefit of operational planning is that a company can analyze how profitably its operations are.
Operational planning dissects a company's financial position, establishes its weaknesses, and develops ways to increase profits.
The operating plans of a company have a positive influence on different areas of the company. The plan that is implemented helps establish business objectives and achieve particular goals.
It has a positive impact on both the operational and physical aspects, in terms of staffing, business appearance and daily procedures.
It's a great way to ensure that all areas of the business are being managed in a constructive way.
Example
It should always be remembered that assigning activities to people is a vital element in the implementation of an operational plan.
The following table is an example of the major components found in an operational plan.
Typically there will be 8-10 key result areas. As an example, only one is shown.
- Key result area: membership growth.
References
- Rose Johnson (2018). Tactical and Operational Planning. Small Business - Chron.com. Taken from: smallbusiness.chron.com.
- Wikipedia, the free encyclopedia (2018). Operational planning. Taken from: en.wikipedia.org.
- Leo Isaac (2018). Purpose of an Operational Plan. Online Learning for Sports Management. Taken from: leoisaac.com
- Rodney Michael (2018). What Are Operational Plans for a Business? - Definition, Types & Examples. Study.com. Taken from: study.com.
- Alison Job (2018). Create An Operational Plan. Enterpreneur magazine. Taken from: entrepreneurmag.co.za.
- Leo Isaac (2018). Operational Plan Sample. Online Learning for Sports Management. Taken from: leoisaac.com.