Welcome back to 3 Minutes Inside Operations. In this episode, André Smaal looks at operational planning for 2027 and at what leadership teams should check before the plan is signed off.
Operational planning is the process of turning a business’s annual targets into the specific changes, owners, resources and timelines the operation needs to deliver them. In manufacturing, that means translating a productivity, output or margin target into decisions about flow, downtime, changeovers, labour, quality and daily management, and then making sure the organisation has the capacity to carry those decisions through.
This is the time of year when targets, budgets and operational priorities come together, and it is also the point where plans tend to become overly complicated or overly optimistic. A percentage improvement is easy to write into a spreadsheet and much harder to deliver on the shop floor, which is why an annual operating plan (AOP) is only as strong as the operational thinking behind it.
Imagine filling in a marathon registration form and entering a target time of 3h30 when your last race took four hours. That is a 30-minute improvement, or 12.5% off your finishing time, and it means holding 4:59 per kilometre instead of 5:41 for all 42.2 kilometres. Nobody would expect to get there by training the same way they did last time.
Operational plans often set a similar goal without the training plan to match. A 12.5% productivity gain written into a 2027 budget is just as ambitious, yet it can easily appear with little more explanation than the number itself. The strategy execution gap is well documented: in their study for Harvard Business Review, Michael Mankins and Richard Steele of Bain & Company found that most companies’ strategies deliver only 63% of their promised financial value. The research dates from 2005, but the pattern will be familiar to anyone who has sat through a mid-year budget review.
The market is unlikely to close that gap for you. Make UK’s Q3 2026 Manufacturing Outlook forecasts UK manufacturing output growth of just 0.3% for 2027, so if your plan assumes a stronger year than that, most of the improvement will need to come from inside the operation.
If your operational objectives include a significant increase in productivity, be clear about where that improvement will come from. Is it better flow, less downtime, shorter changeovers, improved labour utilisation, fewer quality losses or stronger daily management? Each of these has a different owner, a different cost and a different timeline, so the answer shapes everything that follows.
Testing the assumptions means checking each one against the reality of the operation. If the plan assumes more output with the same people and equipment, leadership should be able to explain what will change to release that capacity. If nobody can, productivity becomes an expectation rather than a plan, which is the equivalent of entering 3h30 on the form and carrying on with the training routine that got you round in four hours.
This is also the moment to use S&OP outputs to stress test your 2027 revenue assumptions, because demand, capacity and product mix need to line up before the budget is locked.
Once you understand where the opportunity sits, you need to decide how you are going to capture it. That means answering four practical questions: what needs to happen, who owns it, what resources are required and when the improvement should start to show up in performance.
A financial target on its own does not create change, and this is where the budgeting process and operational planning most often drift apart. Productivity improvement in manufacturing needs a structured programme behind it, with clear priorities, named owners and a realistic sequence of actions, and this matters most when the plan assumes a step change rather than incremental improvement. If you are asking the organisation to deliver something materially different next year, the way you support and manage that change has to be different too.
A management system built on strategy deployment is what links a target agreed in the boardroom to the daily routines that improve manufacturing productivity on the shop floor.
This is the step most often overlooked. Most manufacturing organisations already have a long list of priorities, projects and improvement initiatives competing for the same people, and adding more activity does not necessarily create more progress. Committing to train 12 to 20 hours a week is easy on paper, but actually doing it means giving something else up.
Part of operational planning should therefore be deciding what really matters. Which initiatives will have the greatest impact on the business, which ones are achievable with the people you have, and which should be delayed or removed so the organisation can focus on the priorities that remain? A simpler plan, with clear ownership and enough resources behind it, will often deliver more than an ambitious plan carrying too many competing priorities. As André Smaal sets out in Transform Operations Through Precision of Execution, sustainable change needs capacity, a shared vision and concrete action steps working together.
Even a realistic change takes time to implement. A runner does not get faster in the first week of a new training block, because endurance has to be built before the pace improves, and an operation works the same way. New routines need to bed in, people need to be trained and early problems need to be solved before the improvement shows up in the numbers.
So be cautious about how much of the annual benefit you book in this budget cycle. If a programme starts in the first quarter, a full year of savings is unlikely, and a plan that phases the benefit realistically is far easier to defend at the mid-year review than one that assumed the gains from January.
When you review your 2027 operational plan, ask more than whether the numbers add up. Ask whether the operational assumptions are credible, whether there is a clear improvement programme behind them and whether the organisation has the capacity to deliver what is being planned. Good operational planning gives the organisation a clear and credible route to better performance, and that route matters far more than how ambitious the targets look on paper.
A 3h30 marathon is within reach for a four-hour runner, provided the training plan, the hours and the discipline are there to support it. The same applies to the targets in your 2027 plan, and the factory you need in 2027 may look quite different from the one you run today.
If you want an independent view of whether your 2027 targets are achievable, or help building the improvement programme behind them, talk to TBM. Start a conversation with TBM.
Key Takeaways
Credible operational planning traces every 2027 target back to a specific operational change, connects it to an owned and resourced improvement programme, limits priorities to what the organisation can deliver, and phases the benefit to reflect how long change takes to show up in performance.
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