As a writer and editor, word choice is critical to what I do. Often, I want to confirm that I’ve selected the best possible term for an APICS magazine article or blog post, so I look to Merriam-Webster. (Unless I’m verifying the correctness of a supply chain expression; in which case, I obviously check my trusty APICS Dictionary!)
A few months ago, I was working on a story that dealt with strategy and tactics. The author seemed to use the terms interchangeably — and, truth be told, I used to do the exact same thing. However, I recently had a conversation with Cameron Knight, tactical supply management supervisor at Transaxle Manufacturing of America. He explained to me that there are some key distinctions, which, once understood, can help businesses apply both strategy and tactics to their fullest potentials. Following are some of the highlights from our discussion.
Rennie: When I think about strategy and tactics, they both seem to boil down to planning. But I know I’m missing something. What is it?
Knight: They are both important planning elements — yes. But when we think of strategic planning, we think of the high-level plan, the “what and where” type of plan. Tactical planning is more of the “how and when.” It plots how we get to where we want to go. Think of President Kennedy’s famous speech when he stated, “We choose to go to the moon in this decade.” That’s a great example of a strategic plan. It’s obviously very high-level, and it’s clear what the ultimate goal is.
While most of us supply chain professionals can’t include going to the moon as a part of our company’s goals, most companies do have strategic plans. Your strategic plan could include goals such as growing your company’s market share by 15 percent in the next five years or launching a new technology in the next three years.
Rennie: Both the President Kennedy and the business examples have a timeline involved. Is that an important part of strategy?
Knight: A strategic plan is usually defined as a plan looking out three years or more in the future. Think of it as the destination of a journey.
Rennie: OK, and what about tactical planning timelines?
Knight: These plans are usually one year or less in duration. Examples could include goals such as increasing advertising time by 25 percent this year or to improve customer satisfaction by 20 percent this year; increasing research and development spending; or hiring more engineers.
Tactical planning plots out the steps needed to achieve a strategic plan. In a company, tactical planning could include organizational goals, department goals or individual goals. … Many times, strategic plans can leave us wondering how we will ever get to where we want to go. This is where good tactical planning comes into play. The tactical plan is the map to get to the destination of the strategic plan.
Rennie: How can people effectively unite their strategic and tactical plans?
Knight: Think of each tactical plan as a brick in building up to achieving the strategic plan. If too many bricks are missing, the strategic plan can’t be achieved. If a good foundation isn’t constructed, the weight of the overall goal could cause the strategic plan to crumble. In order to begin linking the strategic and tactical plans, a good understanding of what areas affect the strategic plan is required. Once we understand what influences the strategic plan, we need a good understanding of how we are performing today in these areas and how we can improve in the future.
After identifying what needs to be improved, we need to determine root causes of the issues. Tools that can help with this include the five whys, fishbone diagrams and process mapping. These tools help define our current situation and find ways to improve it.
Rennie: Do you have any real-world experiences you can share to illustrate that point?
Knight: Sure. Say we have a goal to increase our market share. First, we need to understand what actions affect our market share and how we are performing in these areas. This could include the price of our product, the features of our product, current advertising, the quality of our product and inventory levels at our end customer.
So, look at one of these areas: inventory levels at our end customer. Let’s say we are having stockouts of our product, and this is a barrier keeping us from increasing our market share. We as an organization can ask, “How do we keep from stocking out of our product?” The production department, after studying the situation, could determine we don’t have enough capacity on our production lines to keep up with current demand.
Then, tactical goals should be set to help fix our capacity problem. These might include improving our production line productivity by 10 percent in the next six months. To support this goal, maybe we can upgrade our equipment to make it more productive and efficient, or maybe we can redesign the line to make each assembly station’s takt times more level.
The supply management department can look at the issue of stockouts and see how they can help fix this issue as well. Maybe supplier capacity is limited, and our supply base can’t meet our demands. If so, the supply management department can set a tactical goal of making sure all suppliers have capacity to meet our current demand, plus 20 percent in case of future demand increases. The supply management department also could have a goal in place to dual-source critical parts that have capacity concerns.
Then, the shipping department could study their current situation. Perhaps they will determine that they don’t have enough truck capacity to ship out all of our customer’s orders. Through tactical planning, they could make a goal to increase trucking capacity to meet current demand with plans to support additional shipments.
Now that we have a handle on our stockout issue, we can look at other ways to increase our market share. For example, the marketing and sales department can set tactical plans to increase our product exposure through advertising. They can start out by studying what kind of advertising our customer base is the most responsive to. With this information, they can establish goals to increase advertising in these areas. They also can plan to have pricing incentives during certain times of the year.
Again, from this same strategic goal, product engineering can plan to improve features of the product or plan to reduce cost in the design of the product. And the quality department can plan to fix certain warranty problems and reduce customer complaints.
So, there is a high-level, strategic goal to increase our market share by 15 percent in the next five years. Through tactical planning, we set goals for multiple departments to provide support.
Rennie: How much collaboration is required by the various departments as they each work toward achieving their specific tactical goals?
Knight: It is very important that the departments work together. We wouldn’t want the production department to increase their capacity, but the shipping department doesn’t understand how the increased production will affect trucking requirements. It is also important that, for each goal set from our tactical planning, there is a measurable target — a goal date of completion — and that an owner is assigned. With a measurable target, we can track our progress until we meet the ultimate objective. And assigning an owner sets accountability for achieving the goal. And as a final point, the progress being made on all goals should be published and reviewed regularly.
Elizabeth Rennie is senior managing editor of publications for APICS. She may be contacted at firstname.lastname@example.org.