Deriving Target Operating Model (TOR) vs Immediate Solutions

Operations transformation is much needed now, more than ever in our supply chain due to the VUCA world we are operating in - volatility, uncertainty, complexity and ambiguity. However, organisations sometimes run the risk of getting stuck in a circular trap and manpower fatigue in the quest of transforming complicated operation processes or deriving target operating models (TOR). Thus, it may be more efficient to combine long term TOR and immediate impactful solutions.

The choice between immediate solutions for operations transformation and deriving a target operating model depends on various factors such as the organization's current state, strategic goals, resources, and the nature of the challenges it faces. Both approaches have their merits, and the decision often involves a balance between short-term needs and long-term vision. Here's a breakdown:

Immediate Solutions for Operations Transformation

Quick Wins: Immediate solutions focus on addressing pressing issues or pain points in the supply chain. They aim to deliver quick wins and tangible benefits in the short term, such as reducing costs, improving efficiency, or enhancing customer satisfaction.

Agility: This approach emphasizes agility and responsiveness to rapidly changing market conditions or unexpected disruptions. It allows organizations to adapt quickly to emerging challenges without getting bogged down in lengthy planning processes.

Incremental Improvement: Immediate solutions often involve incremental improvements or targeted interventions in specific areas of the supply chain. Organizations can identify low-hanging fruit and implement changes relatively quickly, without needing to overhaul the entire operating model.

Risk Mitigation: By addressing immediate operational issues, organizations can mitigate risks and prevent potential disruptions that could impact their ability to serve customers or meet business objectives.

Figure 1: Balancing long term strategy and quick wins

Deriving Target Operating Model

Long-term Vision: Developing a target operating model involves defining a long-term vision for the supply chain and aligning operational strategies with broader business objectives. It requires a thorough analysis of current capabilities, market trends, and future growth opportunities.

Strategic Alignment: A target operating model ensures that supply chain operations are aligned with the organization's overall strategy and value proposition. It enables organizations to prioritize investments and resources in areas that will drive sustainable competitive advantage.

Holistic Approach: Unlike immediate solutions, which focus on solving specific problems, deriving a target operating model takes a holistic approach to supply chain transformation. It involves rethinking end-to-end processes, organizational structure, technology architecture, and talent management.

Change Management: Developing a target operating model requires careful change management to ensure buy-in from key stakeholders and effective implementation across the organization. It may involve cultural shifts, restructuring, and upskilling or reskilling employees to support the new operating model.

In practice, many organizations adopt a phased approach that combines elements of both immediate solutions and long-term planning. They may implement quick wins to address urgent issues while simultaneously working on developing a target operating model to guide future initiatives. This allows them to balance short-term needs with long-term strategic objectives and adapt to evolving market conditions effectively.