what is a target operating model v2

8/11/2019 What is a Target Operating Model v2

1/14

What is a TargetOperating Model?An intro to TOM

Consulting

Draft internaluse only

December 2013


2/14

PwCDecember 2013

Draftinternal use only

A Target Operating Model (TOM) is used to

describe howan organisation will deliverits products/services to customers at adefined point in the future.

2

What is a Target Operating Model? An intro to TOM


3/14

PwCDecember 2013


Scenario 1 Simple case

You live on a remote island with one other

person. You run a small coffee shop, sellingcoffee & cake to your one customer.

3



4/14

PwCDecember 2013


Your current operating model might look something like this

4


Customers

Products / Services

Face to faceFace to faceChannel

Business Capabilities

Bake Cake Brew Coffee Managesupply chain Managefinances

Mix ingredients

Bake cake

Serve cake

Yourself

Your shop

Oven

Recipe

Process

People

Organisation

Technology

Information

Grind beans

Brew coffee

Serve coffee

Yourself

Your shop

Coffee machine

Coffee machine instructions

Monitor supply

Order goods

Yourself

Your shop

Computer (for internet)

Quantity required for BAU

Account for costs & sales

Produce monthly reports

Yourself

Your shop

Excel spreadsheet

Sales, Costs

Ambition: To serve coffee and cake daily to your sole customer

Coffee Cake

Customer Offering

Star Bucks


5/14

PwCDecember 2013


But then

A ferry lands on your island and off hop 100 (legal) immigrants:- 95 of them are addicted to cake but unable to leave home;

- The other 5 are skilled workers looking for employment; and

- It will take them 6 months to set up their homes and obtain an internetconnection (they have enough cake rations to keep them going in themeantime, but then no further access to cake).

5


You decide to work up a strategy and develop aTOM so you can plan how to take advantage of thisunique business opportunity!


6/14

PwCDecember 2013


First, you work up a strategy:

6


Ambition

Goal

Objectives

To efficiently serve the needs of all cake and coffee lovers on the island and create jobs for the local economy.

To have the capability to deliver coffee & cake to all people on the island in 6 months time.

To grow the business and employ all available skilled workers on the island.

1. What do you want to achieve? What does success look like?

2. How have you decided to set about achieving your ambition?

Business Model

Create a website &

online order system

Build a cake factory

& distribution hub

Retain existing shop

& create loyaltyprogramme

Hire new staff to help

meet expecteddemand

Now you must consider how you will deliver your strategy

Corporate Strategy

Streamline business

processes

Improve efficiency via investment in

infrastructure

Grow the business by acquiring new

customers

Retain existing

customersStrategies

Business needs


7/14

PwCDecember 2013


Your Target Operating Model might look something like this

7


Customers

Products / Services

Channels


Bake Cake

Mix ingredients

Bake cake

Serve cake

Cake Baker (x1)

Process

People

Organisation

Technology

Information

Order & Delivery

Online & F2F DeliveryFace to face

Brew CoffeeManage

Supply Chain

Manage

FinancesProcess

Online Orders

Manage

Customer

Account

Distribute

Goods

Your shop

Cake factory

Bigger oven

Recipe

Grind beans

Brew coffee

Serve coffee

Yourself

Your shop

Coffee machine

Coffee machine

instructions

Monitor supply

Order goods

Yourself

Your shop

Computer (for

internet)

Quantity required

for BAU

Account costs &

sales

Produce reports

Accountant (x1)

Your shop

SAP accounting

system

Sales, costs,

assets,liabilities

Process order

Inform factory

Invoice cust.

Tech support

(x1)

Your shop

Website & order

system

Orders and

delivery dates

Register &

maintain cust.

accounts

Tech support

(x1)

Your shop

Website & CRM

system

Customer

details

Pack orders

Distribute

goods

Delivery drivers

(x2)

Distribution hub

Order system

Delivery vans

Orders and

delivery dates

Ambition

Goal

Objectives


To have the capability to deliver coffee & cake to all people on the island in 6 months time. To be able to employ all available skilled workers on the island.

Business Model

Create a website& online order

system

Build a cakefactory &

distribution hub

Retain existingshop & create

loyalty programme

Hire new staff tohelp meet

expected demand

Corporate Strategy

CakeCoffee

Deliversstra

tegy

Customer Offering

Streamlinebusiness

processes

Star Bucks Cake addicts


8/14

PwCDecember 2013


Roadmap

The Roadmap for change:

8


Now 6 months

4. Recruit & train staff

3. Build cake factory & distribution hub, purchase equipment

Now that you know some of the key differences between the currentand target operating models, you can start to plan how to move from Ato B and achieve your strategic goals.

2. Procure / build & implement new IT systems

Use TOM to track and monitor progress

1. Develop new business processes


9/14

PwCDecember 2013


Your roadmap should be centred around building the required businesscapabilities, in line with your strategy.

9


Now 6 months

Customers

Products / ServicesChannels


Bake Cake

Mix ingredients Bake cake Serve cake

Cake Baker (x1)

Process

People

Organisation

Technology

Information

Order & Delivery


Brew CoffeeManage Supply

ChainManage Finances

Process Online

Orders

Manage Customer

AccountDistribute Goods

Your shop Cake factory

Bigger oven

Recipe

Grind beans Brew coffee Serve coffee

Yourself

Your shop

Coffee machine

Coffee machineinstructions

Monitor supply Order goods

Yourself

Your shop


Quantity required forBAU

Accountant (x1)

Your shop

Sales, costs,assets,liabilities

Tech support (x1)

Your shop

Orders and deliverydates

Tech support (x1)

Your shop

Customer details

Delivery drivers (x2)

Distribution hub


Ambition

Goal

Objectives



Business Model

Create a website &online order system


distribution hub


loyalty programme


expected demand

Corporate Strategy

CakeCoffee

Account costs & sales Produce reports

Process order Inform factory Invoice cust.

Register & maintaincust. accounts

Pack orders Distribute goods

Order system Delivery vans

Website & CRMsystem

SAP accountingsystem

Website & ordersystem

Customer Offering

Streamlinebusiness processes

1. Develop new business processes



10/14

PwCDecember 2013


Your roadmap should be centred around delivering the amended or newbusiness capabilities, in line with your strategy.

10


Now 6 months2. Procure / build & implement new IT systems

Customers



Bake Cake


Cake Baker (x1)

Process

People

Organisation

Technology

Information

Order & Delivery




Process Online

Orders

Manage Customer



Bigger oven

Recipe


Yourself

Your shop

Coffee machine



Yourself

Your shop



Accountant (x1)

Your shop


Tech support (x1)

Your shop


Tech support (x1)

Your shop

Customer details


Distribution hub


Ambition

Goal

Objectives



Business Model



distribution hub


expected demand

Corporate Strategy

CakeCoffee






Website & CRMsystem



Customer Offering



loyalty programme



11/14

PwCDecember 2013



11


Now 6 months


Customers



Bake Cake


Cake Baker (x1)

Process

People

Organisation

Technology

Information

Order & Delivery




Process Online

Orders

Manage Customer


Recipe


Yourself

Your shop

Coffee machine



Yourself

Your shop



Accountant (x1)

Your shop


Tech support (x1)

Your shop


Tech support (x1)

Your shop

Customer details



Ambition

Goal

Objectives



Business Model

Corporate Strategy

CakeCoffee






Website & CRMsystem



Customer Offering

3. Build cake factory & distribution hub; purchase equipment


Distribution hub

Bigger oven



distribution hub


expected demand



loyalty programme



12/14

PwCDecember 2013



12


Now 6 months

Customers



Bake Cake


Process

People

Organisation

Technology

Information

Order & Delivery




Process Online

Orders

Manage Customer



Bigger oven

Recipe


Yourself

Your shop

Coffee machine



Yourself

Your shop



Your shop


Your shop


Your shop

Customer details

Distribution hub


Ambition

Goal

Objectives



Business Model

Corporate Strategy

CakeCoffee






Website & CRMsystem



Customer Offering

4. Recruit & train staff

Accountant (x1) Cake Baker (x1) Tech support (x1) Tech support (x1) Delivery drivers (x2)



distribution hub


expected demand



loyalty programme



13/14

PwCDecember 2013



13


Now 6 months

Customers



Bake Cake

Process

People

Organisation

Technology

Information

Order & Delivery



ChainManage Finances Process Online Orders

Manage CustomerAccount

Distribute Goods

Bigger oven

Recipe


Yourself

Coffee machine



Yourself




Your shop


Your shop

Customer details

Distribution hub


Ambition

Goal

Objectives



Business Model

Corporate Strategy

CakeCoffee





Website & CRMsystem



Customer Offering

Accountant (x1) Cake Baker (x1) Tech support (x1) Tech support (x1) Delivery drivers (x2)



distribution hub


expected demand




Your shop Your shop Your shop



loyalty programme



14/14

PwCDecember 2013

This publication has been prepared for general guidance on matters of interest only, and does

not constitute professional advice. You should not act upon the information contained in thispublication without obtaining specific professional advice. No representation or warranty

(express or implied) is given as to the accuracy or completeness of the information contained

in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its

members, employees and agents do not accept or assume any liability, responsibility or duty

of care for any consequences of you or anyone else acting, or refraining to act, in reliance on

the information contained in this publication or for any decision based on it.

2013 PricewaterhouseCoopers LLP. All rights reserved. In this document, 'PwC' refers to

the UK member firm, and may sometimes refer to the PwC network. Each member firm is a

separate legal entity. Please see www.pwc.com/structure for further details.

what is a target operating model v2

Documents