Strategic plan example

Strategic plan example for a precision machining contract manufacturer

A manufacturing strategic plan sets out which customers and products a manufacturer will build its plants around over the next three to five years, where capacity and capital will go, and how delivery, quality, cost and growth will be measured. It is owned by the chief executive and agreed with the owners or board, the plant managers and the heads of operations, sales and finance.

This is the Manufacturing version of the strategic plan template.

Horizon: 3 years5 priorities · 15 outcomes

Use this template

What this strategic plan template includes

ContextThe situation, the challenges to solve, and what is deliberately left out.
Mission, vision and valuesThe purpose the plan serves and the future it is aiming for.
SWOT summaryThe few internal and external facts that shaped the priorities.
Strategic choicesWhere the organization will compete and how it expects to win.
ResourcingThe budget and people committed to each priority.
Priorities and measuresThree to five priorities, each with an owner, outcomes with a baseline and target, and the initiatives behind them.

Worked example

A complete strategic plan for a fictional organization: contract manufacturer of precision machined components and hydraulic manifolds with two plants.

Worked exampleStrategic plan

Organization	Contract manufacturer of precision machined components and hydraulic manifolds with two plants (500 staff)
Ambition	Be the supplier equipment makers trust with their hardest machined parts, growing revenue from $112 million to $138 million at a 12% EBITDA margin by the end of 2029 without adding a plant.
Horizon	3 years

Context

Where we are and what we are choosing

Revenue is $112 million from two plants with 180 CNC machines, and EBITDA margin is 7.2%. One off-highway equipment maker accounts for 34% of sales under an agreement with a 2% annual price reduction; the top three customers account for 61%. On-time delivery to the promised date is 82%, with $6.8 million of orders past due and $1.9 million a year spent on premium freight. Overall equipment effectiveness on the 14 horizontal machining cells is 54%, mostly lost to setups that average 95 minutes. Scrap and rework cost 4.6% of sales, 28 direct positions are open, and overtime is 16% of hours.

Challenges

Capacity is short on paper and idle in practice. The cells produce good parts for 54% of scheduled time while the schedule is rebuilt by hand every morning around late material and hot orders.
Of 1,900 active part numbers, 620 bring in 6% of revenue at a negative margin and consume a fifth of all setups.
Half of the 41 machinists who can set up a five-axis job are over 55, and 46% of new operators leave within their first year.

We will focus on

Delivery reliability first, because late orders block every conversation about price and new work.
More output from the 180 machines we own before buying another.
Complex, documented parts for medical and laboratory equipment makers, where our tolerances are worth paying for.

We will not

A third plant or a building extension. Machine hours freed by shorter setups cover the growth in this plan.
Replacing the ERP system. It is dated, but a replacement would absorb the same people who must fix scheduling and setups.
Quoting high-volume automotive work, even to fill machines. Its price levels and annual reductions would repeat the problem we already have.

Mission, vision and values

Mission	Make difficult metal parts right and on time, so our customers can build their machines without worrying about us.
Vision	By the end of 2029 we ship 96% of order lines on the promised date, no customer is more than 27% of sales, and someone who joins as an apprentice can see the path to leading a cell.
Values	Nobody gets hurt. A promise date is a promise. Problems are raised at the machine, on the same shift. We measure, then decide. We teach what we know.

SWOT summary

Strengths	Weaknesses	Opportunities	Threats
Holds 5-micron tolerances on five-axis work that few shops in the region attempt	On-time delivery of 82% and $6.8 million past due	Medical and laboratory equipment makers asking us to be a second source for machined housings	Largest customer's agreement takes 2% off prices every year
Manifold engineers whom customers involve before a design is released	Machining cells at 54% overall equipment effectiveness	Three existing customers have asked us to quote assemblies they now buy overseas	Largest customer qualifying a second source for 40 of our part numbers
No debt beyond equipment finance, and owners who reinvest	One customer at 34% of sales, three at 61%	Pallet automation would let six cells run unattended on third shift	Half of our setup machinists reach retirement age within ten years
Average customer relationship of 14 years	Quotes take nine days, and a third arrive after the buyer's deadline	Customers offering three-year agreements in return for stocking programs	Bar stock and casting lead times that swing between 4 and 14 weeks

Strategic choices

Compete on complex parts in lots of 20 to 2,000 with tight tolerances and full documentation. Simple high-volume work is declined.
Earn growth with delivery. No new customer is started in a cell that ships below 90% on time.
Create capacity through setup reduction and unattended running before any machine purchase is approved.
Bring the largest customer down to 27% of sales by growing medical, laboratory and automation accounts, not by turning its orders away.
Price every part number to a margin floor. Parts below it are repriced, re-engineered or handed back within 12 months.
Train our own setup machinists through a paid apprenticeship in place of bidding for them.

Resourcing

Priority	Investment	Lead team
Ship on the day we promised	$1.1 million for finite scheduling software and machine monitoring; two more planners	Operations and supply chain
Get more good parts from the machines we own	$4.6 million on equipment finance for pallet systems on six cells, quick-change workholding and tool presetters; four manufacturing engineers	Manufacturing engineering
Spread revenue across more customers	Three sales engineers and an estimator, $650,000 a year; $1.3 million for medical quality certification, a measuring machine and a clean packing room	Sales and quality
Grow our own machinists	$950,000 a year for 24 apprentices, a training cell and skill-based pay	Human resources and plant managers
Price every part to earn its place	A cost analyst and standard costs rebuilt from measured times, $180,000 a year	Finance

Priorities and measures

Priority 1Owner: Vice President of Operations

Ship on the day we promised

Nearly one order line in five ships late, and the largest customer is qualifying a second source because of it. Buyers will not discuss price or new programs with a supplier they are chasing.

Outcome	Baseline	Target	Due
Order lines shipped on or before the promised dateMilestones: 88% by Q4 2027 · 93% by Q4 2028	82%	96%	Q4 2029
Value of orders past dueMilestones: $3.5M by Q4 2027 · $1.5M by Q4 2028	$6.8M	$800K	Q4 2029
Annual premium freight spendingMilestones: $1.2M by Q4 2027 · $700K by Q4 2028	$1.9M	$400K	Q4 2029

Initiatives

Replace the morning hot list with a finite schedule that is frozen for five days
Release a job to the floor only when material, tooling and program are confirmed
Set promise dates from loaded capacity in a weekly sales and operations review
Put the 30 highest-volume bar and casting items on supplier-held stock agreements

Targets are illustrative. Adapt them to your baseline before you start.

Priority 2Owner: Director of Manufacturing Engineering

Get more good parts from the machines we own

Raising effectiveness on the horizontal cells from 54% to 70% adds about 30% more output from the same machines, which is all the capacity this plan's growth needs.

Outcome	Baseline	Target	Due
Overall equipment effectiveness on horizontal machining cellsMilestones: 60% by Q4 2027 · 65% by Q4 2028	54%	70%	Q4 2029
Average setup time on horizontal machining cellsMilestones: 70 minutes by Q4 2027 · 52 minutes by Q4 2028	95 minutes	40 minutes	Q4 2029
Scrap and rework cost as a share of salesMilestones: 3.8% by Q4 2027 · 2.9% by Q4 2028	4.6%	2.2%	Q4 2029

Initiatives

Fit pallet pools and quick-change workholding to six cells so they run unattended on third shift
Preset tools offline and keep the same 60-tool core magazine in every cell
Add in-process probing on the 50 part numbers that cause half of all scrap
Run a setup reduction event in one cell every month, led by that cell's machinists

Targets are illustrative. Adapt them to your baseline before you start.

Priority 3Owner: Vice President of Sales

Spread revenue across more customers

A third of sales rests on one agreement that cuts prices every year. Medical and laboratory equipment makers buy the tolerances and documentation we are good at, and we cannot answer their quotes in time.

Outcome	Baseline	Target	Due
Revenue from the largest customerMilestones: 32% by Q4 2027 · 29.5% by Q4 2028	34%	27%	Q4 2029
Annual revenue from medical and laboratory equipment customersMilestones: $12M by Q4 2027 · $17.5M by Q4 2028	$9M	$24M	Q4 2029
Average time to return a quoteMilestones: 5 days by Q4 2027	9 days	3 days	Q4 2028

Initiatives

Earn medical device quality certification at the north plant by the end of 2027
Call on 40 medical, laboratory and automation equipment makers within a day's drive
Build quotes from a library of machine rates and proven cycle times, with an estimator dedicated to new customers
Tie price reductions in the largest customer's 2028 renewal to cost savings found jointly

Targets are illustrative. Adapt them to your baseline before you start.

Priority 4Owner: Director of Human Resources

Grow our own machinists

The people who can set up a five-axis job are retiring faster than we hire them, and nearly half of new operators leave within a year. Unattended running still needs someone who can set the job.

Outcome	Baseline	Target	Due
Open direct positionsMilestones: 20 positions by Q4 2027 · 13 positions by Q4 2028	28 positions	8 positions	Q4 2029
Operators who leave within their first yearMilestones: 38% by Q4 2027 · 29% by Q4 2028	46%	22%	Q4 2029
Machinists qualified to set up five-axis jobsMilestones: 45 machinists by Q4 2027 · 51 machinists by Q4 2028	41 machinists	58 machinists	Q4 2029

Initiatives

Start a four-year apprenticeship with the technical college, taking eight apprentices a year
Build a training cell from two machines and qualify eight experienced operators a year for five-axis setups
Publish a skills matrix with a pay raise at each certified level
Move second shift to four ten-hour days

Targets are illustrative. Adapt them to your baseline before you start.

Priority 5Owner: Chief Financial Officer

Price every part to earn its place

Standard costs date from 2019 and hide which parts lose money. Margin recovers when delivery and scrap improve, but only if the 620 loss-making part numbers stop taking a fifth of the setups.

Outcome	Baseline	Target	Due
EBITDA marginMilestones: 8.6% by Q4 2027 · 10.4% by Q4 2028	7.2%	12%	Q4 2029
Revenue from part numbers below the margin floorMilestones: 3.5% by Q4 2027	6%	1%	Q4 2028
Inventory turnsMilestones: 4.7 turns by Q4 2027 · 5.4 turns by Q4 2028	4.1 turns	6 turns	Q4 2029

Initiatives

Rebuild standard costs from measured cycle and setup times
Reprice, re-engineer or hand back the 620 part numbers below the margin floor
Add a material index clause to every customer agreement at renewal
Cut work in process by sizing lots to the five-day frozen schedule

Targets are illustrative. Adapt them to your baseline before you start.

Blank strategic plan template

The same structure with a prompt in every field. Copy it, or download it as a Word or Excel file.

Your planStrategic plan

Organization	[Describe your organization in a few words, with its size]
Ambition	[One sentence on where you want to be at the end of the plan]
Horizon	[How long the plan runs, for example 12 months]

Context

Where we are and what we are choosing

[Where things stand today: the facts that make this strategy necessary]

Challenges

[A problem the strategy has to solve]
[A problem the strategy has to solve]

We will focus on

[Something you are choosing to concentrate on]
[Something you are choosing to concentrate on]

We will not

[Something you are deliberately leaving out]
[Something you are deliberately leaving out]

Mission, vision and values

Mission	[Your mission]
Vision	[Your vision]
Values	[Your values]

SWOT summary

Strengths	Weaknesses	Opportunities	Threats
[Strengths]	[Weaknesses]	[Opportunities]	[Threats]
[Strengths]	[Weaknesses]	[Opportunities]	[Threats]
[Strengths]	[Weaknesses]	[Opportunities]	[Threats]

Strategic choices

[A choice about where to play or how to win]
[A choice about where to play or how to win]
[A choice about where to play or how to win]

Resourcing

Priority	Investment	Lead team
[Priority]	[Investment]	[Lead team]
[Priority]	[Investment]	[Lead team]
[Priority]	[Investment]	[Lead team]

Priorities and measures

Priority 1Owner: [Role accountable for this priority]