A New Way of Competing in Cannabis: Customer-Driven Operations

Reducing cost, brand-building and driving efficiency are 2025 priorities at most MSOs and LPs. Traditional approaches like shaving headcount, mothballing unused assets and procurement savings will only take you so far.

It’s time for some breakthrough operational thinking.

Few leaders imagined that their Operating Models (OM) would resemble swiss cheese on a geographic and organizational basis; nor did they anticipate the level of margin compression and competition.

At a certain point, boosting competitiveness will require a firm to undertake some imaginative and holistic thinking about their operations.

An OM is a strategy-driven organizational construct of activities, people, values, and assets that enables a firm to serve customers and deliver a value proposition. Basically, it is about what is done, where and how.

Most large LPs and MSOs are based around big production centres. Their activities, priorities and spend reflect this predilection. However, this model may not be 'fit for purpose' if you want to build brands, amp up innovation and in many cases, maximize cultivation quality & yield.

Another proven approach is to build your enterprise back from the consumer.

Reengineering your OM around your target customer delivers 4 major benefits:

1. Enhances your value proposition

2. More tightly aligns your operations with buyer need’s & emerging trends

3. Reduces wasteful/extraneous spending and inventory levels

4. Improves capital allocation.

The following case study illustrates my hypothesis:

Car companies are notorious for demanding that their parts suppliers steadily reduce cost, maximize quality, and increase service levels. Magna, a small Canadian parts supplier, was engaged in this high stakes dance with GM.

Frank Stronach (Magna’s founder) discovered he could exceed GM’s requirements by building smaller, more nimble operations very close to assembly plants versus centralizing production far away in low cost geographies.

Essentially, his facilities became an extension of GM’s assembly line. Magna parts were ‘pulled through’ his small plants when the client needed them as opposed to being “pushed from” the inventories of a single supplier factory.

At the time, this strategy defied the conventional wisdom that low cost, high volume and tight quality control came from big facilities with economies of scale.

Magna discovered you could get big by staying small. They parlayed this strategic insight into becoming a global automotive giant.

You can be a Magna, too. There is, however, no template or shortcut. The right OM will be unique to each firm and will arise from careful analysis, strategic clarity, having an open mind and executing with excellence.

Let’s talk about how you begin this transformation journey.

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