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OpEx Budgets Are Increasing, But Do We Know How to Spend Them?

By Roger Price - September 15, 2016

OpEx_Budget_and_Spending.pngOne of the more interesting data points to come out of the Process Excellence Network's 2015 State of the Industry Report was that 52.9% of respondents projected their budgeted spend on operational excellence (OpEx) to increase. This figure represents an improvement compared to a similar study done in 2013 in which less than half of respondents expected such an increase, which is great news for those who make OpEx their profession.But all of this begs the question, how should those budget dollars be spent?  Or, to broaden the question just a bit, how should enterprises allocate their limited OpEx budget dollars?  The answer to this question could fill a book, but here are a few high level thoughts for OpEx Leaders as they develop their budgets:

Staff the OpEx Group with an Appropriate Span of Influence

A key consideration when it comes to budgeting for OpEx facilitators/practitioners, is to have a gauge for the appropriate “span of influence” for those roles.  For example, we had a client in the chemicals industry that was implementing a highly structured and prescriptive global production system. They discovered that one full time site-level OpEx Manager could effectively support up to 3 distinct production processes effectively.  Beyond that, this resource would be spread too thin to do his or her job well.  So at large sites that may have 5-6 distinct production processes, there needed to be more than one OpEx Manager.  At small sites with only one major production process, the OpEx Manager could take on some additional responsibilities at the site and still do his or her job well.

This 1:3 ratio also worked well as a benchmark for this company’s above-site OpEx Leaders.  In other words, one full-time OpEx Leader could effectively coach and support up to 3 manufacturing sites effectively.

To be clear, we’re not suggesting this ratio is appropriate for every organization.  Factors such as industry, geography, pace of implementation, and many others should affect the staffing model.  However, we are suggesting that before budgeting for dedicated OpEx staff it’s important to have a clear understanding of the appropriate span of influence.

Carefully Weigh the “Build vs. Buy” Decision When it Comes to OpEx Content

One of the great benefits of driving OpEx in 2016 is that there is a tremendous amount of instructional and training content available that describes in great detail the various methodologies, concepts, and tools that can be brought to bear in support of an OpEx implementation. And much of this content can be accessed without breaking the budget. Yet many organizations opt not to go that route in favor of having their internal OpEx practitioners develop content from scratch based on their experience and personal perspective on what works and what doesn’t.

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And while there are benefits associated with developing content in-house, there are drawbacks as well.  The time and effort required to do so can slow progress and the outputs of that effort, and while highly customized, aren’t necessarily higher quality. Instead, what often makes sense is to seek a hybrid solution involving a combination of “off the shelf” and internally developed content. Many of our own EON users have found that this hybrid approach, if done well, offers the best of both worlds – the structure and polish of professionally developed content configured and personalized to be practical to the intended audience.

Think About Workflow Management

OpEx_Workflow.pngIn our experience, more and more organizations are recognizing the value in budgeting for an integrated management platform to support the various organizational workflows that are either created or improved through a structured OpEx implementation. 

These workflows include:

  • Strategy deployment from Corporate down to the most fundamental unit of management (e.g., department, plant, clinic, store, etc.)

  • KPI tracking & performance management, meaning monthly tracking of metrics at each level to a target and action planning with single point accountability for all performance “misses.”

  • Project portfolio & lifecycle management, including chartering, prioritizing, planning, executing, and tracking the value of improvement projects

  • Business process standardization & improvement through regular maturity assessments and action planning to improve key business processes

The challenge associated with implementing these workflows absent a management platform is no different than the challenge any HR organization would face trying to manage recruiting without an applicant tracking system or any sales organization would face without a customer relationship management system.

Namely, these workflows require active or passive participation from dozens, hundreds, or perhaps thousands of people, which becomes virtually impossible to manage if they’re all using different tools (e.g., Excel, SharePoint, email, etc.) because leadership can’t get any visibility into what’s being done and whether its working and the workforce at large can’t be held accountable for making the improvement identified through these workflows.

I hope these considerations help you in your OpEx budgeting and allocation. If you want to learn more about how to drive ROI from your Operational Excellence, check out our guide below. 

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