Applying principles of continuous improvement to Capex management: an operations and engineering perspective
Whether embracing the Japanese concept of ‘kaizen’ or the process optimization strategy Lean Six Sigma, continuous improvement is a common denominator among top-tier businesses. Winners of last year’s Business Transformation & Operational Excellence (BTOES) Industry Awards exemplify these concepts in action, showcasing how peak performance can be achieved through small and steady improvements.
Kaizen, a Japanese term meaning “change for the better,” is all about the power of incremental improvements rather than massive overhauls. Similarly, Lean Six Sigma involves rigorously deconstructing your processes to eliminate friction (the Lean part) while simultaneously using data-driven techniques to reduce variability and improve quality (the Six Sigma part). Together, they offer a potent blueprint for business transformation.
For folks in operations and engineering, especially those with oversight of Capex decisions, these methodologies directly apply to the selection, management, and evaluation of capital projects. Aligning your decisions with these principles ensures that your investments consistently yield strategically-aligned, high-quality outcomes.
The art of continuously improving capital allocation performance
Revamping capital allocation with continuous improvement principles in mind can be a secret weapon for operations leaders targeting strategic growth and efficiency. And, with the right tools at your disposal, it can be a seamless process.
Minor tweaks to project evaluation can lead to outsized impacts
Project evaluation is an often overlooked yet critical piece of Capex management, and even small adjustments to this process can significantly influence outcomes. Finario’s intelligent platform, for example, enables operations managers to conduct detailed analyses that consider both financial viability and strategic alignment, ensuring the projects they select have strong risk-adjusted ROI and are in sync with the organization’s long-term goals.
Our platform’s predictive analytics play a pivotal role in the evaluation process. By leveraging your unique historical data, Finario can more precisely forecast potential project inputs and outcomes, providing managers with a data-driven basis for their decision-making. Furthermore, Finario’s dynamic dashboards offer a clear visualization of your project portfolio, facilitating a deeper understanding of each one’s strategic contribution and enabling prioritization that maximizes bottom-line impact.
Through these selection and evaluation tools, Finario empowers organizations to embody the principles of kaizen and make powerful adjustments in their project evaluation process – whether in comparing one project to another, or a portfolio of projects.
Streamlining approval workflows for enhanced efficiency
Tangled approval chains and manual workarounds represent the antithesis of Lean Six Sigma, plaguing capital project workflows with inefficiency. For operations managers focused on getting work started as quickly as possible, approval and funding delays can be an enormous source of frustration. The longer these approvals take, the more likely it is that cost overruns and supply chain delays will weigh down the project.
Finario’s platform, purpose-built for the enterprise, is designed to get well-vetted projects through the pipeline as quickly as possible. With automation that starts from the initial request submission through final approval, Finario GO shortens the process – often 50% or more. This efficiency is achieved without compromising on selection criteria, thanks to an intuitive interface and customizable matrices that facilitate teamwork and adaptability.
Finario GO represents a significant upgrade from traditional approval chains managed through SharePoint or email. The tool minimizes manual interventions, ensures adherence to your policies, and maintains data accuracy through a dynamic engine that updates approval chains automatically during organizational changes, ensuring a seamless workflow. And there’s no need to worry about an extended implementation — the platform’s out of the box configuration offers rapid setup and low maintenance. Furthermore, it supports multi-currency transactions and provides a platform for global collaboration in over 100 languages, unlocking broad accessibility and ease of use for international teams.
By addressing bottlenecks in the approval workflow and leveraging Finario’s innovative capabilities, organizations can boost operational efficiency and reduce errors across the board.
Establish an all-important single source of truth
The importance of a single source of truth in capital planning cannot be overstated. Data silos and disparate systems often compromise the quality and reliability of data essential for justifying capital allocation across projects.
By centralizing all relevant Capex data, Finario eliminates these discrepancies that tend to undermine project outcomes and strategic objectives. This unified data repository enables stakeholders to make informed decisions based on real-time insights and holistic analysis of project performance, financial metrics, and strategic alignment.
Our platform isn’t just another addition to your tech stack — it’s designed to seamlessly integrate with your organization’s existing systems and data sources, ensuring a continuous and automated flow of actuals and other critical financial data. This integration is key to maintaining a single system of record, as it allows for the real-time updating of project financials and performance indicators. With Finario, organizations can ensure that their capital planning processes are grounded in the most current and comprehensive data available, facilitating accurate forecasting, budgeting, and investment analysis.
Moreover, Finario’s emphasis on real-time data and analytics supports dynamic capital allocation strategies that can adapt to changing market conditions, project requirements, and strategic priorities. This gives decision-makers the ability to quickly respond to emerging opportunities or risks.
Constant learning leads to continuous improvement
Kaizen’s prescription for steady improvements requires operations managers to learn what worked and what didn’t from completed projects. Finario allows them to do this in a number of ways.
First of all, Finario’s comprehensive reporting and project archive functionalities serve as a treasure trove of information. By capturing detailed data at every stage of a project’s life cycle, Finario enables organizations to dissect what worked, what didn’t, and why – turning each project into a learning opportunity.
The platform’s emphasis on project lookbacks helps foster this culture of continuous improvement. By regularly analyzing lessons learned from actual outcomes, organizations can enhance the accuracy of future project estimations and promote a culture of transparency, accountability, and strategic thinking across the enterprise.
Furthermore, organizations can leverage the AI-powered Finario Predict™ feature, which provides more accurate and unbiased forecasts by analyzing historical data and applying reference class forecasting methods. This approach helps in identifying and mitigating potential blind spots and biases in the forecasting process, ensuring a more reliable foundation for Capex decision-making.
Join us at BTOES 24 to learn more about continuous improvement of Capex
We’ve just scratched the surface of all there is to know about how continuous improvement can lead to operational excellence. We’re excited to learn more at the upcoming Business Transformation & Operational Excellence Summit & Industry Awards, May 7-10 in Orlando. Of the many sessions we look forward to attending, “Developing the Process Excellence Strategy” hosted by Fahrurazi Bin Baharum, Head of Organization Improvement at Petronas is circled on our agendas. Bin Baharum is a Senior Lean Six Sigma Master and Black Belt, and will delve into the factors that helped Petronas unlock significant value.
Heading to BTOES 24? Stop by our booth to learn more about how Finario’s intelligent platform, purpose-built for the enterprise, can apply the principles of continuous improvement to your Capex management. If you won’t be attending the conference, reach out to us and we’d be happy to walk you through a demo.