How do you balance the trade-offs between cost savings and operational efficiency in ZBB?
Zero-based budgeting (ZBB) is a method of planning and managing your expenses by starting from zero every period and justifying every cost item. It can help you identify and eliminate waste, improve efficiency, and align your resources with your strategic goals. However, ZBB also has some challenges and trade-offs that you need to balance with your operational performance and quality. Here are some tips on how to do that.
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Before you apply ZBB, you need to understand what drives value for your customers, stakeholders, and employees. What are the key activities, processes, and outcomes that create value and differentiate you from your competitors? How do you measure and monitor them? You need to prioritize these value drivers and protect them from any potential cuts or changes that could harm them.
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Here are some key considerations when applying ZBB to protect value: 1. Analyze and segment activities into value-adding vs non value-adding. Value-adding activities directly contribute to customer satisfaction, stakeholder benefits or employee engagement. These should be last to cut. 2. Set targets or floors for key value metrics that serve as constraints when budgets are cut. For example, minimum customer satisfaction score. 3. Take a long-term view on value to avoid cutting investments like R&D that may not pay off in the current year but are vital for future competitiveness.
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In Zero-Based Budgeting (ZBB), balance cost savings and operational efficiency by rigorously reviewing all expenses, justifying each from scratch. Focus on strategic priorities and allocate funds to activities that drive value. Use data analytics to identify cost reduction opportunities without compromising critical operations. Encourage innovation and continuous improvement to optimize processes and reduce waste. Engage stakeholders across the organization for insights on efficiency gains. This approach ensures resources are allocated to areas with the highest return, maintaining a balance between cost-effectiveness and operational excellence.
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The Zero-Based Budget (ZBB) is a powerful tool for seeking operational efficiency. It challenges the company by questioning its status quo, taking its executives out of their comfort zone. To be successful at ZBB, it is necessary to know the company's modus operandi, what generates value for its customers and employees, its strategy and corporate governance. A strategic alignment of the company's main business drivers must be carried out before implementing ZBB.
ZBB requires you to challenge your assumptions and habits about your spending and operations. You need to question every cost item and ask yourself: Is it necessary? Is it efficient? Is it effective? Is it aligned with your strategy and goals? You need to avoid the trap of basing your decisions on historical data or benchmarks that may not reflect your current reality or potential.
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A teoria é simples, porém difícil de ser implementada, pois envolve avaliar a todos, incluindo a nós mesmo. A minha sugestão é que contrate, temporariamente, alguém de fora para fazer isso com eficiência! Já pensou que a técnica do OBZ e outras semelhantes de projetos, como exemplo o Orçamento Base Kaizen, pode ser o melhor ferramental para gerar "Caixa"?!
ZBB is not a top-down or a one-off exercise. It is a collaborative and continuous process that involves your stakeholders at every level and stage. You need to communicate the purpose and benefits of ZBB to your team, customers, suppliers, and partners. You need to solicit their input and feedback, and address their concerns and expectations. You need to empower them to make decisions and take ownership of their budgets and actions.
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Ao utilizarmos uma ferramenta sistêmica, que a cada simulação do Limiar e Incrementos de OBZ, mostra instantaneamente os ganhos resultados de "lucro", "Caixa" e até de "Valuation" pode ser a melhor maneira de conquistar e comprometer todos os stakeholders? Já presenciei gerentes de RH se assustarem com tanta geração de valor com a aplicação do OBZ, comprometendo-se verdadeiramente com com a causa da empresa. Já imaginou que: melhor do que cobrar um redução é mostrar o quanto de resultado esta redução é capaz? Faz o stakeholder se sentir útil! Conheça as formas semelhantes do OBZ: OBKaixzen, OBx !
ZBB can help you optimize your processes and operations by identifying and eliminating inefficiencies, redundancies, and bottlenecks. You can use tools and techniques such as process mapping, lean management, automation, and digitalization to streamline your workflows, reduce errors, and enhance quality. You can also use ZBB to incentivize and reward innovation and improvement in your organization.
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O Limiar não necessariamente está dentro de casa, pode estar numa filial ou no mercado. Obtê-lo é nos ousarmos a fazer igual! Se eles fazem, nós podemos também repetir reduções e ganhos! E, não é necessário, fazer tudo de uma única vez: O OBZ pode ser feito em partes e para sempre: na área de compras, depois na área de produção, depois na área de marketing etc.... Criar a cultura do OBZ é tão importante como realizar a técnica do OBZ.
ZBB is not a static or rigid approach. It is a dynamic and flexible one that requires you to monitor and adjust your plans and actions according to the changing internal and external conditions. You need to track your performance indicators, evaluate your results, and learn from your successes and failures. You need to adapt your budgets and operations to the evolving needs and opportunities of your business environment.
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1. Identify quick wins to deliver large savings with minimal disruption. 2. Involve cross-functional teams to scrutinize activities and eliminate non-essential costs. 3. Use data-driven insights from advanced analytics to optimize resource allocation. 4. Promote a culture of cost awareness and accountability to sustain savings. 5. Continuously monitor performance and adapt plans to changing business needs. For example, a manufacturing company used ZBB to cut indirect costs by 20% without impacting production by eliminating redundant IT licenses and optimizing travel expenses. This freed up funds to invest in automation and boost efficiency.
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To be successful with Zero-Based Budgeting (ZBB), it is important to understand that this is an organic tool. It’s not enough to implement it and believe that everything will work immediately. It is common for the ZBB, in its first implementation, to bring financial cuts above what is necessary in some areas, and relaxations in other areas. Constant review and monitoring is necessary to correct these small deviations. It is recommended that these corrections occur at least every 6 months, or whenever there is a relevant fact.
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O limiar é passível de aprovações de incrementos, ou seja: é importante ter metas alcançáveis. Desta forma, o comprometimento é mais saúdavel! Já presenciei OBZs perfeitos com grande redução, que se perdem em dois anos, voltando num patamar superior ao inicial. O mercado nos dá uma meta (Limiar), mas quem decide se está meta é alcançável dentro da organização são os stakeholders! Já vi um presidente de empresa dizer: "Aqui dentro de casa, não quero que mecham nos prazos médios de pagamentos semanais dos fornecedores rurais! Pois, além de serem todos meus amigos, precisam receber para o seu sustento, e é por isso que nos fornecem tanta qualidade!! "
ZBB can help you achieve short-term cost savings and efficiency gains, but you also need to consider the long-term implications and consequences of your decisions. You need to balance your immediate and future needs and goals, and avoid sacrificing your growth potential, competitive advantage, or customer satisfaction for short-term savings. You need to invest in your core capabilities, assets, and relationships that will sustain and enhance your value creation in the long run.
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Uma corporação tem um alvo de rentabilidade calculável, que somam no período seus gastos fixos e uma rentabilidade com uma taxa adequada de retorno. Chamamos isso de margem alvo, e é esta margem que deve direcionar, no curto, no médio e no longo prazo, de quanto precisamos. Cumprir estas margens alvo, não deve ser missão, mas apenas uma obrigação de todos, que após cumprido torna possível a verdadeira missão: que são as pessoas, a sociedade e meio ambiente. O equilíbrio de lucro não é pecado. Você sabiam que grande partes das organizações não têm lucro suficiente para retornar todo o capital investido? E, de que os critérios contábil-fiscais nem exigem este cálculo?!
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Balancing cost savings and operational efficiency in Zero-Based Budgeting (ZBB) involves meticulous scrutiny of expenses while ensuring optimal performance. In engineering management, ZBB may lead to reallocating resources for R&D to enhance subsea engineering or offshore wind power efficiency. It can also drive cost-efficient manufacturing processes or streamline hydrogen production and battery storage systems while maintaining reliability and compliance with grid codes.
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