歲計之革：易爭奪為流暢

 

歲計之革：易爭奪為流暢，以系統流動論

歲計之考，各部例行之事也，每見長會、劇辯、怨懟。舊法多由各部呈報用度預算，總部彙集，成公司或官府之總計。遂有經年累月之爭，總部欲削各部所請，各部力保其需。此自上而下、重成本之法，弊端重重，常難使預算與組織之大計相合。

舊法之弊：

舊法之弊，有損資源之善用與戰略之合一：

• 局部之總和： 各部用度之累計，徒增隔閡。各部專注己需，未明其預算之請於組織之流動與產出之影響。此或致局部之善，而損全局之優。
• 爭辯之戲： 歲計之考，常為政爭之戲。各部或虛報其請，知其必削，徒耗時力於來往。此爭辯鮮有重價值創造或真制約之辨。
• 重成本： 舊法多賴成本會計之理，常以局部之省為決策，而非產出之增。此或致反效，如削減於組織制約至關緊要之處。
• 乏變通： 歲計之考，常定於十二月，難以應對市況之變或內在之制。不願改動預算，則歲中或成虛設。
• 資源之爭： 歲計之考，或致各部爭奪有限之資源。此內鬥有礙協作，以求組織之最大效能。
• 忽視制約： 舊法常不辨明組織之制約，即限其產出之因素。若無此重，預算之分配或難有效解阻礙大計之瓶頸。

善法：以系統流動論之流動與拉動預算：

系統流動論，合制約理論（TOC）與精益思想之精髓，提供截然不同之預算之法，以流動與拉動為中心，視預算為資源供應鏈，以支持組織之目標。此法明瞭組織為相互依存之要素所成之收益鏈。

以系統流動論於預算，需以下之變：

• 辨明系統之制約： 預算之考，當始於辨明組織內最重之制約，或為生產力、銷售力、或現金流。此制約左右系統之總速。
• 盡用制約： 預算之決，當先求制約所生之產出之最大化。此或需增撥資源，或除阻其效能之礙。如服務組織之特定技能為瓶頸，預算當保證此輩有必需之支持、工具、與任務之不絕。
• 其餘皆從： 其餘各部之預算與活動，皆當從制約之需。即保證非制約之處，提供制約之必需支持，而無自成瓶頸或過多庫存（或服務背景下之資源閒置）。如市場需求為制約，運營預算當重高效及時之交付，以應顧客之需。
• 提升制約： 盡用制約後，當思如何提升其力。此或需資本投入、流程改善、培訓、或重組。預算之考，當便於評估此類選擇，以其增總產出之潛力為據。
• 重流動，除浪費： 援精益之理，預算之考當辨明並除資源分配與利用之浪費（無駄）於全系統。價值流繪製可助視資源（含預算）之流，並指明支出不直增產出之處。
• 拉動之資源分配： 非各部以預測而爭大預算，拉動之預算制，當以實際需求與制約之需而分配資源。此有助避不必要之支出，並使資源之分配與工作之實流相合。預算可視為資源，由制約與增值活動之需而“拉動”。
• 產出會計： 預算當以產出會計之視角觀之，重產出之最大化，並以支持組織目標之法，減投資與運營之費。預算之決，當以其於此全局之度量之影響為據，而非僅以局部之省。
• 持續改善： 預算之考，當為迭代與適應，可依績效監測與系統制約或改善機會之變而調整。

流動與拉動預算之例：

• 生產之制約： 若製造公司辨明特定機器為生產瓶頸，預算當先撥資源，以保證此機器全速運作。此或需撥款以強維護、熟技工、與在製品之緩衝，以防閒置。其餘各部之預算，當與此制約相合——如採購部之預算，當保證原料之及時供應，以供瓶頸。
• 銷售之制約： 若軟體公司見其銷售團隊為收益增長之瓶頸，預算當重增銷售力。此或需投資於銷售培訓、營銷自動化工具以增線索、或聘更多銷售人員。產品開發預算，當與銷售預測相合，以保證公司可交付所售之產品。
• 預算為供應鏈（私營）： 設預算本身為資金流經組織。總部為中央“供應商”，各部為“顧客”。舊法之推動制，依預定之額分配資金，常致有部盈餘，有部短缺。系統流動論之法，當視制約為關鍵需求點。資源（預算）將依其支持流動與產出之實際需求，被“拉動”至制約與其他必要之增值活動。緩衝管理可用於預算分配，以戰略性放置應急資金（預算緩衝），以保護制約免受意外中斷。
• 預算為供應鏈（公營）： 設官府醫療機構欲增急診室（ED）之病患產出，此已辨明為制約。舊法之預算，或依歷史部門支出或政治壓力而分配資金。然用系統流動論，預算當由增ED病患流動之目標所驅動。
  • 辨明制約： ED之容量（如可用醫生或床位之數）為制約。
  • 盡用制約： 預算當先撥資源，以保證ED高效運作。此或需撥款以增高峰期之護士、投資於ED專用之速診設備、或簡化病患入院與出院流程。
  • 其餘皆從： 上游與下游部門之預算，當與ED之流動相合。如初級保健診所之預算，或含管理慢性病與防不必要ED就診之舉措，而病房之預算，當保證ED出院病患之及時床位。
  • 拉動之分配： 非定額之部門預算，資源可依實際病患流動與ED之需而分配。如ED醫療用品之採購，可依消耗率而觸發“拉動”制。
  • 減浪費： 預算當鼓勵除病患流動之浪費之舉措，如減全病程之檢驗或諮詢之等候時間。
  • 產出度量： 預算之效，當以病患產出之改善（如減ED停留時間、增治療病患數）而度量，而非僅以各部門之成本控制。

結論：

舊法之歲計，常為繁瑣無效之舉，或阻組織之效能。以系統流動論之理，組織可設計善預算制，重流動與拉動，視預算為戰略資源供應鏈，並先求制約之管理。此法之變，將致更有效之資源分配、與大計之更善相合、並終至增產出與達組織之目標。納制約為重、流動為本之預算制，離舊時之爭奪，而向協作以求全系統之價值創造

Rethinking the Annual Budgeting Exercise

 

Rethinking the Annual Budgeting Exercise: From Haggling to Flow with the Theory of System Flow

The annual departmental budgeting exercise is a familiar ritual in many organisations, often characterised by lengthy meetings, intense negotiations, and a sense of frustration. The prevailing approach frequently involves departments submitting their expense budgets, which are then aggregated at headquarters to form the overall company or government budget. What ensues is often a drawn-out haggle, with headquarters attempting to trim departmental requests and departments fiercely defending their perceived needs. This top-down, cost-centric approach has significant shortcomings and often fails to align budgets with the organisation's overarching goals.

Shortcomings of Traditional Budgeting Systems:

Traditional budgeting systems are plagued by several fundamental weaknesses that hinder effective resource allocation and strategic alignment:

• Summation of Local Plans: The aggregation of individual departmental expense budgets inherently promotes a siloed mentality. Each department focuses on its own needs and cost centres, without a clear understanding of how their budget requests impact the overall flow and throughput of the organisation. This can lead to local optimisations that are detrimental to the global optimum.
• The Negotiation Game: The annual budget cycle often devolves into a political game of negotiation. Departments may inflate their requests knowing they will be cut, leading to wasted time and resources in the back-and-forth with headquarters. This haggling rarely focuses on value creation or the identification of true constraints.
• Cost-Centric Focus: Traditional budgeting is heavily reliant on cost accounting principles, often driving decisions based on local cost efficiencies rather than the generation of throughput. This can lead to counterproductive actions, such as cutting expenses in areas that are critical for supporting the organisation's constraint.
• Lack of Flexibility and Responsiveness: Annual budgets are often fixed for a 12-month period, making them slow to adapt to changing market conditions or internal constraints. The reluctance to revise budgets can render them irrelevant as the year progresses.
• Resource Competition: The budgeting process can foster unhealthy competition between departments for limited resources. This internal rivalry distracts from collaborative efforts aimed at maximising overall organisational performance.
• Ignoring Constraints: Traditional budgeting often fails to identify and focus on the organisation's constraints – those factors that limit its ability to generate throughput. Without this focus, budget allocations may not effectively address the bottlenecks hindering the achievement of strategic goals.

A Better Way: Flow and Pull-Based Budgeting with the Theory of System Flow:

The Theory of System Flow, integrating the core principles of the Theory of Constraints (TOC) and Lean thinking, offers a fundamentally different approach to budgeting, one that centres on the concepts of flow and pull, treating the budget as a resource supply chain that must support the organisation's goal. This approach recognises that an organisation is a system of interdependent elements forming a revenue chain.

Applying the Theory of System Flow to budgeting involves the following key shifts:

• Identify the System Constraint: The budgeting process should begin by identifying the most significant constraint within the organisation, whether it is in production capacity, sales, or even cash flow. This constraint dictates the overall pace of the system.
• Exploit the Constraint: Budgetary decisions should prioritise maximising the throughput generated by the constraint. This might involve allocating additional resources or removing obstacles that hinder its performance. For example, if a specific skill set within a service organisation is the bottleneck, the budget should ensure these individuals have the necessary support, tools, and uninterrupted flow of tasks.
• Subordinate Everything Else: All other departmental budgets and activities should be subordinated to the needs of the constraint. This means ensuring that non-constraint areas provide the necessary support to the constraint without creating their own bottlenecks or excessive inventory (or underutilised resources in a service context). For instance, if market demand is the constraint, operational budgets should focus on efficient and timely delivery to meet customer needs.
• Elevate the Constraint: Once the constraint is effectively exploited, the next step is to consider how to elevate its capacity. This might involve capital investment, process improvements, training, or restructuring. The budgeting process should facilitate the evaluation of such options based on their potential to increase overall throughput.
• Focus on Flow and Eliminate Waste: Drawing on Lean principles, the budgeting process should aim to identify and eliminate waste (muda) in resource allocation and utilisation across the entire system. Value stream mapping can help visualise the flow of resources (including budget) and pinpoint areas where spending does not directly contribute to throughput.
• Pull-Based Resource Allocation: Instead of departments pushing for larger budgets based on forecasts, a pull-based budgeting system would allocate resources based on actual demand and the needs of the constraint. This helps to avoid unnecessary spending and aligns resource allocation with the real flow of work. Budget can be seen as a resource that is "pulled" by the needs of the constraint and value-adding activities.
• Throughput Accounting: The budget should be viewed through the lens of Throughput Accounting, focusing on maximising throughput and minimising investment and operating expense in a way that supports the organisation's goal. Budget decisions should be evaluated based on their impact on these global measures, rather than solely on local cost efficiencies.
• Continuous Improvement: The budgeting process should be iterative and adaptive, allowing for adjustments based on performance monitoring and the identification of changes in the system's constraints or opportunities for improvement.

Examples of Flow and Pull-Based Budgeting:

• Constraint in Production: If a manufacturing company identifies a specific machine as its production bottleneck, the budget would prioritise resources to ensure this machine operates at maximum capacity. This might include allocating funds for enhanced maintenance, skilled technicians, and a buffer of work-in-progress to prevent idle time. Other departments would then have their budgets aligned to support this constraint – for example, the procurement department's budget would need to ensure a timely supply of raw materials to feed the bottleneck.
• Constraint in Sales: If a software company finds its sales team is the bottleneck in revenue growth, the budget would focus on increasing sales capacity. This could involve investing in sales training, marketing automation tools to improve lead generation, or hiring more sales personnel. The product development budget would then need to align with the sales forecast to ensure the company can deliver the products being sold.
• Budget as a Supply Chain (Private Sector): Imagine the budget itself as a flow of funds through the organisation. Headquarters acts as the central "supplier," and departments are the "customers." A traditional push system allocates funds based on pre-determined amounts, often leading to some departments having excess while others face shortages. A Theory of System Flow approach would treat the constraint as the key demand point. Resources (budget) would be "pulled" towards the constraint and other essential value-adding activities based on their actual needs to support flow and throughput. Buffer management could be applied to budget allocation, with contingency funds (budget buffers) strategically placed to protect the constraint from unexpected disruptions.
• Budget as a Supply Chain (Public Government Organisation): Consider a government healthcare agency aiming to improve patient throughput in its emergency department (ED), which has been identified as the constraint. A traditional budgeting approach might allocate funds based on historical departmental spending or political pressures. However, using the Theory of System Flow, the budget would be driven by the goal of maximising patient flow through the ED.
  • Identify the Constraint: The ED's capacity (e.g., number of available doctors or beds) is the constraint.
  • Exploit the Constraint: The budget would prioritise resources to ensure the ED operates efficiently. This could mean allocating funds for additional nursing staff during peak hours, investing in faster diagnostic equipment specifically for the ED, or streamlining patient intake and discharge processes.
  • Subordinate Everything Else: Budgets for upstream and downstream departments would be aligned to support the ED's flow. For example, the primary care clinics' budget might include initiatives to manage chronic conditions and prevent unnecessary ED visits, while the budget for hospital wards would need to ensure timely bed availability for patients being discharged from the ED.
  • Pull-Based Allocation: Instead of fixed departmental budgets, resources could be allocated based on the actual patient flow and the ED's needs. For instance, the procurement of medical supplies for the ED could be based on a "pull" system triggered by consumption rates.
  • Waste Reduction: The budget would encourage initiatives to eliminate waste in the patient flow, such as reducing waiting times for tests or consultations across the entire patient journey.
  • Throughput Measurement: Budget effectiveness would be measured by improvements in patient throughput (e.g., reduced length of stay in the ED, increased number of patients treated), rather than solely on cost containment within individual departments.

Conclusion:

The traditional annual departmental budgeting exercise is often a cumbersome and ineffective process that can hinder organisational performance. By adopting the principles of the Theory of System Flow, organisations can design a better budgeting system that focuses on flow and pull, treats the budget as a strategic resource supply chain, and prioritises the management of constraints. This shift in approach will lead to more effective resource allocation, improved alignment with strategic goals, and ultimately, enhanced throughput and achievement of the organisation's objectives. Embracing a constraint-focused, flow-based budgeting system moves away from the adversarial haggling of the past towards a collaborative effort to maximise value creation for the entire system.