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February 9, 2025 • 13 mins

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Sue and Simon discuss Chapter 10 - How can I budget better? from their book "Every Second Counts: How to Achieve Business Excellence, Transform Operational Productivity, and Deliver Extraordinary Results."
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Episode Transcript

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Speaker 1 (00:00):
Welcome to the Rethink Productivity podcast.
Sue joins me today and we arenow on chapter 10 of Every
Second Counts.
There's the kind of closingcomments which we'll do in a
separate episode and a bit on AA, but today we're talking about
how can I budget better.
Do you want to kick us off onthis chapter, Sue?

Speaker 2 (00:19):
I think budgets can seem one of those kind of nerdy
things.
Actually, I think a budgetmodel is a really important
strategic tool that the businesscan use and it's got lots of
different stakeholders that areable to use it.
Fundamentally, the very seniorteams in businesses are making
decisions all the time aboutwhere they put resources in

(00:42):
order to deliver their strategy,and I don't know how anybody
does that effectively without aworkload model.
A workload model really meansyou understand the costs of your
operation and allows you wellhelps you make decisions about
where you want to put that money, where you want to be a bit
tighter on things, where youwant to put a bit of investment,
and allows you to make thoseimportant strategic decisions,

(01:05):
because there aren't many moreimportant decisions than where
you put your resources todeliver your results so should
we get into the detail ofworkload models, what the inputs
are, that kind of thing?
yeah, I've been getting top linelevel workload models can get
very detailed and very nerdyfast, and it's a top line level.

(01:26):
It's really about understandinghow long does it take to do the
tasks that your team needs todo, how many times do they do it
, and that's the sum of all that.
Adding all those tasks and allthose volumes together
essentially tells you how muchworkload there is by company, by

(01:46):
region, by area, by individualstore or department within store
, depending on how you structureit.
So at the top line, it's reallysimple.
The complexity is then as youget into it, because if you want
, if you know how long it takesto put an item on the shelf, for
example, as part ofreplenishment, have you got
access to your volume data?
Do you know it?

(02:07):
By case, by amper, by pallet, byunit?
However, you're doing it.
So it gets more complicated,and that's the challenge is to
keep it really simple, becausehow can you use the data that
you've got?
Make sure the times that you'vegot line up with it it, so you
then keep it simple and youdon't make it over complicated

(02:29):
and there's a whole bunch, asyou say, of complexity that
comes with it.

Speaker 1 (02:34):
We've got things like Business decisions, so it kind
of forces through, as you said,once you know how long things
take and the volume.
Also business decisions aroundminimum money requirements,
maybe service we always seem toget into conversations around
what allowance do you allow, ifany, for customer service.
So it forces the business toeither finalise or confirm some

(02:58):
of those things that might begreat training allowances, for
example but also to review them,if they've been there for a
while, to make sure they'restill relevant and fit.

Speaker 2 (03:08):
And it's things like time for how managers spend the
time.
So a lot of businesses willhave a view on how much time
their managers should spendmanaging.
In reality, the majority ofmanagers that we see at least
dip at some point into doingworkload well.
Are you going to bake that intoyour model, which will mean you
need fewer hours of somebodyelse, or are you going to assume

(03:30):
that your managers are 100%managing?

Speaker 1 (03:32):
building the models only part of the work.
Clearly you need goodgovernance, good steering,
project groups to help makethose decisions, because you're
making big strategic businessdecisions that could swing
outputs by millions of poundsyeah, and it's really important
to identify the stakeholders forit.

Speaker 2 (03:53):
It's like any change project, but because this has
such big implications, it's kindof particularly important.
So who are the stakeholders?
So usually it's kind of a mixof there's some senior team
people that have got a view onhow they want to spend money and
where you want to invest.
You know, usually there's partsof the operation where you see
there's been more potential forgrowth than others and it would

(04:16):
probably be a good idea to put abit more investment into those
and tighten some of the others.
So those are big strategicdecisions that will probably be
made by operational leaders.
Finance usually have an interestin it because usually with an
organisation there's some toplevel decisions about how much
we're going to spend on theoperational aspect versus

(04:37):
logistics, versus marketing.
So you know there's those bigtrade-offs right at the top of
the company that are being made.
So you know, having a robustmodel that other people trust is
a really good start for thosesorts of conversations and
understanding.
So there's lots of people thathave got a view on it and if

(04:58):
you're introducing a model forthe first time, there might be
more change.
So if you've had a model forthe first time there might be
more change.
So if you've had a model, sovery often people have had
something where it's either beenbased on, well, what you got
last year plus a bit more thatmight be tweaked now.
If that basis wasn't that goodor has drifted over time, you
might find when you move to themodel that some outlets have got

(05:19):
a bigger change than others andagain, that all takes working
through and deciding.
Well, actually, can I reallyinvest in the ones that should
have extra money until I'vereleased it from the others, and
how doable is that over theover a short time period?
So you do need some good mindsto think about what's the best
way to do it and ideally, awhole comms plan to go alongside

(05:43):
it to make sure that it's notseen as just some black box that
does things to people, butactually people see it as part
of there's business reasons fordoing all these things and this
is how it fits and where it'sall heading and it needs to live
and breathe, doesn't it?

Speaker 1 (05:58):
so you've got to keep you up to date.
Those conversations, quarterlymodel updates, half yearly, new
budget year all need to kickback in with those people.

Speaker 2 (06:07):
Yeah.

Speaker 1 (06:07):
And I think the key here is about the models being
fair and transparent.
So the model will calculate anumber.
Our models will calculate hours, costs and FTE by location, by
week day for some clients, andwe do that in Excel and we've
got our new ReBudget online toolcoming through very soon.
So keeping out on the websiteand socials for more information

(06:30):
around that.
But it doesn't mean that that'sthe number you have to use,
because most organisations thenget into a debate about what the
output of the model is versusthe finance three, five year
plan salary number and how theyalign the two.
So that's a different debateand we won't get into the detail
of matching those two todaybecause that's a very much a

(06:52):
business by business decision,business by business decision.
But the model should be seen asthe fair way of allocating the
available funds from a point ofunderstanding what the start
point is and then how much youhave to squeeze that or add in
to get to the number that thefinance want to spend, so that
the senior team reallyunderstand the compromises and
trade-offs that are being madeto get to the financial number

(07:12):
in effect.
Yeah and in terms of otherapplications for the model, we
see lots of people using theirvarious let's call them
iterations or versions of themodel.
So you've got the one, which islive, that the stores,
restaurants whatever it might bewarehouses are working to, but
there might be other versionsthat the team who managed the

(07:34):
model are working to to costimpact of change yeah, because I
mean, as we've discussed inother chapters, sometimes
stopping a task isn't as simpleas well.

Speaker 2 (07:44):
If I save that and it saves 10 minutes, I can take 10
minutes out everywhere becausethere might be impact of if you
have a minimum number of peoplethat you need on site.
You know you can't, you mighttake out work, but if you can't
take out the hours, then that'sthe sort of thing that you need
on site.

Speaker 1 (07:57):
You know you can't, you might take out work, but if
you can't take out the hours,then that's the sort of thing
that the model will show you andin a world where cost is is
clearly king and probably nevermore so than at the time
recording, with coming changesin national insurance and other
bits to employers.
It's those scenarios of so whatif we drive more transactions

(08:18):
through self-checkout?
What if we spend less timedoing this?
What if we reduce our minimummanning windows or overall
numbers?
Those are all the types ofscenarios that the team should
be playing with to come up withcreative solutions.
Now they might not be palatableand people might not like them,
but, as again we've discussedin other chapters and at our
forum last September, all theeasy stuff's done.

(08:40):
So we're now in a world ofpresenting options that
previously would have been offthe table, that are on the table
because there's nothing elseleft to go at.
So it's a great way tofacilitate those conversations
in a fact way and take theemotion out.

Speaker 2 (08:55):
It is, and obviously there is the view that gives you
the per location or departmentview.
But the fact that you can usethe model to look across and say
, okay, so how much is itcosting to handle our stock, or
how much is it costing to serveour customers, where are the,
where's the time spent?
So understanding that actuallythere's x million pounds spent

(09:15):
there, it can kind of give thatimpetus to have a fresh look at
something that perhaps peoplethought oh, we can't touch that
before, because actually, as yousay, once you're dealing with
the facts, it allows you to takea much more clear-eyed view at
where are we spending our money,where does it make a difference
for our customers?
Where does it fit with ourstrategy?

Speaker 1 (09:35):
Yeah.
So in terms of quick wins, I'vegot a couple for you.
I think one.
If you've not got a workloadmodel, now's the time to
consider it.
If you're listening to this,you run any type of business and
you don't really know the costof running that business.
That would be a concern,because how are you going to
make strategic structure changesto make sure you're protecting
your colleagues and yourcustomers?
Making sure the hours of themodel match the available budget

(09:59):
, so they always need to bealigned.
Making sure the hours of themodel match the available budget
, so they always need to bealigned.
You can't give teams a numberof hours that they then can't
afford from a cash point of viewto spend.
Keep things as simple aspossible.
So there's always a danger thatpeople want to add complexity
because that makes them feelcomfortable or gives the model a
level of accuracy that peoplethink is important or valid.

(10:20):
We've seen them really simple,which maybe don't have as much
complexity and is needed to getunder the skin of variation and
things that have a materialimpact, but also massively
overcomplicated, where there'sway too much information, which
causes a problem in thetransparency and the buying for
it and also a problem in termsof the upkeep and ongoing

(10:40):
maintenance of the the modelswell, we've seen situations
where the biggest debates areabout the tiniest amount of
workload.

Speaker 2 (10:47):
You know, if people are having a debate about
something that's 10 minutes persite, per quarter, for example,
it's like it's not got materialimpact versus the the core of
the work that you're happening.
So you kind of get intomateriality debate or you can
kind of let emotion take over ifyou're not careful.

Speaker 1 (11:05):
Avoid black box models.
So where it goes into asolution and you get an output
and nobody can really explain ortrack that output back to the
various calculations.
And again, it's also very easyto let the model be run by
individual people.
They may move on sidewaysupwards somewhere different.
And then there's an exposure interms of understanding of the

(11:27):
model, the integrity, how itworks.
So it there needs to be anunderstanding across a number of
people in the business of howit works, just so you've got
cover for any situation thatarises.
But overall, biggest tip iskeep your model up to date.
It needs to reflect changes inyour business and processes.
So if things stop, clearly thatneeds to be reflected in the
model and you have choices aboutwhat you do with the potential

(11:49):
saving, but that's got to workthe other way.
As work goes in, you need toreflect that in the model as
well.

Speaker 2 (11:55):
Otherwise it becomes a kind of one-way tool to drive
out cost and quickly becomes outof date because it's not
reflecting reality and we haveseen people that use a workload
model that covers all theworkloads so they cover kind of
what's the whole, what's theoverall budget.
We have seen people that usestart by using a very slimmed
down model so they might justlook at, kind of the core task

(12:16):
that they're doing.
So we worked with a client thatwas a warehouse and they wanted
to be better planned at theresource that they needed.
So a really simple model helpedthem understand right, if I've
got this amount of deliveriescoming in that I'll need to put
away and this amount of ordersgoing out this week, how many
hours do I need?

(12:37):
So they weren't counting in thetime for training or admin or
whatever, but actually it gavethem a much better steer,
whereas previously they wererelying on an experienced
individual.
That news, oh yeah, for thisweek.
We've always used 100 hours.
It's like well one, whether wastheir intuition correct?
And secondly, what happenedwhen they were on holiday, if

(13:01):
they went off sick, if they left?
Because that business wasdependent on one person's
expertise of estimating how muchworkload there was absolutely
so.

Speaker 1 (13:11):
We'll pause there.
We'll be back with the finalwrap of the book.
We'll touch on the the kind ofai um chapter that's in there at
the end and share our finalthoughts.
So thanks, sue, we'll catch upsoon thank you hi.
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