I have decided to write this article because I have a lot of questions from students of our training courses, our clients who started to move to the new version ISO 9001 and ISO 14001 and those who only have started to develop quality or environment management system.
One of the difficult tasks that appeared during the review or development of the system was implementation of activities for management of opportunities.
Everyone understands clearly that using new opportunities encourages continuous improvement and implementation of the Standards requirements addressed to company’s management system.
But the question is ‘how’?
The requirements for management of opportunities are closely connected with requirements for risk management. We can find a lot of information about risk management, but unlikely we can say the same about management of opportunities.
I wouldn’t like to say that my idea fits for everyone but experience we got in several projects shows that approach is universal and useful. If an organization wants to have a real management system, this approach helps to support an improvement of your own management system and a confidence of client to you.
This approach is based on the idea, that was put by developers of Standards, moving from preventive actions to risks and opportunities management. It has a lot of philosophy but discussion about philosophy is not our task today.
Well. Let’s get down to business.
As usual we have some barriers:
- Delays in forming of special structures for managing risks and opportunities.
- Ambiguous vision of problems by various participants.
- The lack of reliable and accurate data.
- The lack of training and motivation of staff.
- Errors in the choice of methods used to assess the risks and opportunities.
In my opinion first of all you should create Risks and Opportunities Management Committee which will be managed by the top manager of your company. It is very important because the top manager carries all responsibility and can manage all resources. In some cases, (it depends on the company) a role of Committee may fulfil the Board. If such a structure is created, all other issues can be resolved.
Opportunity Management is always associated with a definition of context, therefore, assessment of the possibilities with the proposed approach can be maintained for both the external and internal context.
I hope you have already determined with the contexts.
Let’s consider the example of the approach using the internal context of the organization. First, you need to structure the internal context in some way, and to have a clear understanding of the opportunity management objects.
For example, the types of opportunities for internal context can be presented as follows:
|Types of opportunities||Description|
|Strategic||Related to strategic issues (mission, policies, objectives)|
|Financial||Related to economic impacts (pricing, revenues, budgets)|
|Organizational||Related to decision-making methods, organizational structure, ensuring the necessary resources, procedures|
|Operating||Related to supply, infrastructure, industrial environment, technological discipline, service and repair|
For each type of the opportunities it is necessary to define control objects, which may differ for different organizations. Let’s consider the operating type as an example. This example is closer to Industrial enterprises.
|Types of opportunities||Objects of management|
|Operating||The volume of production, the rate of production, the assortment range of products, availability of raw materials, inventory levels, inventory turns, cash machine park, utilization of equipment, backup power, infrastructure, the level of injury, environmental aspects, transportation products, storage products, storage capacity warehousing|
I think you will agree that these Objects of management for the operating type of opportunities are the key characteristics of any production, and changes in these key characteristics can lead to attraction of new opportunities for the organization. I always insist on the fact that the implementation and application of the management system should be cost-effective, which, alas, is not common (this is a separate topic). Therefore, the assess of opportunities in this approach is based on the level of impact on the financial results.
I propose to use the following levels of impact of the opportunities implementation in accordance with the priority:
|Level of impact||Description|
|1||Impact on financial results|
|2||Impact on quality (safety, legality) products|
|3||Impact on the environment|
|4||Impact on occupational safety and health personnel|
The highest priority was given to the impact on occupation health and safety. In this case, if you couldn’t find a positive influence on any level you mustn’t consider such offer as a potential opportunity.
As I mentioned before, the economy of the management system is critical to the business. In this regard, it is necessary to pay attention to the costs for their realization during evaluating the capability:
|Level of costs||Description|
|1||More than 500K $|
|2||More than 50K $ to 500K $|
|3||Up to 50K $|
|4||It does not require the costs|
In this case, the highest priority belongs to the fourth level, that is, the opportunity without the financial costs. The best approach which can be used for the implementation of Lean management in the organization. Of course, in the example above arbitrary numbers are used and organizations set their own figures in accordance to the size of their budget and their risk-appetite.
It would be useful to take into account the payback period of the costs incurred in the implementation of the possibilities:
|Level of payback period||Description|
|1||From 3 to 7 years|
|2||From 1 to 3 years|
|3||From 6 months to 1 year|
|4||Less than 6 months|
Of course, the last payback has got the highest priority.
For evaluation of each opportunity I offer to use the next matrix.
|Opportunities assessment matrix|
Keys to the Opportunities assessment matrix taking into account the costs, the payback and the level of impact:
|В||High level: the opportunity is included into the management plan as real and it is processed.|
|Н||Low level: the opportunity is included into the management plan as a potential opportunity .|
Now it’s time to look at the plan of the opportunities management . This is an important document which allows us to maintain up to date information about opportunities and about the implementation of the relevant actions and store information about unrealized possibilities as well. It will return to their implementation in the case of any changes of the internal and / or external context.
I think there is a question: what is the status and what is it for? Below is a table of the statuses of the proposals which was included in the Opportunities management plan:
|Open||A new opportunity is identified and is awaiting the appointment of actions and responsible person.|
|Closed||The opportunity is closed. It does not require further consideration, the actions had been fulfilled.|
|In progress||Actions are being fulfilled.|
|Monitoring||Actions had been fulfilled. Monitoring of an effectiveness (efficiency) of actions is being carried out.|
|Resolved||Actions and responsible person were assigned. Actions to implement the possibility have not been started.|
You can provide an access to the Opportunity Management Plan in accordance to the procedures which are adopted by your organization.
The risks and opportunities Committee operates in accordance to a schedule and procedure (or the Regulation on the Committee), analyzes the effectiveness and efficiency with regard to the implementation of opportunities.
I hope this article will be useful and implementation of this scheme won’t be very difficult.
You can order Excel file, which let you create an Opportunities management plan easy. Our email email@example.com.