5 operational excellence trends for 2024

Operational excellence (OPEX) remains a critical endeavor for organizations across sectors. More than just a buzzword, OPEX is a strategic imperative that enhances companies’ processes. From modernizing systems and improving performance to reducing overheads and boosting customer loyalty, OPEX offers key business value – driving innovation and competitiveness in an ever-changing business landscape.

“There are many reasons for achieving OPEX, such as cost efficiencies, customer satisfaction, adaptability, competitive advantage, employee engagement, compliance and data-driven decision making,” Dara Kiernan, owner/consultant, KPI Services Limited, tells PEX Network.

OPEX will be high on the agenda for many businesses this year. Here are five trends that are set to play an integral role in the OPEX landscape in 2024.

Generative AI and intelligent automation

The application of generative AI and intelligent automation (IA) will be significant in OPEX this year. This particularly relates to the use of generative AI in back-office and shared-service functions, says Axel Karlsson, operations practice lead at McKinsey & Company. “There’s a huge opportunity for every company I know of regardless of industry,” he says.

The opportunities for leveraging data across the operations space are more or less infinite, he adds. “We’ve seen it for a decade or more in digital manufacturing and in various next-generation digital applications, but now, we are expecting a new S-curve driven by generative AI.”

You can see applications of generative AI in most areas within operations, Karlsson says. “I think the shift will be almost as big as when the computer hit the desk in the office: what you can do, how it will change clients, how it will change the software industry and how it will change customer service. It will be a big new revolution.”

However, to truly benefit from this, organizations need to have their data strategies well sorted, Karlsson warns. “You need to have control of what data you are accessing, should be accessing and should be leveraging to make your corporation even better.”

Another emerging trend in 2024 is the use of IA – the combination of automation with AI and business process management (BPM). The global market for IA is projected to grow to $21.1 billion by 2027. “Overall, IA is critical for reducing operations costs while improving operational efficiency,” according to the CIO’s Playbook For Operational Excellence In 2024 by enreap.

READ: Generative AI’s game-changing role in digital transformation

Sustainability and carbon footprint reduction

Sustainability and carbon footprint reduction are increasingly viewed as modern business cornerstones. OPEX can play a key role in achieving sustainability goals, and vice versa. In 2024, manufacturers (for example) will turn to sustainability strategies that drive efficiency, according to Steve Bieszczat from ERP solution provider DELMIAworks. “Notably, a company’s carbon footprint is determined by both its own production and the production and operations of its supply chain. So, to meet their sustainability goals, large manufacturers need to start measuring and claiming reduced emissions from their contracts and supply chain manufacturers,” he writes.

This will make sustainability and carbon footprint tracking and reporting programs supply chain concerns a key trend in 2024 and beyond. Having a formal sustainability and carbon footprint management plan will become a priority for mid-market manufacturers seeking preferred vendor status from larger manufacturers who are increasingly requiring suppliers to have a program in place, Bieszczat adds.

“Additionally, reducing carbon footprint will improve the manufacturer’s bottom line since the top purchasing spend often includes raw materials and energy consumption, which are also the largest contributors to carbon emissions.”

Gartner predicts that by 2027, 25% of CIOs will see their personal compensation linked to their sustainable technology impact.

READ: Driving sustainability through process optimization

Supply chain management

Supply chain management can be complex. Whether due to natural disasters, geopolitical issues or unforeseen global events, supply chain disruptions can significantly impact the effective running of any business. This year, supply chain optimization, risk management and contingency planning will be key to helping businesses achieve and maintain OPEX, according to Advisory Excellence.

“By integrating these elements into their operations, companies can better prepare for and respond to supply chain disruptions, ensuring minimal disruption to their customers and partners,” the firm states in a blog.

By 2024, it is projected that companies will continue to invest in technologies linked to digital supply chain to enhance the visibility, traceability and efficiency of their operations, concurs Ignasi Sayol, president of Logistics Cluster of Catalunya at employers’ association PIMEC. “Operational efficiency is bolstered through the automation and enhancement of logistic processes, reducing time and costs, while increasing the capacity to adapt to changing consumer demands. Therefore, the digital supply chain represents a crucial element for business growth and sustainability in this era of digital transformation.”

WATCH: Cracking the code for supply chain transformation

Accelerated software delivery

In 2024, software delivery operations are set for a significant surge, states enreap’s CIO guide. “Operational teams are likely to regain control over resource allocation. Software engineering will shift from the realm of individual productivity to team efficiency.” With the advent of generative AI for coding, smart development companies must invest in their infrastructure pipeline, the firm adds.

Among Gartner’s top technology trends for 2024, AI-powered software engineering will enable development teams to meet the demand for accelerated software delivery.

Inflationary challenges and budgets

With inflation rates rising, operations leaders must develop new strategies for purchasing and cost management, writes Smart IT consultant Dion O’Byrne. “This environment presents both challenges and opportunities. Skilled purchasing in these conditions can yield quick and significant gains, making it vital for operations directors to stay informed and agile in their financial planning.”

Thankfully, research from Verdantix suggests that OPEX budgets will continue to grow in 2024 with 95% of corporate OPEX decision-makers planning to maintain or increase spend. This will be driven by optimization, digital transformation and safety, the research states.

Process improvement cannot be conducted in silo

While OPEX offers significant potential for improving the process function of modern organizations, process improvement cannot be conducted within a silo and requires involvement from all aspects of the operation, Kiernan says. “So many businesses these days do not adopt an agile and inclusive approach to process improvement and tend to rely on their IT teams to design and implement new improvements.”

At the outset, planning for such a change needs to factor how people currently work, and not just on how the system currently works, Keirnan adds. “The starting point for all process improvement is to identify, and map out, the steps people take to complete a task, and then review how the system interacts with that.”