What an operational excellence review uncovers and what it delivers for your business

Every company beyond a certain size carries hidden costs: time lost to searching for information, mistakes that get corrected instead of prevented, processes everyone keeps running because "that's how it's always been done." An operational excellence review, usually a short project lasting a few weeks, systematically maps these costs and delivers a concrete action plan based on the evidence. This article sets out what such a review typically uncovers, how the process works, and how to calculate the savings potential, with a worked example based on external research and Belgian figures.

What exactly is an operational excellence review?

An OpEx quick scan combines three types of input:

1. hard data (financial figures, lead times, error rates, headcount figures),
2. direct observation on the shop floor ("gemba" visits, following processes as they actually happen, not as they appear on paper),
3. conversations with employees at every level, from frontline staff to management.

These three sources are brought together in process mapping (often a value stream map) and benchmarked against sector data. The result is not a lengthy report but a prioritisation matrix: each finding weighed by impact against implementation effort. This is usually followed by a short improvement sprint of 6 to 12 weeks in which the "quick wins" are actually implemented, not just recommended. That way the project itself already delivers measurable results, before any follow up engagement is even considered.

What does it typically uncover?

The classic lens for this is Lean's "8 wastes" framework, summarised in the mnemonic DOWNTIME (Defects, Overproduction, Waiting, Non-utilised talent, Transportation, Inventory, Motion and Extra-processing). In practice this translates into the categories below, each with the scale that research and benchmark data suggest.

1. Cost of poor quality

Errors, rework, complaint handling, returns and warranty work. According to the American Society for Quality, the cost of poor quality (COPQ) typically runs at 15 to 20% of revenue in an average organisation, rising to 30 to 40% in companies with a weak quality system, versus under 5% for "world class" performers. In organisations with a reactive rather than preventive quality approach, most of that cost also goes towards fixing mistakes after the fact rather than preventing them.

2. Lost time from searching for information and inefficient meetings

Knowledge workers lose a substantial share of their working week searching for information. McKinsey Global Institute calculated that better collaboration tools could cut knowledge workers' search time by roughly 35%, freeing up about 6% of the full working week, an implicit indication that search currently takes up somewhere between a sixth and a fifth of working time. Atlassian measures a comparable order of magnitude: up to 25% of time goes to hunting for answers, and 56% of employees regularly have to ask a colleague or book a meeting to find what they need. On the meetings front, a Salary.com survey found that 19% of employees named "too many meetings" as the single biggest source of wasted time at work, the top reason two years running.

3. Underused automation

Especially in administrative and financial processes. Benchmark data from APQC across nearly 2,500 companies shows a median 20% headcount reduction in the finance function once recurring tasks were automated.

4. Procurement and supplier management

Spending outside agreed contracts ("maverick spend"), too little bundled volume, weak supplier follow up. McKinsey reports that a targeted supplier renegotiation alone can save more than 3%, and that harmonising contracts with smaller suppliers typically yields 2 to 5%; procurement functions in the top quartile generate twice the annual savings of those in the bottom quartile. The Hackett Group also finds that "AI world class" procurement organisations have 69% less maverick spend leakage and process invoices 74% faster than average organisations.

5. Absence and staff turnover

Short term sick leave cost Belgian private sector employers an average of EUR 1,609 in direct wage cost per full time employee in 2025; for a company with 100 employees that quickly adds up to more than EUR 160,000. These figures cover only the direct wage cost of hours not worked; covering absences through overtime or temp staff can be considerably more expensive on top of that. Separately from absence, various HR studies estimate the full replacement cost of an employee who leaves at 50 to 200% of annual salary, heavily dependent on role and seniority.

6. Organisational structure and span of control

Too many management layers, unclear decision making authority, overcapacity in some roles alongside understaffing in others, often visible in too narrow or too wide a span of control. McKinsey documents a basic materials company that cut costs by 20% while output rose by more than 50% over three years by applying operational excellence structurally; though according to the same analysis, only 7% of organisations achieve that standard across the board.

7. Working capital and inventory

Slow lead times, excess inventory and an unnecessarily high working capital requirement. This usually calls for deeper analysis than a short review allows, but it is flagged as an early signal during the quick scan and factored into the prioritisation of any follow up project.

From finding to euros: a worked example

The table below translates the categories above into a concrete figure, for a hypothetical Belgian SME with 45 full time employees, EUR 6,000,000 in revenue and EUR 2,700,000 in payroll. The assumptions are deliberately conservative (each set at the low end of the cited benchmark ranges) to avoid overlap between categories and to present a realistic, defensible figure. For a specific company, these assumptions would be replaced during the review itself with the figures actually measured.

Finding	Assumption (based on benchmark)	Calculation	Potential / year
Cost of poor quality (errors, rework, complaints, returns)	COPQ conservatively set at 8% of revenue (well below the ASQ average of 15 to 20% for an average organisation, in line with an above average performer); 15% of that addressable in year 1	8% x EUR 6,000,000 = EUR 480,000; 15% x EUR 480,000	EUR 72,000
Lost time (information search + inefficient meetings)	5 percentage points of payroll recoverable (well below the roughly 17 to 25% measured by McKinsey/Atlassian, to avoid overlap with other categories)	5% x EUR 2,700,000 payroll	EUR 135,000
Underused automation (admin/finance)	20% productivity gain (APQC median) on 4 FTE of administrative capacity at EUR 55,000	20% x 4 x EUR 55,000	EUR 44,000
Procurement & supplier management	3% savings (in line with what McKinsey measures for a targeted supplier renegotiation or contract harmonisation with smaller suppliers) on 20% of revenue considered externally sourced	3% x 20% x EUR 6,000,000	EUR 36,000
Short term sick leave	Reducing effective short term absence volume by around 15% through targeted interventions on workload and processes (illustrative, no formal external benchmark)	45 FTE x EUR 1,609 = EUR 72,405; 15% of that	EUR 10,860
Total identified potential			EUR 297,860 / year

That's roughly EUR 298,000 per year, or about 5.0% of revenue. This is identified potential, not guaranteed savings. Part of it is direct cash (procurement, absence), another part is freed up capacity (time savings, automation) that only creates value once it's deliberately put to use, for example to grow without hiring, rather than letting it quietly leak away. Experience from this kind of project suggests that 50 to 70% of the "quick win" potential is typically realised within the first 6 to 12 months; that's a practical rule of thumb rather than a formal external benchmark, but a useful one for setting expectations.

Why the maths justifies the investment

The logic of a short OpEx audit is asymmetric: the cost of a few weeks of diagnosis is nowhere near a potential of almost EUR 300,000 a year, even if only a fraction of that is ever actually realised. That's exactly why it pays to keep the review itself small and fast (a few weeks, focused on hard data and direct observation) and to invest the freed up time and budget in implementation, where the real savings happen.

Definitions

Operational excellence (OpEx): a management approach in which an organisation continuously measures, analyses and improves its processes to deliver more value with less waste, not as a single project but as a structural way of working.

Gemba: Japanese for "the place where the real work happens." A gemba visit means the researcher observes the shop floor or process directly, rather than relying only on reports and figures.

Cost of poor quality (COPQ): all the costs an organisation incurs because a product, service or process isn't right the first time, such as rework, scrap, complaint handling, returns, warranty claims, and the revenue lost through dissatisfied customers.

Maverick spend: purchases made outside agreed contracts, suppliers or approval procedures, causing an organisation to miss out on negotiated discounts and volume benefits.

Quartile: when comparing many companies, they are split into four equally sized groups by performance; the "top quartile" is the strongest 25% of performers, the "bottom quartile" the weakest 25%.

Span of control: the number of employees who report directly to one manager. A very narrow span of control often points to too many management layers; a very wide one can indicate insufficient guidance and support.

Working capital: the money tied up in everyday operations (mainly inventory and outstanding invoices) before it's released again as cash. The slower the lead time, the more working capital a company needs.

Sources

• American Society for Quality (ASQ) figures on the cost of poor quality, as cited by Modus Advanced: https://www.modusadvanced.com/resources/blog/whats-the-cost-of-poor-quality
• The prevention versus failure cost logic follows the cost of quality model of quality pioneers such as Juran and Feigenbaum; no exact percentage could be attributed to one specific verifiable study, so none is given.
• McKinsey Global Institute, "The Social Economy: Unlocking value and productivity through social technologies" (July 2012): https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/the-social-economy — the report states that better tools could reduce search time by around 35%, freeing up about 6% of the working week, implying a current share of roughly 17 to 20%.
• Atlassian research, summarised by AgilityPortal: https://agilityportal.io/blog/time-wasted-searching-information Caveat: Atlassian sells collaboration software and has an interest in highlighting this problem; the figure is indicative rather than independently verified.
• Salary.com, "2013 Wasting Time at Work Survey": https://www.salary.com/chronicles/2013-wasting-time-at-work-survey/ Caveat: a US survey from 2013; more recent European figures on this specific point were not available. The widely quoted "50% of meeting time is wasted" could not be traced to an original source and is not included.
• APQC Open Standards Benchmarking, "Percentage reduction achieved in finance function headcount from finance function automation": https://www.apqc.org/what-we-do/benchmarking/open-standards-benchmarking/measures/percentage-reduction-achieved-1 — median based on 2,486 companies.
• McKinsey & Company, "The hidden source of value: Procurement": https://www.mckinsey.com/capabilities/operations/our-insights/now-is-the-time-for-procurement-to-lead-value-capture
• The Hackett Group, sourcing and procurement benchmarking: https://www.thehackettgroup.com/sourcing-procurement-strategy/procurement-benchmarking/ Caveat: Hackett's client base is predominantly large multinational enterprises, so these figures don't necessarily translate directly to an SME context.
• SD Worx, Sickness Absence Report 2025: https://www.sdworx.be/nl-be/nieuws-inspiratie/strategisch-duurzaam-hr/ziekteverzuimrapport-2025 and "Sickness absence costs more than you think": https://www.sdworx.be/nl-be/nieuws-inspiratie/strategisch-duurzaam-hr/blog-verzuimkosten — the direct cost figure of EUR 1,608.81 per FTE relates to 2025. SD Worx's claim that replacement can be "up to twice as expensive" is not backed by a separate study and is flagged here as an unverified estimate.
• Stealth Agents, "Employee Turnover Cost Statistics": https://stealthagents.com/research/employee-turnover-cost-statistics-2026 Caveat: predominantly US HR studies with a wide spread depending on seniority; no Belgian figure is available.
• McKinsey & Company, "Operational excellence for peak productivity": https://www.mckinsey.com/capabilities/operations/our-insights/breaking-operational-barriers-to-peak-productivity