May . 2024 .

What is a Center of Excellence in business?

Centers of Excellence (CoEs) can boost business results by closing gaps in operational practices and accelerating the implementation of strategy

Gabriel Rodrigues*

What is a Center of Excellence in business?

Keeping manufacturing operations constantly evolving and improving is very difficult, especially in times of fast technological change and scarcity of talent, as several of your experienced team members get close to retirement, and competition for technical knowledge is fierce.

This can be even more challenging within large organizations, where each business unit, department and plant tends to adopt their own strategy without a more systemic view that helps leverage the organization’s scale. Just ask yourself: what would our results be if all my process engineers had the same knowledge as my best process engineer in this specific topic?

In this context, Centers of Excellence (CoEs) can boost your results by closing the gaps in your operational practices and accelerating the implementation of company-wide strategy.

<< Read more: The role of warehouse efficiency in supply chain resilience >>

CoEs are not a new concept. In fact they have been employed for decades, normally as part of a matrix organization with each business unit and plants (owners of the P&L) on the vertical axis, critical processes experts (owners of the standards and the good practices) on the horizontal axis.

That is correct, while the business units and plants own the resources and manufacture the products, and ultimately are accountable for the results, the CoEs own the standards and good practices that, when adopted by the plants, should drive better results. That is the sole reason the CoE`s exists: helping the plants and business units improve their results in an efficient way.

CoE members should be knowledge seekers  

It is important to clarify we are not talking about the Standard Operating Procedures. Even though in some cases CoEs should go to this level to help plants improve their results, I’m referring to process and management standards (performance metrics, control parameters and specification, equipment & technology standards, operating guidelines, management routines, among others).

<< Read more: Unlocking agile operational efficiency: challenges and rewards >>

The CoE members should be knowledgeable and knowledge seekers, studying (internally and externally) the technological trends and good practices around their processes, setting and helping the sites to implement new process and management standards through training, coaching and hands-on work. This all seems pretty obvious: having a few experts studying modern best practices, technology trends, and other relevant topics inside and outside the organization, and more focused on helping the sites to deploy new standards through training, coaching, hands-on implementation.

Essentially, taking the knowledge of a few and spreading it across the network to close the gap and constantly improve. However, it does not come without its challenges.

<< Read more: Demystifying operational excellence in asset-intensive sectors >>

If not properly implemented, CoEs can become synonymous with bureaucracy (which is true in many cases) as sites start to see them as another entity trying to interfere with their work, or when experts start to focus more and more on standards and less and less on results and implementation.

Centers of Excellence to increase effectiveness and efficiency in business 

Here are few key elements to increase CoE effectiveness and efficiency to accelerate company transformation and excellence, and to close the knowledge gap throughout operations:

1) Areas of Focus & Knowledge – Guarantee you understand which parts of your process are critical to move the needle on quality, productivity & cost. Select people that truly understand those processes, with a strong track record of delivering results, that show desire to continuously learn and teach that topic. It’s always better if you can find people inside your organization, but don`t trade established relationships for great expertise. 

2) Open the Gap & Align the Strategy – Have the CoE access different processes and open best practice and results-based gaps to understand the full potential of your operation. Prioritize the areas of improvement based on companywide and business units` strategy, this way you will support the achievement of overall company strategy.

3) Standards based on practical application & knowledge sharing – Before building any standards, focus prioritized issues and sites to deliver results. Use these experiences to build standards that are applicable and have proven to generate positive impact. Build it in a way that is easy to share, as part of an operational excellence program and based on digital tools.

4) Making Factory Life Easier – Lead the most impactful projects that benefit from a cross plant implementation, helping to build operational capabilities and enabling plants to stay focused on day-to-day execution. Finally, help operations to manage its interfaces with other functions, defining the best way to interact and to deliver what internal clients require. 

<< Read more: Digital Transformation of the Food & Beverage Industry >>

We have worked with several global companies to help them build or improve the impact of their CoEs. In a recent example, we worked with the central engineering group of a FMCG company to accelerate the implementation of capital projects and support the portfolio innovation demand by the market. By focusing on defining areas of expertise, prioritizing categories based on long-term plan, aligning roles and responsibilities between central engineering and site engineering (and other functions like R&D), developing equipment standards and project management, the organization managed to cut strategic capital projects timeline by almost half.

Does your company have a CoE? Does it adhere to the key elements covered above? If not, you can extract more value from your CoE! Get in touch with Falconi to learn how your CoE can add maximum value for your organization.


Gabriel Rodrigues

11+ years of experience in operations and supply chain in industries such as aviation, mining, steel, transportation, paper, and CPG, working with companies in Brazil, USA, and Mexico. Mechanical and Industrial Engineer specialized in Industrial Management. Certified Lean Six Sigma Black Belt, Business Process Professional (ABPMP), and project manager (PMI)

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