Why 2025’s Best Industrial CFOs Are Starting Every Capital Plan From Zero
For many manufacturers, CapEx budgeting becomes a rollover exercise. This year’s plan is last year’s plus inflation. But in today’s margin-squeezed environment, zero-based budgeting (ZBB) is gaining traction—especially in ceramics and glass operations.
Start With Strategic Outcomes, Not Assets
In a ZBB model, the question isn’t “What should we replace?” but “What do we need to accomplish?” For example, improving delivery performance or reducing natural gas use—not just “buy new trucks” or “upgrade the kiln burner.”
Rebuild the CapEx List From the Ground Up
Every request must be justified from scratch, with ROI forecasts, implementation plans, and operational linkage. Legacy projects don’t get a pass. This forces commercial, finance, and plant leaders to reexamine old assumptions and update business cases.
Score Projects on Strategic, Operational, and Financial Value
Use a multi-criteria evaluation framework:
Strategic fit (market expansion, ESG goals)
Operational impact (cycle time, uptime)
Financial return (payback, IRR, cash flow timing)
This helps teams prioritize clearly—and hold sponsors accountable.
ZBB Requires New Cadence and Tools
Instead of once-a-year reviews, ZBB works best with quarterly reforecasting and rolling prioritization. Many firms adopt simple digital scoring tools to evaluate and rank proposals collaboratively.
Cultural Change Is the Hardest Part
Moving to zero-based budgeting is less about spreadsheets and more about mindset. CFOs and COOs must reinforce the idea that every dollar must earn its keep—regardless of how long it’s been in the plan.
