Issue link: https://iconnect007.uberflip.com/i/1415897
44 SMT007 MAGAZINE I OCTOBER 2021 term financial decisions. Whatever the process at your company, it will need to be clearly doc- umented and followed. We've heard you point out that the value and importance for the NDA in the CapEx planning process is often overlooked. How does that fit in? Friberg: Since there are many times where the CapEx is part of a company's fulfillment and go-to-market strategy, it becomes critical to have the nondisclosure agreement as part of the CapEx standard operating procedure (SOP.) Most companies have the NDA as part of their supply chain SOP; it should not be over- looked in the CapEx processes as well. is is because a capital expenditure is an important part of the supply chain sourcing and buying process. When capital equipment is thought of as a supply chain item, all the normal vendor authorizations make sense. It is generally good business practice to have an NDA any time you want to share something valuable about your company and/or business strategy. You want to make sure that the other party doesn't use any of that disclosed information without your approval. is protects any information that is not widely known (new technology, new loca- tion, new distribution model, etc.). An example of information that needs pro- tection might be when a company is examin- ing their overall fulfillment network and de- termines that there are too many distribution nodes away from the point-of-manufacture. It is critical that this information not move pre- maturely through the enterprise, as that could result in panic within the business, or the pos- sibility that a key competitor gains knowledge about your execution strategy and can identify a competitive advantage within the market— costing you market share erosion. Walk us through the role that a statement of work (SOW) plays in the CapEx process. Isn't the SOW primarily about execution of the plan? Friberg: e SOW inside the CapEx process clearly defines what work, equipment, deliv- erables, and the timeline for generating the fi- nal CapEx approval and the period-of-perfor- mance where the business will start to see the ROI to the financials. Having an SOW as part of the process precludes conflicts and prob- lems in contract execution on the technical tasks and subtasks within the overall project. Do these processes change when the capital expenditure is for facilities or infrastructure rather than equipment? Friberg: No. CapEx items are assets that the com- pany uses in the process to manufacture/deliver products and services to the consumers. So, by definition, capital goods are not finished goods, but rather are used to make the finished goods. Whether it's a building or a pick-and-place ma- chine, the general process is the same. You've previously mentioned having contingency plans for CapEx monies. What are some common strategies and approaches? Friberg: Other than not delivering the CapEx to schedule, even more troubling to the corpo- rate leadership would be "surprises" in the cost of the CapEx. Most successful CapEx projects implement a 10% contingency into both the fi- nancial and scheduling aspect of the project. As part of the CapEx standard operating pro- cedure, the scenario planning section is used to proactively outline potential cost, delivery, and minor changes to scope that would impact the planned execution dividend of the CapEx. You specifically recommend that the team "overcommunicate." Normally, that's not a desirable thing. What do you mean when you use that specific term? Friberg: Communication, in a consistent for- mat, gets rid of annoying email trails, off-line spreadsheets, and delayed approvals (if outside