Possibilities of using the lean six sigma methodology in the program budgeting of the defense system

Abstract

The budget, as an institution of public finances, has an effect on economic activities of the majority of business entities, which causes its taking the central place in the public finances. Improvement of the budgeting process, as a part of the public finance management reform, and aimed to the increase of efficiency and transparency of the budget, imposes a need for the introduction of the program budget. The program budget, which was first implemented in the defense system of the Republic of Serbia, improves and completes the process of target-oriented planning and contributes significantly to the success and rationality of planning the budget revenues and expenditures. It is the operationalization of the strategic planning process, i.e. the distribution of necessary resources to deliver concrete short-term objectives of the program, which were set in the process of operational planning. The budgeting process must permeate all activities of the defense system, at all decision-making levels and of all functions of the defense. For the Ministry of Defense, this, among other things, also means the introduction of a more efficient mechanism for monitoring the achievement of the strategic goals at the level of the state and the defense system. In the situation of limited resources, it is of crucial importance to make the defense system effective, efficient and economical. The introduction of the program budgeting into the defense system can lead to a more rational use of resources. The aim of this paper is to answer the question of whether the concept of Lean Six Sigma, as a business transformation tool that uses statistical tools to detect the cause of the problem and provides metrics to monitor the reached level of the progress, can be used to optimize the budgeting process of the defense system.

Keywords

• program budget
• budgeting
• defense system
• the concept of lean six sigma