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OPERATIONAL EXCELLENCE

Many companies drive operational excellence into their operations, yet when asked what it is, there is almost always hesitation.  You might get answers such as “it’s about process quality”, or applying lean tools everywhere  to eliminate waste.  Let’s define operational excellence as the guiding management system that consists of the processes that allows each and every employee to see the flow of value to the customer, and fix that flow when it breaks down.

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Included within Operational Excellence are three core process models:

  • Managing Asset Productivity

  • Ensuring Effective use of Capital

  • Assessing and Managing Operational Risk

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The organization pursuing Operational Excellence should focus on achieving measurable benefits in:

  • The development and ongoing refinement of its strategic position towards its Mission; Objectives; and Outcomes

  • The foundation and enrichment of its Culture geared to Operational Excellence throughout all levels of the organization

  • The identification and implementation of proven best practices throughout its process architecture

  • The leadership and direction necessary to ensure a well-orchestrated journey of continual process improvement

  • The development, implementation and ongoing measurement of organizational alignment and achieved results

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Step 1

The company’s first priority is to define the operational capabilities it is trying to build and leverage those capabilities in order to increase the organization’s competitive advantage in the market place. 

 

Step 2

The next action is the establishment of priorities at the operations level and developing an analysis of those priorities complementing each other as well as those that are conflicting.

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Areas to be considered include:

  • Process Capability/Technology (new equipment vs equipment improvement)

  • Inventory and Supply Policies (make to stock vs make to order)

  • Planning and Scheduling (cycle vs work order scheduling)

  • Supplier Capabilities (spot buy vs term agreement)

  • Organization and Behaviors (hierarchical control vs empowerment)

  • Skills and Training (multi skilled vs specialization)

  • New Product Introduction

  • Quality Systems (centralized vs decentralized)

  • Capacity Policies (high vs low variability)

  • Process Improvement

  • Maintenance (preventive vs breakdown approach)

 

Step 3

Analysis of the different maturity levels within the organization’s structure to determine where each operation/functional component stands in its ability to participate in the Operational Excellence journey.  Once identified, plans can be initiated for improvement actions to be implemented.

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  • Apprentice level—limited, basic operations in place with the need to change mind-sets and build skills.  Need to fundamentally upgrade operational capabilities including strategy alignment, operations structure, processes and performance measures

  • Journeymen—the need to adapt best practices from outside or build within while conducting training and upgrading mind-sets

  • Role models—advanced with best practices established in a continual refinement mode

Measurable Indicators of Operational Excellence

  • Alignment of operations to business strategy

  • Identifying the right operational levers that deliver results

  • The existence of an Operational Excellence Culture

  • The identification and implementation of best practices

  • Identifying the time frame needed to build up capabilities

  • Performance relative to the market place

 

Leadership provides the direction and consistency necessary for achievement of Operational Excellence.

 

Specific behaviors include:

  • Providing specific and timely feedback to individuals and teams

  • Managing through being visible and interacting on the operations floor

  • Providing a coach/teacher orientation

  • Actively removing barriers to the organization’s success

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