Posted on: Sep 15, 2023
What is operational excellence?
At the core of any successful business is the drive for operational excellence. This term, deeply rooted in the literature of business management, encompasses an organization’s strategy for continuous improvement and surpassing competitors, fostering a culture of ongoing enhancement. Operational excellence isn’t just a strategy; it’s an ethos that permeates every decision, process, and team member within a company. It focuses on persistent improvement, productivity enhancement, quality upliftment and cost savings. The ultimate goal? To ensure a sustainable competitive advantage in the market. Organizations that implemented operational excellence constantly notice that it helps leaders make informed decisions that deliver additional value to their customers.
The Shingo Guiding Principles lay down ten foundational elements to operational excellence:
- Respect every individual: A valued individual contributes more proactively, seeking mutual respect and appreciation.
- Lead with humility: Before innovation, comes humility. To lead with humility leaders, need to create environment where associates feel respected, energized and encouraged to express their creativity.
- Seek perfection: Perfection is an aspiration not likely to be achieved but the pursuit of which creates a mindset and culture of continuous improvement.
- Embrace Scientific Thinking: Encourage a culture where innovative ideas flourish, understanding that failure is often a precursor to breakthroughs.
- Focus on Process: In case of poor outcomes don’t blame the people involved in the process, but rather analyze the process to find the ways it can be improved.
- Assure Quality at the Source: Perfect quality can only be achieved when every element of work is done right the first time. If an error should occur, it must be detected and corrected at the point and time of its creation.
- Improve Flow & Pull: Deliver value by aligning production with customer demands, ensuring seamless flow and availability.
- Think Systemically: Don’t think about individual players or departments for improvement, but rather think of ways to improve the entire system.
- Create Constancy of Purpose: Ensure alignment between operational objectives and the broader organizational vision.
- Create Value for the Customer: Understand and adjust to customer expectations efficiently and effectively.
Popular tools facilitating operational excellence include Lean Manufacturing, Six Sigma, Kaizen, and Total Quality Management (TQM).
Operational excellence – how it is measured?
To truly grasp the impact of operational excellence initiatives, organizations need to establish and consistently monitor key performance indicators.
A few illustrative metrics include:
- Employee satisfaction and engagement levels.
- Efficiency of processes.
- Timeliness and accuracy of deliveries.
- People development metrics, such as training initiatives.
- Number of implemented improvement projects.
- Tangible cost reductions.
- Non-quality associated costs.
- Customer satisfaction ratings.
- Compliance benchmarks.
- Comprehensive process scorecards.
Regular assessment of these indicators helps organizations indicate areas for further improvement.
Operational excellence – examples
Here’s a snapshot of how global giants have embedded operational excellence into their DNA:
Toyota’s operational framework is a great example of the power of Lean Manufacturing. By embracing Lean Manufacturing principles, Toyota optimized its production process where more is accomplished with fewer resources, thereby enriching product quality and productivity.
General Electric (GE) found its advantage through Six Sigma, optimizing processes and elevating quality across the whole organization.
Motorola achieved its success story by embracing TQM principles, steering the course toward global leadership in the electronics industry, underpinned by continuous quality enhancement.
The Kaizen method has been widely adopted by many organizations like: Wal-Mart, McDonald’s or FedEx to fine-tune their operations and boost efficiency.
In conclusion, operational excellence isn’t exclusive to large-sized enterprises. Its principles, universally adaptable, can be the bases of any organization, irrespective of size. Establishing an operational excellence culture from the beginning is a game-changer for businesses aiming for long-term success.
To learn more about Operational Excellence, contact the team at ADAPTIVE GROUP for expert guidance!