According to a recent CEO Challenge survey, Operational Excellence is the second largest challenge facing CEOs in 2013. However, explaining operational excellence is difficult as it has a duality to it. On one hand it is a state of mind of the whole organisation; to be as good as you possibly can be and to continuously and consistently keep improving. On the other hand, it also is a collection of methods and approaches to operational improvement. This white paper touches on the second nature of operational excellence: the tools, methods, and projects. It explains Excelr8’s definition of what is meant by operational excellence and how it came to be.
Operational excellence (operations excellence as it sometimes is referred to) should be seen as the natural evolution of the existing operational improvement methodologies. Over the years many different techniques have been developed with the aim of improving operations. Broadly speaking these approach operational improvement from either: processes efficiency, staff and management behaviours, or management systems perspectives. Each one targeting a different type of root causes via different tools. The practices have been continuously improved and redesigned since the first one came to be, each iteration giving more powerful toolkits. Unfortunately the problems faced by companies today are more complex and compounded than ever before. We are looking at a number of issues that need to be tackled simultaneously:
- Staff retention
- Staff behaviour and training
- Lack of management skills
- No goal setting
- Limited process efficiency
- No waste control
- Limited operational planning
- Limited process control
To stay competitive and ahead of the game requiresa more holistic approach to operations improvement. One that takes all operational areas into account – this is where operational excellence and Excelr8 come in.
What is Operational Excellence
Excelr8 sees OpEx as the combination of process, behavioural change and management systems improvements, aiming to achieve a state of excellence within operations. It is a holistic approach that addresses and improves all angles of operations, instead of shortcomings in one of the operational aspects. The background to this is the view that the issues and challenges found in the organisation will not have one single root cause. Instead, due to historical and other reasons, there will most likely be a number of different causes scattered within the three areas (processes issues, management system weaknesses, staff behavioural shortcomings). The following is a situation often seen in our clients’ organisations:
- There are some inherent process inefficiencies (linier process rather than a parallel one) that lead to a lower actual performance than expected. At the same time, waste is generated throughout the process. The managers do not have a day to day plan, nor are there any performance standards available. There are no daily or weekly performance evaluation meeting, in fact performance is not evaluated at all, it consists of the following attitude: “what will be, will be”. The managers and supervisors are not interested in setting expectations for the staff and following up on the actual performance. Again, the attitude is “As long as it works and there are products coming out then it is all good…at the end of the day, the company is making lots of money anyway.”
Fixing just the processes will not dramatically increase the efficiency of the organisation above. There might be an improvement but the improvement itself might very shortly decrease as there is no system to monitor and sustain it. The supervisory and managerial levels do not really care about the performance and unless that is addressed the full potential will not be realised. Operational excellence addresses all of these issues.
The exact methods and tools are similar to the ones used in existing improvement methodologies, but rather than just addressing the issue from a single angle, a selection of best methods and tools is used. It is performed at all organisational levels and focuses on long term operational improvement and operational sustainability rather than quick results. An important aspect of operational excellence is product and delivery quality and setting goals for these. To be successful, operational excellence requires the backing of all levels of management, operational staff and in some cases, unions. The implementation is a lot more organic than in most other improvement methodologies making it more acceptable by the staff.
The results from operational excellence projects differ from standard improvement projects. The time frame to the set goal is usually longer than with a standard project as the change is taking place across the whole operations organisation. On the plus side the results are more ingrained in the organisation. The average benefits will also take longer to materialise but will then surpass what a traditional improvement project can deliver. The operational staff’s attitude to performance will change making them take more ownership of the current climate.
What Operations Excellence Is Not
Operational excellence is not:
- A cost cutting exercise – results can lead to decreased costs
- A quick win – it requires time and dedication
- Something that can be carried out solely by consultants – operational staff must be involved to make it a success
- A solution for all problems – operational excellence can only improve operations
- Always successful – as with all projects operational excellence requires dedication and support from the heads of management
- A short exercise – operational excellence even more thancontinuous improvement programs will take time but the results are beneficial
Setting Up OpEx Project
Unlike standard improvement projects, operational excellence project should start by defining what the end state should be. Only then should the “as is” analysis be performed. As a very first step a definition of what the organisation sees as excellence needs to be determined. This includes definitions for all aspects of operations. As a next step, there are a number of half way states which needs to be clarified. Only after this has been completed can the “as is” analysis take place. Before any changes can commence, a very extensive communication program needs to proceed, involving all levels of management. The goal is for everyone to grasp the vision of the operational excellence.
How Can Excelr8 Aid In the Implementation of Operational Excellence
Excelr8 would be very pleased to help you to achieve long lasting OpEx benefits for your organisation. Our help can take different forms depending on your particular needs.
Please contact us to find out more or to arrange a meeting with one of our UK or Europe based OpEx experts.