Operational Excellence involves those key strategic activities that will facilitate consistent product or service quality delivery to an organization’s desired customer base. With single organizations not being the only suppliers to customers, it is in their best interest to ensure that they are delivering their product or service with a high standard. In order to be successful on a global sphere, organizations need to put themselves in a position where they are dominating.
Operational Excellence is the means via which, appropriate standards are upheld in the process of customer value creation. Implementation can usually be measured, and results in lower operational risks, operating costs, and increased revenues due to higher efficiency. The following image highlights the key components of the practice:
High Performance Habits consist of those industrial best practices that can help to propel the organization to consistent standards. These include the implementation of methodologies such as Lean and Six Sigma, which facilitate waste reduction and process variability.
Process Excellence are those day to day activities, which make operations smoother. Car manufacture is an excellent example of this practice. On an assembly line, employees can operate the And-On system if they identify a flaw, and fix it on the spot. This prevents problems from propagating through the system and inducing further problems downstream.
Continuous Improvement facilitates ongoing process optimization. No process is perfect, and sometimes there are even slow degradations of the system in time, which requires keen attention in order to rectify. Periodic downtime for process improvement via activities such as kaizens are focus plants, helps to facilitate peak organizational performance.
Tools and Development help an organization and it’s members to grow. As industry standards change, the adaptation of any new and relevant skills or technology will ensure that the organization remains competitive in a global world.
OPERATIONAL EXCELLENCE COMPONENTS
The two primary components of Operational Excellence are:
1) An Integrated Management System
Organizations are leader driven, and it is usually the vision of the management, that is trickled down to the lower level organizational arms. This typically takes place via tools such as the balanced scorecard, which is fed to each department head, who then identifies how he/she will fit into the mandates required at the time.
These mandates typically include operational optimization, human resource training, and quality management. The appropriate systems that facilitate these outcomes will then be implemented and monitored via suitable metrics. Organizations such as ALCOA, Sherwin Williams and Moen are very systems driven.
2) Operational Discipline
Operational Discipline is the execution of the preset mandates. Via tools such as Daily Management, and behind the scenes Human Resources Tracking Tools and accounting systems, organizations can put themselves in a place where they are identifying whether or not targets are being me. If there are any opportunities identified, this is the point at which corrective actions such as kaizens will be implemented, in order to bring the critical parameters back to target.
Overall Operational Excellence is that driving force in every organization, that enables them to become greater, in order to outdo their competition.