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The business environment has never been this competitive in
recent times. The goal of businesses is to seek measures by which they can
improve.
One way to achieve the desired goal of a business is to understand
operational excellence (OpEx) and how it works.
Beyond just boosting
efficiencies or optimizing ROI, a company can be made to operate better. A
company should be able to adapt to shifting market conditions and technologies
that serve as channels for the modern global economy.
In a challenging business climate, operational excellence
offers businesses a way to lay out a plan for ongoing progress, giving them a
competitive edge.
When operational excellence is done correctly, it can help
the decision-making process for business executives and encourage employees to
continually improve.
The theory that businesses will ultimately outperform
their rivals if they are better at problem-solving and process improvement
holds true.
In this article, we'll look into what operational excellence
is, its core principles, and the methodologies used to achieve it.
So, sit
tight, get your learning tools, and prepare to apply these principles as we
take a critical look into the subject matter of operational excellence.
What is Operational Excellence?
Operational excellence is a philosophy, a mindset, that
seeks to embrace certain principles and tools that can create a culture of
excellence within an organization.
Operational excellence (OpEx) mindset is one
that believes in problem-solving and leadership as a means to continuous
development.
In an organization, its success is dependent on what kind of
philosophy exists among the management and team members and how much of that
philosophy is materialized.
A philosophy of operational excellence would be
evident to customers as they began to partake in the flow of value from the
organization.
Okay, this may seem like an invisible concept, but it's not.
Operational excellence (OpEx) has certain principles that have been practiced
since the 1970s.
It was first introduced by Dr. Joseph M. Juran while he was
training Japanese leaders on ways to improve their quality of operation.
As we
journey through this article, you'll get to learn these principles.
Core Principles of Operational Excellence
As earlier said, operational excellence is a philosophy that
requires principles to have effect. These principles are based on the Shingo
Model.
Every year, the Shingo Institute of the Jon M. Huntsman School of
Business gives out the Shingo Prize.
This is an award for operational
excellence given to individuals based on company culture, results, and how much
they conformed to the Shingo Model.
Here is a more critical look at what the
core principles are:
Principle #1: Respect Every Individual
As one of the Shingo Model's principles, it places emphasis
on respect for every single person in an organization.
This is because everyone
has their own worth and what they bring to the table. A devout act of showing
respect to everyone must be made.
One way to achieve this is by getting
everyone involved in the improvement process and by making everyone's voice
count.
Principle #2: Lead with Humility
A leader who intends to instill the philosophy and
materialize operational excellence should be humble.
Humility is the
willingness to listen to and take suggestions from everyone else in the
organization.
This doesn't show weakness; rather, it shows that you consider
the overall development of the organization and are willing to do all that's
necessary to make it work.
Principle #3: Seek Perfection
The concept of "perfection" is most often
challenged, as it is often seen as an impossible venture.
It is simply said
that "perfection is not attainable." But the fact that
"perfection" is not attainable doesn't mean efforts shouldn't be made
towards it.
In this model, the key concept is to attempt any form of
challenge that may come with an excellence mindset. This means that complacency
cannot exist within the operations of the organization.
An organization that
seeks perfection would always raise the bar of their standards and be at their
best at any given time.
Principle #4: Assure Quality at the Source
This model emphasizes the need for the maintenance of high
quality in every section of the organization.
When each section is paid
attention to and operations are done correctly, any mistake can be spotted
easily and the necessary corrections made immediately.
Principle #5: Flow and Pull Value
Every organization strives to deliver maximum value to its
customers.
One way to ensure that your organization optimizes flow and pulls
value is to ensure that everyone understands what the customers' needs are and
is ready to make the necessary adjustments and provisions.
To achieve this, you
must ensure that there are no interruptions in operations, as they can take a
toll on the efficiency of your team and may end up wasting their time.
Principle #6: Embrace Scientific Thinking
Organizations improve because they are open to continuous
experimentation with ideas.
It is required that you be able to identify what
works for you and what doesn't.
By doing this, you're able to show that you're
continuously learning and that your team members should also do the same.
Principle #7: Focus on the Process
Often times, when there's an occurrence of a mistake in the
operations of an organization, it's easier to point fingers as to whose fault
it is. This is often not productive.
The Shingo model therefore emphasizes the
need to focus more on the process than just the end result.
For you to achieve
operational excellence, you'll have to embrace the fact that a process could be
the issue and not the employee.
When you're able to correct the process, you'll
be able to provide solutions and make progress.
Principle #8: Think Systemically
For you to really cultivate an operational excellence
mindset, you must be able to think "system" rather than some
particular section of your organization.
You should be able to understand the
interdependence of every section on one another and then use this awareness to
the advantage of the overall growth of the organization.
By thinking
systematically, you are able to establish the mindset of operational excellence
among your team.
Principle #9: Create Constancy of Purpose
Constancy is often said to be one of the factors that
sustains an organization or even an individual.
It's not just enough to know
what the mission and vision statements of your organization are; being
consistent with them is yet another thing.
To effectively establish operational
excellence among your team members or employees, you must constantly create a
system where you can reiterate what the purpose of the organization is and why
they must be constant in achieving it.
Principle #10: Create Value for the Customer
Customers don't come to your organization or company because
they necessary like the individuals there, but mainly because you have
value that they need and are willing to pay for.
The Shingo model emphasizes
the importance of understanding the needs of customers and making provision for
those needs.
When your company is focused on creating value for customers,
you've been able to establish operational excellence as a culture.
The Best Operational Excellence Methodologies
It's important that organizations do their best to apply
operational excellence to their company's culture, as this is a step towards
achieving long-term growth.
There have been so many methodologies used over the
years since it was developed, but we'll take a look at the best three
operational excellence methodologies.
Here is a close look at the
methodologies:
1. Lean Manufacturing
Lean manufacturing is a methodology for operational
excellence that attempts to eliminate any form of waste in the production
process.
It emphasizes that a company should add value to customers, and
anything that may undermine that should be eliminated.
The main idea of lean
manufacturing is that companies should improve the quality of the products and
services they offer.
Lean manufacturing methodology has been able to factor in
several areas of waste that companies often get into that are detrimental to
their operational excellence. These areas include:
I. Overproduction: This happens when companies make more products than are actually needed by customers. This often leads to waste within the company
II. Transportation: This happens when unfinished products are transported unnecessarily, leading to waste in transportation resources.
III. Motion: This refers to any movement or action taken that doesn't add value to the products. This can cause negative work ethics and lead to waste within the organization.
IV. Waiting: This waste occurs when workers become idle while waiting for the next step in the production process.
V. Over-processing: This waste comes from the excess time spent on processing a product than it actually requires.
VI. Defects: This waste comes from mistakes that happen in the production process that lead to the loss of some products.
VII. Inventory: This type of waste occurs when the supplied goods are more than the demand. This requires that it be returned back to the company, and this can be wasteful.
2. Six Sigma
The Six Sigma methodology is a set of tools and techniques
that are designed to improve the way businesses operate.
This methodology is
focused on improving the customer experience by eliminating any variation.
Many
companies have implemented this methodology and have had success. An example of
such companies are the Fortune 500 companies.
Utilizing the Six Sigma method
will produce less than 3% of anomalies in a million business
opportunities.
The six-sigma method is able to help companies improve
customer service and eliminate variation using the following steps:
I. Define the problem: This is the first step towards achieving your goal. When you're able to define the problem, you can now begin to seek solutions.
II. Measure: The next step after defining the problem is to take into account with appropriate data the things that work well within your company and those that do not, and then make the necessary improvements.
III. Analysis: Having successfully measured what works and what doesn't with appropriate data, you then run analysis on what the problem's root cause is.
IV. Make Improvements: After you have analyzed your data, you seek out the most suitable solutions and apply them on a small scale. When the effects are good, you can then make it larger.
IV. Take Control: Once you've been able to implement the new solutions, you should make this a continuous process. Always seek out ways to constantly improve the operations of your company.
3. Kaizen
Kaizen is a Japanese root word meaning "continuous
development." This methodology of operational excellence has found its
relevance in several millions of companies around the world.
The Kaizen methodology focuses on improving processes, which
improves the overall company results.
As one of the core principles of
operational excellence emphasizes focusing on the process, Kaizen places
emphasis on improving the process by which results are obtained within the
organization.
It established the fact that a good process will yield good
results.
Also, Kaizen methodology focuses on building team spirit
within the workers of an organization.
When your workers work as a team,
ensuring full participation, it will be easier to achieve your short- and
long-term goals.
When these processes are now improved, there has to be
continuity. It is in improving consistently that a company will be able to
achieve its short-, mid-, and long-term goals, and that's what
"Kaizen" is all about.
Conclusion
Operational excellence is a mindset that has to be
constantly woven into the minds of workers in an organization. It is with this
mindset that desired results can be attained.
As this article explains, the
core principles and methodologies of operational excellence are the foundation
for achieving maximal results in companies.
The three methods of operational
excellence have analyzed ways of avoiding defects or anything that retards
growth or causes wastefulness.
When you're able to employ all that has been
said here, like Dr. Joseph M. Juran taught in the 1970s, you'll be able to
replicate excellence within your organization.
Tags:
Leadership