Operational Excellence (OpEx for short) is one of those business buzzwords that you hear flying around but I’ve gotten feedback that it remains unclear what it is. Operational ExcellenceSo hereby my interpretation of Operational Excellence based on my own training and experiences.

There are several reasons to want Operational Excellence:

  • Lower operational costs
  • Increasing quality
  • Shorter throughput times
  • Etc.

Still, these reasons are not what operational excellence is all about!

Creating all these benefits still does not mean that your business will actually grow or that you’re doing this in a way that is most beneficial for your customers, your organisation or your employees. The nuance lies in the way these improvements come from an organic flow instead of forced change.

OpEx organisations strive for continuously delivering the highest value to their customers first time right and do so by ensuring a continuous and visual flow of their processes and/or products. Where flow is disrupted, action is taken without requiring the assistance of management.

OpEx is company-wide and understood by all. It is not something that is solely done by management or the continuous improvement department. Instead it is engrained in the daily life and business of everyone working there. Operational ExcellenceEmployees in an OpEx organisation understand what value is for their customers and are able to ‘read’ the flow of the product or process and take immediate corrective action when required.
This implies that in an OpEx organisation, performance management and the continuous improvement of the organisation, people and processes are seamlessly aligned. Performance Management and Continuous Improvement thus continuously reinforce each other.

Performance management

Done by business owners and managers to ensure that an organisation is doing the right things right.

When the ‘wrong’ things are done or when things are done in the ‘wrong’ way these managers will then steer the processes or people involved in the right direction again. Performance management thus gives them the tools to define vision and goals and to communicate, measure, report and steer processes and people. Usually the management processes to do this are supported by information technology but it is always about the quality of the actual decisions made that determine the success of the performance and thus the company.

Continuous Improvement

Continuous Improvement is something every business should strive for, whether you are a freelancer or a large corporate, there is always room for improvement and quite likely, there’s always a need for improvement as well!

Lean offers a handy toolbox for making this improvement happen and the modular improvement cycle (based on the Six Sigma DMAIC cycle) forms a perfect structure for every type of required improvement.

Let’s look at a few features of the Operational Excellence philosophy in more detail:

The Method

Operational Excellence is a way of thinking and looking at your organisation but says nothing definite about a methodology. Though all types of methods are possible, the most popular ones are Lean (to remove waste) and Lean Six Sigma (to increase predictability of processes). Other methods often used are Business Process Management, the Balanced Scorecard and ISO.

Customer value first

This really comes from the Lean and Six Sigma legacy as these methods listen to customer requirements first and improve second. In an Operational Excellent organisation all employees understand what is critical to quality for their customers and all processes are aimed at maximizing this.

Visual flow

This is allOperational Excellence: visual management about making the product and/or process flow and its performance as simple as possible. Basically, an outsider should be able to walk in the office and almost immediately understand if things are on target or not without knowing or understanding the department, without looking at reports or printouts. Though easier to do in a manufacturing situation than in a service setting, it is not impossible. For example, I’m a big fan of low tech KPI boards; simple whiteboards with post-its (green is good, pink is bad).

Employee responsibility

With everything as clear and a visible as possible, the next step is to place the responsibility for improvements there where it happens: on the operational floor. All employees are responsible for their part in the improvement and standard methods for mistake correction and process improvement are in place. The idea is that these environments become ‘self-healing’ and that management is able to spend time on innovation, sales and people development (or whatever other priority there is of course).

Operational Excellence is therefore something to strive for, it’s a way of thinking and managing your organisation. Though not necessarily linked to Lean it does remain one of the best methods to apply when striving for OpEx. As with all philosophies and methods though; always make sure it fits you and your organisation.

I’d love to hear from you

Are you in the field of Operational Excellence? Or do you have experience with really poor or really well-executed Operational Excellence strategies or programs? Share your experiences in the comments below!