Operational Excellence

The COO’s Guide to Achieving Operational Excellence with the Right People

The COOs Guide to Achieving Operational Excellence with the Right People

Depending on the person and discipline, operational excellence can mean any number of things. Here, you'll find a guide to operational excellence to simplify this concept and use it to elevate your business to a level of excellence that surpasses your largest competitors. This guide will give you resources needed to achieve excellence effectively, without the pains of hiring expensive consultants or going through a drawn-out trial and error process.

The key to operational excellence is—spoiler alert—finding the gaps and deploying the right tactics and essential expertise to get the job done right.

What Is Operational Excellence, Anyway?

Prior to getting into the specifics of helping you achieve “operational excellence”, it's important for you to understand the term.

Operational excellence is a generic term that considers a variety of elements used to achieve it. The true definition of operational excellence will depend on your individual business goals. To achieve those goals, you must determine what specifically defines operational excellence for your business.

It all boils down to people, processes, and technology to form a successful framework. If you can efficiently balance these, you can achieve excellence of operation along with leadership in your industry. Put simply, operational excellence denotes a level of leadership and superior performance over competitors through effective best practices applied.

Why Is Operational Excellence Important?

Pursuing operational excellence is crucial because if you don't have an effective strategy and a framework to help achieve it, you will eventually fail due to a lack of a strategy. By defining operational excellence for your business, you'll know what you need to accomplish to ensure your business operations are consistently at their best. Ultimately, the goal of operational excellence will be to create value for both your company and your customers. In turn, you can remain competitive and become an industry leader.

There are several key reasons why your business requires operational excellence to thrive.

  1. Improve efficiency with optimized processes
    A company that achieves operational excellence and maintains it will have a combination of efficient and specific processes or value streams, with defined metrics and rules. Through improved efficiency of processes, you can save or make money for your business and stakeholders while minimizing waste.
  2. Benefit from increased agility
    Companies need to quickly adapt to changes in the market if they wish to achieve and maintain operational excellence. Otherwise, they won't be capable of surviving in their industry, let alone thriving.
  3. Make more informed decisions
    Through the implementation of the Digital Transformation elements, companies can collect a wide range of data from systems comprising sensors, pumps, compressors, motors, and conveyors. Using information such as production rates, machine usage and condition, and other metrics, companies can better determine how to optimize operational efficiency and productivity.
  4. Empower your workforce
    Attracting and retaining top talent is critical for every company's success. Operational excellence applied makes your workforce more productive through improved problem-solving capabilities, along with a greater incentive to provide input that further improves operations.

The Three Essential Elements of Operational Excellence: Processes, People, and Technology

The three main components of a framework for operational excellence include processes, people, and technology. To streamline operations and facilitate optimal efficiency, you must assess the gaps in all three across all functional areas of your organization.

Here we'll review each of these elements and their important roles in operational excellence.

Processes

Your business must address any potential issues that are contributing to inefficient processes. Processes are the binding force between people and technology, so improving them can optimize the efficiency of both your staff and equipment.

If you want to streamline processes, you must identify the necessary steps of current processes and specify them even further by defining exceptions, variations, interdependencies, and supporting processes. Keep in mind that your stakeholders should be involved in this work to ensure they know how any changes will affect them. In some cases, these stakeholders may also be able to provide input to close gaps and solve other problems.
Additionally, industry leaders develop and put formal manufacturing improvement programs into place, along with training. As a result of these measures, they're able to further improve processes.

To make sure processes remain efficient, you'll need to measure them. By identifying which metrics to track and monitoring them, you can measure progress and enable continual improvement.

People

People are the most crucial element of operational excellence. When your company's employees can see how processes and equipment bring value to customers, this enables them to identify any potential inefficiencies or other issues for which they can provide feedback. Based on this feedback, improvements made to processes or technology can simplify their jobs, increasing productivity and motivation. Subsequently, customers enjoy higher-quality products and faster turnaround times. This, in turn, leads to increased overall efficiency and positive ROI.

In some instances, there may be certain conflicts around personnel resources, in which case you can take different steps to resolve these issues. For example, you can wait for a high-performing employee to complete a project prior to reassignment, or you can choose to reassign staff who are already available. Another option is to recruit new employees, but it's important to find the right employees based on the particular problem you're experiencing.

Technology

After balancing both people and processes, you'll benefit from looking closely at the technology that connects the two. There are many kinds of technology you can integrate to optimize efficiency, including, for example, Manufacturing Operations Management (MOM) software, which many companies use to both maintain and optimize operations. The right technology will also provide plenty of actionable data that helps you make more informed decisions about how to improve operations. The technology you use in your company should be consistently efficient, user-friendly, and adaptable to system changes.

Performing an in-depth assessment in each of these areas can help you identify specific issues preventing you from achieving operational excellence. From there, you, your staff, and your stakeholders can figure out which steps to take for improvement and a better overall balance.

6 processes commonly used to achieve operational excellence

If you're wondering how to achieve operational excellence through specific proven processes, there are several key processes you can use. Each of these incorporates its own strategy that allows for continuous workflow improvement. The following are some of these processes and the ways you can implement them to your benefit.

Hoshin Kanri, or Policy Deployment

Hoshin Kanri, also known as “policy deployment” and other titles, was documented by Peter Drucker and a team of other experienced professionals. This "Lean" method allows businesses to organize, plan, and align their objectives, goals, and vision, level by level. This method helps optimize the efficiency of both transactional and manufacturing processes, by aligning metrics and improvement actions.

The Hoshin Kanri strategy consists of an elegant technique that involves identifying three to five significant metrics around which the organization wants to drive change. For instance, these changes could include improved quality, growth, or a better customer experience. 

Based on the changes you want to achieve, you can generate around five to fifteen control metrics that indicate what's working, and what you don't want to negatively affect. These metrics should remain in place regardless of the changes introduced. For instance, if your customer satisfaction scores are consistently high, this is a great control metric to use. You'll want this metric to stay where it is as you make certain changes. Typically, you select three to five change metrics to drive change. Depending on the metrics you choose, you can then designate who is responsible for each.

Hoshin Kanri is an extremely detailed framework within which the entire deployment planning cycle unfolds.

Newmawashi or Catch-ball - Core Element of Hoshin Kanri

This process of planning in Hoshin Kanri is known as Newmawashi or catch-ball. This process entails top-level management determining which three to five elements to change. Management will also determine specifically how to measure those changes. Additionally, this will entail deciding on the control metrics that must remain consistent following any change.

With variable and control metrics determined, top-level management can then ensure top leaders are in alignment and designate responsibility. In doing so, they'll be able to decide who is personally accountable for performing certain tasks and achieving end goals. From there, leaders will iterate with the lower levels to further align the organization from top to bottom.

The reason this process is called "catch-ball" is that it involves passing information and tasks back and forth until everyone in the organization is aligned. Each employee involved in the strategy should have a clear understanding of their role at every level. If this is done effectively, everyone at each level will be on the same page regarding what needs to be accomplished.

Theory of Constraints or Continuous Improvement

The Theory of Constraints is a body of knowledge that Eli Goldratt initially developed. This theory posits that, for any type of business or business process striving for better results, there's always going to be a constraint to the desired results. This constraint could be in quality, growth, cost, operations, or other performance-limiting elements referred to as "The Constraints." 

The practice of Theory of Constraints entails understanding the few vital resources that are limiting the desired results, whatever those results may be. The goal could be to produce more volume for every dollar spent on operations, among other objectives. As an example of this practice, top-level management may want to determine what constraints are causing issues with efficiency in a manufacturing facility. Looking at the people, technology, and processes implemented in the facility, management may conclude that a limited number of machines, staff, processes, or departments are part of the constraint. The goal would then be to break the constraints by fixing problems or adding more equipment, staff, or workspace to apply to the constraints. 

The Theory of Constraints also helps remove things that waste time and add nothing of value to your organization. An example of this could include a company with a sheet metal operation that involves forming the metal into various shapes using press brakes. Management may believe at first that their bottleneck in production has to do with inefficient press brakes. However, upon investigating, management may then discover that the real constraint comes down to a lack of staff available for shifts to facilitate 24-hour continuous operation. In this instance, the first step would be to hire more staff to ensure continuous operation.

Lean Sigma

The Six Sigma process improvement strategy was borne from a type of statistical principle stating that processes produce 99.99966% of a million deliverables without any defects. When combined with the Lean methodology used along with the Hoshin Kanri process, you can enjoy the advantages of increased process efficiency.

Lean Six Sigma commonly follows a DMAIC approach; five steps to make processes more efficient, including defining, measuring, analyzing, improving, and controlling the problem identified. By completing these steps using Lean methods, you can experience several benefits. For instance, you can make the transition from defect detection to prevention, standardize certain processes that improve agility, decrease lead times while increasing capacity, and consistently engage employees to boost morale and productivity.

Critical Path, Critical Chain

Both critical path and critical chain are critical types of project management practices that promote optimal project planning, execution, and completion. The critical path is the series of project activities that dictate the duration of the plan.
Meanwhile, critical chain project management takes every aspect of a project into consideration to ensure successful completion, with a focus on managing tightly the critical path activities. Critical chain accounts for people, space, technology, and materials, working to identify these resources, along with potential constraints limiting their performance.

Statistical Process Control

Statistical Process Control (SPC) provides quality with measurement and quality control in manufacturing operations. This is achieved by collecting data from various instrumentation and process measurements, which enables management to effectively evaluate, monitor, and control processes.

What roles and expertise are needed to achieve operational excellence?

In addition to the right processes, you need to have the right people with the required skill levels and experience to achieve operational excellence. Unfortunately, many companies struggle because of gaps in these skills and experience. You may even find that, upon discovering certain issues, your current staff doesn't have the skills needed to fix them. What you need are operational excellence resources to help fill those designated operational excellence roles.

While many companies may want to fill skills gaps by hiring consultants or new personnel with the necessary skills, these solutions consume valuable time and resources. Instead, consider bringing in such experts on an interim basis, which is often far more time- and cost-efficient. To determine the kind of expertise and roles you'll need to fill, the process starts with determining the exact nature of the issue and where the issue resides. 

The professionals provided by MetaExperts deploy three levels of expertise to an organization to effect change. These include Architect, Master, and Expert levels. With each of these levels, we are able to provide our customers with the help they needed to fill operational excellence roles.

Start-Up Story - High Tech

One of our customers developed a new technology with camera lasers that efficiently exterminated insect pests. The benefit of this technology was the ability to kill these pests without causing damage to surrounding crops. The problem was that the company needed to manufacture these devices at a much lower cost to sell them commercially. The MetaExpert was able to connect the company with the best suppliers and procure components to produce these devices more cost-effectively.

Solar Energy Solutions Provider

Another organization decided to hire a new staff member from France who could purchase the parts they needed for industrial-grade solar fields. Unfortunately, while this professional had ample expertise, the company would have had to wait six to nine months for immigration processing to complete before hiring the individual, when they needed this person as soon as possible. A professional from MetaExperts stepped in and not only helped procure the supplies needed, but also helped save tens of millions on these items to maximize profitability.

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Operational excellence tools and technologies you need to know

If you want to succeed and maintain operational excellence, there are certain key technologies and tools to use. Some of these operational excellence tools include:

Integrated Policy Management

Create a system that can effectively generate or change policies and documentation, allow for immediate editing capabilities for all documents and media, and push updated content to all key individuals.

Digital Transformation

Platforms used to connect to IoT improve the accuracy of data collection and analysis, which can optimize efficiency.

Automated Scheduling

Businesses should be able to manage all activities on a daily to an annual basis, which an automated scheduling system can achieve through task monitoring, recurring scheduling, and reminders.

Mobile Optimization

An operational excellence platform should also be mobile-optimized to enable employees and management to easily complete tasks anywhere and at any time.

OpEx is Not A Strategy

Get the Infographic Summary, The 6 Biggest Blocks to Achieving Operational Excellence
Download the Infographic Summary

Why you don't need an operational excellence consultant. You need MetaExperts.

To achieve operational excellence, many companies initially consider hiring consultants but doing so can be both costly and inefficient. Instead, hire experienced MetaExperts who can supply you with the precise talent you need, as soon as you need it. With our help, you'll benefit from sufficient resources, less overhead, and the right skills to fill the gaps that are holding your organization back. 

Depending on your specific constraints and pain points, we'll make sure you have access to the expertise and resources required to eliminate them.

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