What is Operational Excellence?
Published on May 17, 2016
Operational Excellence is not easy to define. Some descriptions are too broad. Others set parameters so narrow that the ultimate definition seems too focused in scope. Often, ending up with definitions that seem plausible in an academic sense, such as:
- Being world class
- Being the best globally
- Excellence in everything we do
These definitions are difficult to translate into practical actions. Worse yet, so many different interpretations of what “Operational Excellence” is are developed leaving an organization with a lacks of precise definition and a roadmap to follow for achieving it.
What Operational Excellence Really Is
To leverage operations to achieve business growth, the first step is to understand what Operational Excellence really is, and how that is achieved. Think of it as answering the question: Where will the journey of continuous improvement take the organization? A good answer is that the journey will take the organization to Operational Excellence, or the point at which —
Each and every employee can see the flow of value to the customer, and fix that flow before it breaks down.
While this definition may seem simple, it is in this simplicity that the magic lies.
Why This Definition Works
By defining Operational Excellence in this way, it applies to every level and every person in the organization, from executives all the way down to the employees producing the product. It’s clear, concise, practical and, most importantly, actionable and teachable. Everyone in the organization “gets it.” They know that, in their respective areas, there should be a visible flow of product or information. They should be able to recognize if that flow is normal or abnormal and what to do if it is abnormal, all without requiring the assistance of management.
With this definition of Operational Excellence, an organization can begin to teach the true power of lean value streams by taking them a step further. Creating value streams that not only flow at the rate of customer demand, but are made visual in such a way and to such a degree that every employee in the organization can physically see that flow.
Visual Flow That Everyone Can See & Understand
We have all heard of the visual factory, but this is different. We are not talking about identifying where tools, equipment, processes, and departments are located. Rather, in Operational Excellence, visuals are strictly for the timing of flow. And these visuals are easy to understand by anyone, to the point where a visitor can come into our operation and tell us if we are on time without asking any questions, requesting any reports, or looking at any computer printouts. The intent is to make the operation so visual that every employee can see the flow of value to the customer and tell if this flow is normal or abnormal.
How Op Ex Works When Things Go Wrong
Once everyone can see normal and abnormal flow, the next step is to create what’s known as standard work for abnormal flow. In this phase, we create standard work that corrects when abnormal conditions in the flow begin to occur. This means that the people working in the flow (either on the manufacturing floor or in the office) have a standard methodology for correcting things when they go wrong. The end result is something called “self-healing” value streams, which means that when flow breaks down somewhere in the operation, the employees working in the flow are able to fix it without the need for management intervention.
Op Ex Results in Business Growth
The last phrase of Op Ex (and fix that flow before it breaks down)is a critical feature, since once we achieve Operational Excellence, we won’t need management involvement in the day-to-day happenings of the operation. Instead, operations leadership can spend their time working with sales and the innovation process to develop new products that customers want and that fit the operation’s capabilities. The result is time spent on activities that generate top-line growth.
The key to success in achieving Operational Excellence starts with the right definition, one that everyone, at all levels of the operation, can understand and know how to achieve. That way, each employee will see that our continuous improvement efforts are not about eliminating waste or lowering cost. Rather, the end goal is to have operations be a key player in creating and delivering products that customers want in order to establish perpetual business growth.