The business environment has never been this competitive as businesses seek measures to improve their operations and productivities. One way to effectively achieve these is to understand operational excellence (OpEx) and how it works.
In addition, beyond just boosting efficiencies or optimizing ROI, a company can be made to operate better. Moreover, a company should be able to adapt to shifting market conditions and technologies that serve as channels for the modern global economy.
This article will examine operational excellence, proven core principles, and actionable methodologies that have and can be used to achieve it. So, sit tight, get your learning tools, and prepare to apply these principles as we examine operational excellence critically.
What is Operational Excellence?
Operational excellence (OpEx) is a philosophy, a mindset, that embraces certain principles and tools to create a culture of excellence within an organization. In addition, it believes in problem-solving and leadership as a means of continuous development.
Specifically, an organization’s success depends on the philosophy of its management and team members and how much of that philosophy materializes. As a result, customers would see a philosophy of operational excellence as they participate in the flow of value from the organization.
Furthermore, this concept was first introduced by Dr. Joseph Juran in the 1970s while training Japanese leaders on improving their operational quality. Consequently, OpEx offers businesses a way to lay out a plan for ongoing progress, giving them a competitive edge.
Hence, when operational excellence is done correctly, it can help business executives make better decisions and encourage employees to improve continually.
Read also: Leadership skills every entrepreneur needs for business success
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.
The Shingo Institute of the Jon M. Huntsman School of Business gives the yearly 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 emphasizes respect for every single person in an organization. This is because everyone has worth and something to contribute. A devout act of showing respect to everyone must be performed.
Moreover, one way to achieve this is to involve everyone in the improvement process and make 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 organization’s overall development and are willing to do all necessary to make it work.
Principle #3: Seek Perfection
The concept of “perfection” is often challenged, as it is often seen as an impossible venture. It is said that “perfection is not attainable.” However, 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 challenge that may come with an excellence mindset. This means that complacency cannot exist within the organization’s operations.
Hence, an organization that seeks perfection always raises the bar of its standards and is at its best at any given time.
Principle #4: Assure Quality at the Source
This model emphasizes the need to maintain high quality in every organization section. When each section is paid attention to, and operations are done correctly, any mistake can be spotted easily, and the necessary corrections can be made immediately.
Principle #5: Flow and Pull Value
Every organization strives to deliver maximum value to its customers. One way your organization optimizes flow and pulls value is to ensure everyone understands the customers’ needs and is ready to make the necessary adjustments and provisions.
To achieve this, you must ensure that operations do not interrupt, as interruptions can affect your team’s efficiency and may waste their time.
Principle #6: Embrace Scientific Thinking
Organizations improve because they are open to continuous experimentation with ideas. Hence, you should identify what works for you and what doesn’t.
Doing this shows that you’re continuously learning and that your team members should do the same.
Principle #7: Focus on the Process
Often, when there’s a mistake in an organization’s operations, it’s easier to point fingers at whose fault it is. Fact is, the “blame game” is often not productive, hence, the Shingo model emphasizes the need to focus more on the process than just the end result.
Moreover, to achieve operational excellence, you must embrace the fact that a process could be the issue, not the employee. When you correct the process, you’ll be able to provide solutions and make progress.
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Principle #8: Think Systemically
To cultivate operational excellence, you must be able to think “system” rather than some particular section of your organization.
In addition, you should understand the interdependence of every section on one another and use this awareness to the advantage of the organization’s overall growth.
By thinking systematically, you can 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. Knowing your organization’s mission and vision statements is not enough; being consistent with them is yet another.
To effectively establish operational excellence among your employees, you should create a system that reinforces the organization’s purpose and why they must constantly achieve it.
Read also: Innovative culture in business: Building a path to success
Principle #10: Create Value for the Customer
Customers don’t come to your company because they necessarily like the individuals there but because you offer a value they need and are willing to pay for.
The Shingo model emphasizes the importance of understanding customers’ needs and making provision for those needs.
Moreover, when your company focus is to create value, then, you’ve been able to establish OpEx as a culture.
Actionable Operational Excellence Methodologies
Operational excellence can only be established as an organizational culture when actionable methodologies are followed. Here is a close look at the top three methodologies.
1. Lean Manufacturing
Lean manufacturing is an operational excellence methodology that attempts to eliminate waste in the production process. Additionally, it emphasizes that a company should add value to customers and eliminate anything that may undermine that.
Furthermore, the main idea of lean manufacturing is that companies should improve the quality of their products and services.
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 customers need. This often leads to waste within the company
II. Transportation: This occurs when unfinished products are transported unnecessarily, leading to waste in transportation resources.
III. Motion: This refers to any movement or action 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 more time spent processing a product than required.
VI. Defects: This waste comes from mistakes in the production process that lead to the loss of some products.
VII. Inventory: Inventory waste occurs when the supplied goods exceed the demand requiring that it be returned to the company, which can be wasteful.
2. Six Sigma
The Six Sigma methodology is a set of tools and techniques designed to improve business operations. It is focused on improving the customer experience by eliminating any variation.
Furthermore, many companies have implemented this methodology and have had success. An example of such companies is the Fortune 500 companies.
Hence, utilizing the Six Sigma method will produce less than 3% of anomalies in a million business opportunities.
Moreover, the six-sigma method can help companies improve customer service and eliminate variation using the following steps:
I. Define the problem: Being able to clearly define the problem that the company is facing offers you the insight to where and what the solutions are.
II. Measure: Next, measure what works well within your company and what does not using appropriate data, and then make the necessary improvements.
III. Analysis: Having successfully measured what works and what doesn’t with appropriate data, you then analyze the problem’s root cause.
IV. Make Improvements: Afterwards, you need to seek the most suitable solutions and apply them on a small scale. When the effects are good, you can then make it larger.
V. Take Control: Once you’ve implemented the new solutions, ensure to make it a continuous process.
3. Kaizen
Kaizen is a Japanese root word meaning “continuous development.” This operational excellence methodology has been found relevant in several million companies worldwide.
In addition, the Kaizen methodology focuses on improving the processes by which results are obtained within a company and the results themselves. Furthermore, it focuses on building team spirit within the workers of an organization.
Moreover, when your workers work as a team, ensuring full participation and achieving your short- and long-term goals will be easier. When these processes are improved, there has to be continuity.
Hence, consistent improvement is the key to achieving a company’s short-, mid-, and long-term goals, and that’s what “Kaizen” is all about.
Conclusion
Operational excellence is a mindset that must be constantly woven into the minds of organization workers, and with it, your desired results can be attained.
The three methods of operational excellence have analyzed ways of avoiding defects or anything that retards growth or causes wastefulness.
Therefore, by employing its proven principles and actionable methods just as Dr. Joseph M. Juran taught in the 1970s, you can replicate excellence within your organization
