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Wednesday, 21 January 2015 00:00 - - {{hitsCtrl.values.hits}}
What is operational excellence?
How many companies in Sri Lanka today can claim that they are operationally excellent? Whilst there may be some companies in the manufacturing sector which are excellent on the factory floor, there are very few if any at all, operationally excellent in all aspects of their business such as finance, marketing, sales, exporting, distribution, etc.
Whilst there has been a huge emphasis on marketing, HR and finance, a critical area – operational excellence together with the required professionals has been neglected. The case in point is to ask whether there is an international institute of quality excellence which turns out Chartered operational excellence professionals. Sadly, not.
However there are individuals who have specialised in Kaizen, Lean and Six Sigma who are professionals in quality control, in the wider sense. Quality control in this case is not only specifically product related – it is concerned about A to Z of the final product or service, which means the manner it is delivered from commencement to delivery to the customer.
Operational excellence is not the same as continuous improvement – which is a never-ending journey which will improve the operation forever. By setting the goal of perpetual improvement to make the operation more efficient, we may incrementally reduce cost, but there is no guarantee that our business will grow! There is no point being efficient, if the demand for our products is dropping or has dropped.
To enable the operations section to achieve business growth, the first step is to understand what operational excellence really is and how we can achieve it. A good answer is that our journey will take us to operational excellence, when ‘each and every employee can see the flow of value to the customer, and fix that flow before it breaks down’.
By defining operational excellence in this way, it applies to every level and every person in the organisation, 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 organisation can understand this. They know that, in their respective areas, there should be a visible flow of product or information. They should be able to recognise if that flow is normal or abnormal and what to do if it is abnormal, all without requiring the assistance of management.
Lean value streams
With this definition of operational excellence, we can begin to teach the true power of lean value streams by taking them a step further. A lean value stream is a graphical display of the process from beginning to end, run in the most efficient way. We can now create 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 organisation can physically see that flow.
This is not the visual factory where we are concerned 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. This means that we must address the eight forms of ‘waste’ in the value stream.
Normal and abnormal flow
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-regeneration’ 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.
This last phrase 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. The end goal is to have operations be a key player in creating and delivering products that customers want in order to establish healthy and continuous business growth. For more details on operational excellence and value stream mapping, please consult Avix Consulting, [email protected].
