Operational Excellence: Everything You Need To Know

Operational Excellence(OE) is the key to increased profitability and competitiveness in your factory, as well as complete customer satisfaction. 

OE drives business performance because of its unwavering commitment to continuous improvement.

Let’s take a look at the core principles, strategies, and benefits behind this philosophy.

What is Operational Excellence?

At its core, OE is a mindset or culture focused on executing processes, activities, and tasks as efficiently as possible.

This means processes become better, faster, safer, and more cost-effective, and every organisation component is actively involved and accounted for.

The Shingo Model: A blueprint for Operational Excellence

 

Shigeo Shingo developed the Shingo Model for Toyota, which works as a layout for OE and helped shape Toyota’s operational approach.

The Shingo Model highlights the importance of embracing principles over unbreakable organisational rules.

The key operating principles of this methodology are:

  • Respect everyone
  • Lead with humility
  • Pursue perfection
  • Ensure quality at the source
  • Improve flow and systems
  • Embrace scientific thinking
  • Focus on the process
  • Think systemically
  • Create constancy of purpose
  • Create value for the customer

How to achieve Operational Excellence: Strategies

The most important thing to achieve OE is to implement a systemic approach.

This involves looking for ways to improve the efficiency of your processes constantly, as well as getting rid of waste at any point in your value chain.

A great way to do this is by adopting the Lean Process Mapping method, which consists of five elements:

Vision

To guide your team and make informed decisions, you need to have a clear vision of your goals, where you are at the minute, and how to get to where you want to be.

This helps you make sure your efforts are going in the right direction and avoids wasting time, resources, and money.

Customer value

To deliver real value, you need to understand and address your customers’ needs.

This means customer satisfaction should always be at the core of your business and the driving force behind your efforts.

Processes

To develop a great OE strategy, you need an in-depth understanding of your processes.

To do this, you need to analyse your workflows and identify any redundancies, waste, and areas for improvement, always striving for continuous improvement.

Team culture

Achieving OE is easier with a skilled, coordinated team.

To do this, match your workers with the best positions based on their knowledge and performance, train them, and foster a collaborative environment where problems get solved collectively.

Tools and resources

To carry out their tools properly, your team needs effective tools.

They also need continuous training and keeping up to date with the latest market trends, as these are both critical components to achieve OE and maintain it.

Benefits of Operational Excellence

Apart from helping your company stay competitive, OE also brings you increased cost-effectiveness, reduced risks, and higher rates of customer satisfaction.

When you streamline your processes, you can respond quickly and effectively to changes in the market. 

When you nurture a culture based on problem-solving and maximising your workforce’s potential, your chances of achieving and maintaining success multiply.

Not to mention this approach will also improve the quality of your internal communications, cross-sectional collaboration, and overall efficiency.

How to measure Operational Excellence

To manage safety, health, and stakeholder satisfaction, you need to be measuring OE properly.

If you skip this step and don’t measure where you are in terms of OE, you won’t be able to see the progress you’re making.

The most effective way to measure OE is by identifying key indicators for both internal and external operations. It’s essential everyone in the organisation is aware of these indicators and that they also monitor them constantly.

Some examples of indicators are:

Internal Indicators

  • Cost control (e.g. materials, personnel, maintenance)
  • Efficiency improvement (e.g. OEE – Overall Equipment Effectiveness)
  • Inventory turnover rate (TOR)
  • People development (e.g. training programs, career plans)
  • Health and safety performance (e.g. accident-free days)
  • Internal customer service level (On-Time Delivery – OTD)
  • Internal non-quality costs
  • Employee satisfaction surveys

External Indicators

  • Customer satisfaction and service level (e.g. OTD with final customers)
  • External non-quality costs (e.g. rejection rates, associated costs)
  • Exceeding customer audit expectations
  • Compliance with legal regulations
  • Reputation as a company with a positive working environment
  • Measuring these indicators allows organisations to track their progress toward Operational Excellence, identify areas for improvement, and make data-driven decisions to drive continuous enhancement

mlean® & Operational Excellence

Operational Excellence is the gateway to peak performance and long-term success. 

When you adopt the principles, strategies, and tools of OE, you streamline your processes, maximise customer value, and foster a culture of continuous improvement. 

OE requires a clear vision, customer-centricity, process optimisation, strong team dynamics, and the right resources. This brings us to our next point.

There are several management tools you can use to achieve OE, and in this day and age, the best ones are digital.

When you get a digital tool, you ensure no relevant information gets lost in your factory, and processes become simpler and less messy. Everybody can access information about anything at any point.

That is if you use a complete and flexible digital tool like our mlean Production System (mPS).

Many factories use different digital tools to achieve OE only to find out those tools don’t integrate well, don’t cover all the bases their factory needs, or fail to provide a tailored approach.

Truth is, every factory is different, and the best thing you can do to achieve OE is to unify your tech stack and choose a tool that won’t let you down.

Our mPS offers a comprehensive, centralised, and flexible digital solution that helps you implement continuous improvement and achieve OE easily.

With our mPS, you can standardise your processes, maintain those standards, manage your shop floor, and check that everything’s working as it should.

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