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What is Operational Excellence – Part II

In our blog What is operational Excellence – Part I we wrote about what is operational excellence, the main principles of operational excellence according to Shingo, and what was needed to reach operational excellence by describing the five elements of operational excellence. Well, we end 2022 with this blog, an extension of the first one, where we will focus our attention on the real benefits and critical tools for operational excellence.

Benefits of Operational Excellence

If you are reading this blog is because you know you need to remain competitive in the market and the only way is to keep an open eye to improving opportunities and react to them. Tangible results are the fruit of operational excellence but there is a long way to reach those results. Any company seeks to have lower costs, less risk, higher profits, and more satisfied customers than the competition. One thing it is clear, you will only be able to respond to the changing market conditions if your processes are streamlined.

We believe that when a company is excellent in its operations, it is because it has a team that is well assembled and capable of successfully solving problems and achieving its goals to be competitive, thus maximizing customer value and developing efficient systems in which employees feel capable and focused on solving problems as soon as they arise.

The benefits are a symphony well orchestrated and made of people, processes, and technology. Harmony between your operations and your decisions is the result of using the knowledge and wisdom of your people, crystal-clear processes, and the best of every technology.

Operational Excellence Tools

After conducting a diagnostic of our operations, the following management tools are indispensable and highly effective in achieving operational excellence (OpEx) in a company:

There are many ways to apply those tools, however, digital tools are now available to reach the efficiency you are looking for. Remember you will need to use a systematic method to identify those improvement opportunities as quickly as possible. The goal is to align your strategy with your operations by using effective digital methods while increasing transparency and engagement.

How to measure Operational Excellence

Why is it so important to measure Operational Excellence (OpEx) properly?

Operational Excellence systematically manages the safety and health of personnel. And more in detail: reliability, integrity, the safety of processes, environment, efficiency, and safety of the stakeholders to meet the objectives of the company. All those elements are critical to adequately measure Operational Excellence in the Company. Essentially, that is why it is important to include some indicators, if you do not measure you will never see progress. Each company must identify the key indicators in its line of business and focus on them, ensuring that the entire organization is aware of them and that they are strictly monitored.

Internal indicators

These are some examples of internal indicators that would be a good starting point:

  • Costs (Materials, Personnel, Maintenance, etc).
  • Efficiency (OEE)
  • TOR (Inventory Turnover)
  • People Development (Training, Career Plan)
  • Health and Safety (Accidents without sick leave and with sick leave, accident-free days)
  • OTD (Internal Customer Service Level)
  • Internal Non-Quality Costs
  • Staff satisfaction surveys

External Indicators

Some examples of External Indicators:

  • OTD (Level of service with final Customer).
  • Non-Quality Customer Costs (No. of rejections and associated costs)
  • Exceeding Customer Audit expectations
  • Exceed compliance with legal regulations
  • To stand out among companies with a good working environment.

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mlean can help you to reach operational excellence and help you to measure your success. Request a demo.

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