There is no business in this world that does not require improvement. There is always one or two areas in the business that could be made better. But how does an organization point out what kind of change is needed in a particular area?
The changes in an organization take place because of different reasons, such as significant initiatives taken by the organization or change in the market demands. Most of the time, the change happens subtly and gradually over time. Operational excellence is a type of change that doesn’t happen overnight but takes place slowly.
In this article, you will learn about what operational excellence is, what are its ten core principles, and what are the different methodologies used to implement operational excellence.
Table of Contents
What is operational excellence?
Operational excellence can be referred to as a philosophy which makes the use of problem-solving and leadership skills to improve the organization continuously. Most of the time, people are not sure of how they should try to achieve operational excellence. Therefore, it is challenging to define operational excellence as it is considered either too ambiguous or too broad to define.
In simple words, we can say that operational excellence is not the set of activities that one should perform to achieve a particular output. Still, it is a type of mindset that you and your employees must have to achieve specific goals.
Let us first learn how operational excellence and continuous improvement related to one another before learning about the ten core principles of operational excellence.
Operational excellence vs continuous improvement
Operational excellence is a mindset where people working in the organization embrace principles and tools to achieve sustainable improvement in the organization.
In other words, we can say that operational excellence is when the people working in your organization understands the flow of value to the customers. That means, they should not only continuously make efforts to improve the values of the organization, but also make efforts to enhance the delivery.
Therefore, we can say that operational excellence is not just about cutting costs and improving the productivity of the organization. But it is about enhancing the culture of the organization which helps organizations to develop valuable products and services for their customers and in this way they try to achieve long-term sustainable growth.
Operational excellence is a process where the right type of tools is applied to the right procedures. When a company becomes successful in achieving this, then an ideal work culture is created in the organization where employees are treated in such a way that they feel not only empowered but also feel motivated to achieve excellence.
On the other hand, continuous improvement is an on-going effort to enhance the product, processes, and services of an organization. It incrementally takes place rather than instantly by some breakthrough innovations.
An organization that focuses on continuous improvement has more chances to maintain its constant development.
Ten core principles of operational excellence:
In this section, you will learn about the ten core principles of operational excellence. These principles are related to the culture of the company, the output of the company, and how well employees follow these principles.
1. Lead with humility
Constant improvement is necessary for any organization. The first step toward improvement is by accepting that there is a need for improvement, and it is also essential to improve. Having the awareness for improvement can be defined as lead with humility.
The leaders of an organization should be ready to seek feedback, listen to others’ opinions & suggestions, and be prepared to learn. If a leader of an organization practices this type of attitude, then the employees of the organization will feel empowered enough to vocalize their ideas and contribute their feedback.
Lead with humility can also be referred to as letting go of the past, and what you thought was the “right way” in the past.
When an organization adopts the principle “lead with humility” then consistent engagement can be seen in the organization, and employees like to participate in the activities taking place in the organization with zeal.
Employees will know that their suggestions and ideas will be welcomed when they point out areas where improvement can be made, and they will be shown rather than adverse repercussions.
2. Respect for every individual
The second core principle states that every individual working in an organization must be respected. This is because each person working in the organization has worth and potential to deserve to be respected.
When I mention everyone, that means it also includes customers, employees, suppliers, partners, and the whole community. It is not enough to have respect for others, but it is also essential to demonstrate that respect to them.
An employer can show respect to his employees by involving them in the development of future improvement plans for the organization. In this way, the employees will not only feel included but will also feel respected for the role that they play in the organization.
They will feel empowered and will feel motivated to think about positive ideas for the improvement of the organization and to achieve operational excellence.
3. Embrace scientific thinking
An organization needs to embrace scientific thinking. In science, scientists believe in rigorously testing, observing, analyzing and experimenting new ideas and methods to find out the best idea.
By embracing scientific thinking, an organization should also consider scientific thinking to improve constantly. You should continuously explore new ideas and encourage your employees to do the same without the fear of facing failure. You will never grow until you do not determine what works for you and what does not work for you.
4. Seek perfection
Another essential core principle that an organization must make part of its organization is continually seeking perfection. There will be many people who will not like this principle as they believe in the notion that perfection is unattainable. I am not saying it is not valid. There is always scope for improvement.
One should always strive to achieve excellence. When you do this, you create a different mindset in your organization. This will help your employees to have a different attitude to deal with problems that they face.
A challenge should be confronted with a positive attitude and rather than providing short term solutions, long term solutions should be considered, and a simplified work approach should be adopted without compromising the quality of the work.
5. Assure Quality at the source
Best quality can only be achieved by achieving the best quality of each process of the production. Each part of the production process must be performed rightly.
To do this, the work area should be designed in such a way that each problem in the work area becomes visible immediately. When a problem is encountered, then all the work should be stopped immediately, and the problem should be solved before moving ahead.
6. Focus on the process
It is a common human tendency to blame others when any problem arises. No matter how smart your employee is, it is impossible for him to consistently produce good quality work when there is a fault in the process.
Therefore, whenever a problem arises, rather than pointing the finger at your employees, you should look at the process and try to find out problems or issues in it. By adopting this attitude, you can make changes in the operations in such a way so that you can achieve any desired results.
7. Think systematically
An organization is formed of several small processes that are interconnected with one another to make the work happen. Most of the time, problems take place when work moves from one process to another.
Therefore, an organization needs to understand the relationship between the processes as it is essential to make the right decisions. You should broaden your vision of your organization and actively remove any barriers that prevent the movement of ideas, material, or information in the organization.
8. Create value for the customers
An organization needs to learn about the needs and expectations of its customers. It is in the hands of customers to define the value of something by conveying what they want and what is the price that they are ready to pay for it.
A company can achieve long-term success if it delivers to its customers what they wish to consistently and efficiently. Creating value for customers is a simple idea, but it is challenging to implement it.
An organization must work continuously to learn about the needs and expectations of its customers and keep modifying and enhancing its processes to meet the expectations of its customers.
9. Flow and pull value
The main objective of every organization should be to give maximum benefit to its customers. The organization should create in response to the demand and maintain the continuous flow. By doing this, the organization can make sure that there is less waste produced.
To do this, it is vital for your organization to continuously evaluate the demand of its customers and produce in the right quantity to meet the demand.
10. Create constancy of purpose
It is essential to keep your employees aware of your goals and mission statements. It is not a one time job that you tell your customers about your goals and forgets about it.
It is essential for you to continuously keep reminding your customers of your organizational goals, the progress that you are making, and efforts they are required to make to achieve that goal.
Your every employee should be aware of the purpose of the existence of your organization and plans. Having this knowledge will help them to align their personal goals and actions with the goals of the organization.
Operational excellence methodologies
To achieve operational excellence and organization must improve its culture and performance to achieve long-term sustainable growth. Companies should make efforts to move past the traditional and short-term methods and adopt modern and long-term methods to achieve constant success.
Several technologies were introduced over a while. In this section, you will learn about the three main methodologies that an organization can adopt to achieve operational excellence.
1. Six Sigma
Six Sigma is a set of tools and techniques that can be used to enhance business processes so that better products and services can be produced. The main objective of six Sigma is to improve the customer’s experience.
Several successful companies use six sigma methodologies to achieve operational excellence.
By implementing Six Sigma, you make sure that there are only 3.4 defects for every million opportunities. Errors can be referred to as anytime a company fails to meet the expectations of its customers. The following are the steps involved in the six sigma process.
1. Define
The first step is to define the problem. A plan can’t be developed if a problem is not defined correctly.
2. Measure
Once you have defined your problem. The next step is to look at all processes closely and measure all the data available. Look what is working well for your organization and what is not working well.
3. Analysis
Once the data is collected, the next step is to analyze the data and to find out the root of the problem.
4. Improvement
After the analysis, look for the possible solutions and implement those solutions at a small level to test their working.
5. Control
Once you determine the new solution. Now, it is time to evaluate its performance and maintain it. It is also essential to continuously measure the solution to check its effectiveness.
2. Lean manufacturing
The focus of lean manufacturing is to reduce waste in the production system. That means a business should focus only on the things that add value to the business.
The businesses that use lean manufacturing try to improve the quality of their products & services and eliminate everything that doesn’t add value to the business or doesn’t help in reducing the overall cost.
The following are the seven main areas in lean manufacturing which are considered deadly waste in lean manufacturing.
1. Overproduction
Producing something before it is needed only adds up cost and burden on the inventory of the company.
2. Waiting
Waiting time is that time where employees are not doing any work and just waiting for the next task.
3. Transport
Transport is a waste which is caused by the unnecessary movement of vehicles.
4. Motion
Motion waste refers to poor coordination among workers.
5. Over-processing
When more time is spent on processing the goods than the required time.
6. Inventory
Inventory waste takes place when there is high supply but low demand for the products in the market.
7. Defects
Production of defect products or services adds to the waste.
3. Kaizen
“Kaizen” is a Japanese word and its meaning is “Continuous improvement”. This methodology is used in business for the continuous implementation of positive change at work. The main principle of Kaizen is to improve the process, and an improved process leads to better outcomes.
Kaizen encourages applying small changes such as cutting costs, enhanced employee productivity, and improved customers’ experience in business to achieve significant results.
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