What is operational excellence and how can it be achieved?
03 December 2020
As certain markets become increasingly more competitive, the importance of having quality ingrained throughout your business has never been higher. With quality in mind, what is operational excellence, exactly? While the term ‘operational excellence’ may sound like something intelligent to say at a business meeting, it should be acknowledged that this is not a process that can be achieved overnight. However, with the right balance of planning and patience, you could potentially grow your business into a market leader within your respective field.
In this article, we help you to understand the broad question ‘what is operational excellence?’ by covering the following points:
- The definition of operational excellence
- Operational excellence vs. continuous improvement
- The core principles of operational excellence
- How operational excellence can be achieved
- The potential obstacles you could face
- A case study of operational excellence in practice
Firstly, let us delve into the meaning of operational excellence.
Defining operational excellence
Operational excellence can be difficult to define. The main reason for this is due to it being more of an ethos that should be present within every member of staff rather than a concrete set of activities.
However, operational excellence can be defined as executing a business strategy more effectively and with a higher level of consistency than your competition. For this to be achieved, every employee must have the capacity to see the flow of value to the customer and fix this as and when interruptions arise.
Although this is a great starting point, operational excellence can be understood better within the context of continuous improvement.
Is there a difference between operational excellence and continuous improvement?
Although operational excellence and continuous improvement work in tandem, they aren’t the same ideology.
Continuous improvement is essentially the on-going endeavours to adjust and improve an organisation’s processes, products or services. These steps are taken gradually over time with the long-term goals of continuing to build and maintain on these improvements. In other words, continuous improvement focusses on making each existing process perfect.
Conversely, operational excellence is not as simple as attempting to reduce costs or increase productivity in the workplace. Moreover, its aim is to create a company culture that allows the production of valuable products for your customers and achieve sustainable growth over a long-term period. For this culture to be successful, employees are given the trust and accountability to perform their respective roles in line with the customer’s needs.
Operational excellence is therefore a company culture that is ingrained throughout your business and is acknowledged by every member of staff involved.
In summary, continuous improvement is essential to progress key aspects of your organisation. However, operational excellence is required to instil the appropriate company culture to reach your continuous improvement goals.
Find out how our quality management system assisted Brussels Airlines to achieve operational excellence below.
What are the core principles of operational excellence?
Before we delve into how you can adhere to operational excellence, it is important that you have an idea of its core principles. Despite there being several core principle frameworks that can be applied to operational excellence, the go-to source among many is the Shingo model by Dr Shigeo Shingo. These core principles include the following:
#1 Respect for every individual
First and foremost, respect must be applied across your organisation to employees, customers, partners, suppliers, and the community as a whole. When those around you are respected, they are more likely to buy into what your organisation represents and feel emotionally invested in achieving your desired outcomes. To most people, being respected in their job role is essential.
This can be demonstrated by creating development plans for your employees for them to further enhance their skills to perform their role to the highest standard.
#2 Lead with humility
As a leader, you should always demonstrate humility. Improvements are most likely to occur when you are able to identify and acknowledge your own shortcomings before looking for a solution to the problem. A great example of humility is having the willingness to listen to people across your organisation regardless of their job role and status.
#3 Seek perfection
Although perfection seldom exists, striving for it will help create an environment worthy of operational excellence. Seeking perfection often means looking for long-term solutions rather than quick fixes which will hold your organisation in good stead. As everyone across the organisation can get involved, different points of view make for improvements where they are required.
#4: Embrace scientific thinking
Take a leaf out of a scientist’s book by constantly testing ideas through experimentation, observation and analysis. Applying this approach allows teams to understand new concepts, learn from short-comings and make future amendments. In order to strive for operational excellence, you must have the mindset of testing new ideas without the fear of failure.
#5: Focus on the process
If something goes wrong, it is important to take a step back and see the bigger picture. In other words, it is too simple to blame people – quite often underlying issues are rooted in the process instead. Once any deficiencies are ironed out within the system, your employees will then be able to produce positive results on a consistent basis.
#6 Assure quality at the source
Operational excellence can only be attained once each aspect of your organisation is performed correctly the first time. If a problem does arise, however, it must be resolved at the outset. It is essential to correct any errors before they move further along the process and cause further damage.
#7: Flow and pull value
The main objective of an organisation is to provide the highest quality value to its customers. With this in mind, you should ensure that the process and workflow are continuous, as failing to do so can create waste and anomalies.
It is equally important to not over-manufacture by meeting your customer’s demands rather than creating more than is necessary.
#8: Think systematically
When thinking systematically, it is vital that you remove obstructions that can prevent ideas, information, or materials. There are several facets to all organisations and it is important to fully understand how these function together as it will allow for making better decisions. Alternatively, taking a narrow vision can make it more difficult to overcome any potential barriers you may face.
#9: Create consistency of purpose
Your organisation should be clear on its goals and mission statement from the very beginning and highlight these as you continue to develop.
Every employee in each department should have a sound knowledge of the organisation’s ethos and its long-term ambitions. This knowledge will allow them to align their own actions and goals with those of the business.
#10: Create value for the customer
Creating value for the customer starts with understanding the customer’s needs and what they are willing to pay for these to be fulfilled. Long-term success with this value can only be achieved by organisations that meet their customer’s expectations on a consistent basis.
You should strive to be successful in this area by continuously working to gain a deeper understanding of your customer’s requirements.
How to achieve operational excellence
Now that you have an idea of the core values that help shape operational excellence, what steps should you take to meet this standard?
Although the answer to this is not necessarily set-in-stone, there are several actions you can take which will potentially assist in making you a successful company working to an operational excellence standard. These can include the following:
Ensure operational excellence is fully understood
A great starting point is to ensure that the concept of operational excellence is introduced to all employees. This will make it easier for your organisation to understand your customer’s expectations and the resources that should be used in order to achieve these goals. This is crucial because if there’s a lack of understanding among your staff, your long-term vision will be unclear.
Empower your employees
Operational excellence will not be achieved with all the direction coming from the top of the organisation. A more collective approach is required. It will require front-line employees being given the trust and responsibility to identify and action any interruptions that may occur in the flow of value. The higher end of the hierarchy should be available to manage the strategic direction and provide the essential resources for the employees to ensure quality is maintained on a consistent basis.
Ensure communication is key
Success can only be achieved if your company objectives are communicated clearly to your employees. It is therefore vitally important that each member of staff fully understands what their role is along with their accompanying goals. Feeding back to your staff is equally as important to ensure that they are acknowledged for their good work or to offer training if there are any gaps in their knowledge.
Prepare for problems
Having a general work-flow standard is great but you also need one in preparation in case of an abnormal flow. Although your default standard will run normally, it is crucial to have a back-up plan that your employees can adopt when it is required to ensure quick resolution.
Emphasise visual flow transparency
If there is an obstruction to the flow of value to the customer, it’s essential that it is clearly visible so you can make the required amendments. It is for this reason why many improvement tools are designed to allow visual management such as images and dashboards; which leads us on to our final point.
Use a quality management system
Using a quality management system will make it easier for you to enforce and moderate the previous steps to assist you in being recognised as an organisation that functions to operational excellence. In addition to the above, our QMS also allows you to do the following:
- Define and document systems, policies and procedures with robust change control.
- Publish and distribute your QMS to all appropriate personnel, including the supply chain.
- Create a framework to demonstrate capability and competence for training and development.
- Verify compliance of policies and procedures through regular internal audit.
- Report incidents, near-misses and complaints; create action plans and track through to completion.
- Analyse audits and findings, incidents and occurrences, and determine causal factors.
Discover more about our QMS - Q-Pulse
What obstacles could you face?
As previously mentioned, operational excellence is not straightforward, and the likelihood is that you will be faced with obstacles along your journey. These issues could include the following:
Is your business progressing by hitting the targets you initially set? If not, you may need to step back, adopt a different approach, or move the goalposts slightly.
Lack of understanding
It is possible that some employees may not fully understand the business strategy and therefore how their role can be a major contribution to the overall customer experience. In this case, bespoke training may be required to upskill your employees to the required standard.
See our health and safety learning management system for more information.
Too much data
Sometimes, there can be such a thing as too much data. Although having access to key metrics about your business is vital, it can be counterproductive if the data is too complex for you to understand. If this information is not managed correctly, it can lead to poor decisions being made.
Inability to evolve
As markets become more competitive, the need to evolve at the right time is paramount. Quite often, organisations are able to adapt quickly enough in order to stay ahead of their immediate competition.
Poor product management
Bringing new products to market is not a straightforward task and involves stringent process management tasks to be completed. Without this, the quality of your products will lack consistency and will have a detrimental effect on your organisation’s long-term plans.
See how our product lifecycle management software can assist.
Not adhering to EHS compliance
If you are opening a new organisation in a different country or state, the chances are the EHS compliance obligations will differ to the others. Not adhering to these regulations can therefore damage your brand’s reputation which can have a negative effect on your long-term vision.
Find out more about how our EHS compliance software can assist with these potential issues.
How can Ideagen assist you with operational excellence?
At Ideagen, we have a broad range of quality management software that can be applied to all the areas covered in this article. Contact us today if you wish to discuss how we can assist with the day-to-day running of your organisation.
Now that the question ‘what is operational excellence?’ has been answered, discover more about our software solution packages.