29-08-2017, 12:52 PM
Operational excellence is not easy to define. Some descriptions are too broad. Others are limited in scope. We often end up with definitions that seem plausible in an academic sense, such as "Being world class," "Being the best worldwide," or "Excellence in everything we do," but are difficult to translate into specific practices.
To properly define Operational Excellence, it is worth looking at the evolution of the term.
Michael Treacy and Fred Wiersema described three propositions or disciplines of value that an organization might choose to compete in its market or industry: Operational Excellence, Product Leadership, and Customer Intimacy.
They hold that market leaders must excel in delivering extraordinary levels of performance in one of these three value propositions, keeping standards competitive in the other disciplines.
Based on the findings of Treacy and Wiersema, market leaders will seek to pursue a diffused business strategy in two or three disciplines, but will continually focus on their organizational design, processes, technology, and competencies to enhance value discipline in which They want to excel.
Organizations that pursue a differentiation strategy of Operational Excellence are able to offer a combination of price, quality and ease of purchase and service that the other organization in their market or industry can match.
Additional information on the elements of the management philosophy of operational excellence can be found at:
1. Shingo Award for Operational Excellence
2. Malcolm Baldrige Nation Quality Award
3. The EFQM Model of Excellence
Achieving Operational Excellence requires the successful implementation of a Business Execution System that effectively and transparently integrates the following four building blocks:
• Implementation of strategies
• Performance Management
• Excellence in Processes
• High Performance Work Teams
Operational Excellence is an organizational leadership element that emphasizes the application of a variety of principles, systems and tools for the sustainable improvement of key performance metrics.
This can be reduced to seven areas that organizations should excel in:
1. Strategy - Leadership creates vision and values and refines it in a strategic approach and direction
2. Metrics - dashboards balanced cascade down the organization
3. Culture: the staff understands the strategy and is responsible for the results
4. Processes - integrated business process architecture (BPM)
5. Methodology - application of discipline and rigor to continuous improvement through Lean Six Sigma (LSS)
6. Project management - applying discipline and rigor to projects (PMBOK)
7. Tools - delivery of solutions (processes, products and services), problem solving and continuous process improvement.
It is also essential to understand that these areas are all interconnected. For an organization to claim that it operates in the Operational Excellence space, it must excel in all seven areas.
The following model shows the interconnection of all these areas of experience.
These seven areas of focus when combined effectively create the model for Operational Excellence. If we extend the seven elements we see the application of many tools and management techniques:
1. Strategy - We can apply tools, such as McKinsey 7 S, Balanced Scorecards and Strategy Maps.
2. Metrics - the use of Balanced Scorecards and Key Process Indicators (KPIs) of BPM.
3. Culture: includes leadership, change management, consensus building, motivation and team building.
4. Processes - processes defined, measured, continuously improved and controlled using the disciplines of Business Process Management.
5. Methodology - There are several methodologies, the most used are: BPM, Kaizen, Lean, Values Flow Mapping, Six Sigma, Lean Six Sigma and Process Improvement Tools. Many organizations have found that using combinations of these together gives the optimum result.
6. Project Management - A rigorous and disciplined approach to project management is required to apply the methodologies and tools needed to succeed. The most widely recognized is the PMBOK (Project Management Body of the Project Management Institute).
7. Tools - Organizations that are good at continuous improvement have an established set of tools they use to work on process improvement projects.
These are also the tools used by BPM and Lean Six Sigma methodologies.
Process Improvement Tools:
• Work with ideas - Brainstorming, affinity diagram, multi-voting
• Process flow tools - SIPOC diagram, Process map, Process flow analysis, Value-added analysis
• Customer Voice (VOC)
• Data collection - Operational definitions, check sheets, sampling, analysis of measurement systems, Pareto charts
• Descriptive statistics and data screens - Histogram, performance charts
The objective of Operational Excellence is to help the organization by:
1. Maintain focus on return on investment (ROI) and productivity, while reducing costs
2. Get greater reuse of technological investments to increase operational efficiency
3. Align the operating model to support growth
Operational Excellence will help an organization:
• Provide measurable improvements: OPEX links operations to strategy and sets performance metrics to help organizations stay on track to meet or exceed their goals.
• Add capacity and flexibility to our operating model - OPEX can help improve quality, costs and delivery time, as well as identify potential savings while promoting growth and innovation.
• Creation of effective organizations - OPEX focuses on changes in the organizational model and delivery of services that drive results, with emphasis on the transversal nature of the processes used to produce products and services for our clients.
To properly define Operational Excellence, it is worth looking at the evolution of the term.
Michael Treacy and Fred Wiersema described three propositions or disciplines of value that an organization might choose to compete in its market or industry: Operational Excellence, Product Leadership, and Customer Intimacy.
They hold that market leaders must excel in delivering extraordinary levels of performance in one of these three value propositions, keeping standards competitive in the other disciplines.
Based on the findings of Treacy and Wiersema, market leaders will seek to pursue a diffused business strategy in two or three disciplines, but will continually focus on their organizational design, processes, technology, and competencies to enhance value discipline in which They want to excel.
Organizations that pursue a differentiation strategy of Operational Excellence are able to offer a combination of price, quality and ease of purchase and service that the other organization in their market or industry can match.
Additional information on the elements of the management philosophy of operational excellence can be found at:
1. Shingo Award for Operational Excellence
2. Malcolm Baldrige Nation Quality Award
3. The EFQM Model of Excellence
Achieving Operational Excellence requires the successful implementation of a Business Execution System that effectively and transparently integrates the following four building blocks:
• Implementation of strategies
• Performance Management
• Excellence in Processes
• High Performance Work Teams
Operational Excellence is an organizational leadership element that emphasizes the application of a variety of principles, systems and tools for the sustainable improvement of key performance metrics.
This can be reduced to seven areas that organizations should excel in:
1. Strategy - Leadership creates vision and values and refines it in a strategic approach and direction
2. Metrics - dashboards balanced cascade down the organization
3. Culture: the staff understands the strategy and is responsible for the results
4. Processes - integrated business process architecture (BPM)
5. Methodology - application of discipline and rigor to continuous improvement through Lean Six Sigma (LSS)
6. Project management - applying discipline and rigor to projects (PMBOK)
7. Tools - delivery of solutions (processes, products and services), problem solving and continuous process improvement.
It is also essential to understand that these areas are all interconnected. For an organization to claim that it operates in the Operational Excellence space, it must excel in all seven areas.
The following model shows the interconnection of all these areas of experience.
These seven areas of focus when combined effectively create the model for Operational Excellence. If we extend the seven elements we see the application of many tools and management techniques:
1. Strategy - We can apply tools, such as McKinsey 7 S, Balanced Scorecards and Strategy Maps.
2. Metrics - the use of Balanced Scorecards and Key Process Indicators (KPIs) of BPM.
3. Culture: includes leadership, change management, consensus building, motivation and team building.
4. Processes - processes defined, measured, continuously improved and controlled using the disciplines of Business Process Management.
5. Methodology - There are several methodologies, the most used are: BPM, Kaizen, Lean, Values Flow Mapping, Six Sigma, Lean Six Sigma and Process Improvement Tools. Many organizations have found that using combinations of these together gives the optimum result.
6. Project Management - A rigorous and disciplined approach to project management is required to apply the methodologies and tools needed to succeed. The most widely recognized is the PMBOK (Project Management Body of the Project Management Institute).
7. Tools - Organizations that are good at continuous improvement have an established set of tools they use to work on process improvement projects.
These are also the tools used by BPM and Lean Six Sigma methodologies.
Process Improvement Tools:
• Work with ideas - Brainstorming, affinity diagram, multi-voting
• Process flow tools - SIPOC diagram, Process map, Process flow analysis, Value-added analysis
• Customer Voice (VOC)
• Data collection - Operational definitions, check sheets, sampling, analysis of measurement systems, Pareto charts
• Descriptive statistics and data screens - Histogram, performance charts
The objective of Operational Excellence is to help the organization by:
1. Maintain focus on return on investment (ROI) and productivity, while reducing costs
2. Get greater reuse of technological investments to increase operational efficiency
3. Align the operating model to support growth
Operational Excellence will help an organization:
• Provide measurable improvements: OPEX links operations to strategy and sets performance metrics to help organizations stay on track to meet or exceed their goals.
• Add capacity and flexibility to our operating model - OPEX can help improve quality, costs and delivery time, as well as identify potential savings while promoting growth and innovation.
• Creation of effective organizations - OPEX focuses on changes in the organizational model and delivery of services that drive results, with emphasis on the transversal nature of the processes used to produce products and services for our clients.