Why outstanding companies are placing Operational Excellence at the heart of everything they do
Naturally however, operational excellence is somewhat of a nuanced concept, which is to say that it pertains to your ‘intangible assets’ (i.e. structures and processes), and achieving it will mean different things to different companies, their executives, managers and employees.
Variables include the size and profile of your company, its culture and organisational structure, growth trajectories, industry, and customers. These are all elements that will impact and determine how operational excellence manifests itself within your organisation.
But the bottom line is that no matter if you’re an up-and-coming technology startup with just a hundred or so employees, or a large multinational manufacturer with several hundred thousand, in order to remain competitive, you must find the optimal means of minimising waste, maximising productivity from limited resources, and continuing to provide a high level of service to your customers – all while reducing costs.
This is why today’s outstanding companies place operational excellence at the heart of everything they do, for the business benefits are outstanding, and the process puts them significantly ahead of competitors.
Let’s consider some of the key benefits of embarking on a journey towards operational excellence, and what three leading organisations have achieved by emphasising the principles of the philosophy.
Committing to a Small Number of Critical Goals
All companies – large and small – have limited resources. On the journey towards operational excellence, organisations must identify a small number of critical goals that will become the core focus of their limited resources, and thereby reduce waste and drive greater operational effectiveness and efficiency.
Take for example, a global, market-leading manufacturer of food service disposables and packaging, serving a multitude of markets, from traditional restaurants to food processors. Typically, customers of these commodity products choose suppliers based largely on cost and availability. Understanding the market, this company knew it needed to improve its performance at production-line level – shorten lead times and improve productivity – if it was to become more competitive, and so it was here that the company placed its focus.
The company started producing a higher number of smaller lots with shorter lead times, and quickly became a more efficient producer. This strategy increased the availability of its products while reducing costs, which improved the company’s margins, profitability and revenue.
Committing to a small number of critical goals is a core component of executing an operational excellence strategy model. In order to do so, companies must first identify their key operational processes, and then optimise those that create value, growth, and innovation and weed out those that consume the most resources, time and assets.
Problem-solving, Teamwork and Leadership
A successful operational excellence programme cannot only save a company a significant amount in operating costs, but can also enhance agility, innovation, and improve regulator and public confidence.
It may begin at the top, but operational excellence needs to extend to become a company-wide initiative in order to be successful – and that requires co-operation and teamwork at all levels. All employees must be well-trained, have a strong understanding of what’s expected of them at all times and know how their role influences the organisation as a whole.
Oil and gas companies understand the need for operational excellence in these terms. The volatility of the market means that even high oil prices won’t mask inefficient operations for long. What’s more, the industry operates in some of the toughest and most politically sensitive places in the world and any accidents that occur can have high costs to the environment and even human life.
One particular oil and gas giant is a good case in point. The company has been perfecting its approach to operational excellence for decades and it all begins with exceptional employees. From the moment someone new joins the team, they receive extensive training in best practice procedures to ensure that they – like everyone else – understand the right way to do the right things.
A key part of the company’s operational excellence programme has been distilled into a set of easy-to-understand (and thereby follow) guidelines that form the company’s Tenets of Operation. Safety is the core objective of these Tenets, which are based on just two key principles: 1). Do it safely or not at all; 2). There is always time to do it right.
The company holds leadership accountable for setting this vision and is tasked with demonstrating commitment to operational excellence at all levels through ongoing engagement with the workforce.
Enabling Ongoing Improvement with Strong, Repeatable Processes
There is never an end-point to operational excellence, which is to say that it is never ‘finished’. Even outstanding companies haven’t reached a magical point of perfection where they never have to think about making improvements ever again – and they never will.
Rather, they have become outstandingly adept at identifying areas of improvement, and, once identified, implement solutions which then become strong, repeatable processes that spread throughout the organisation.
As such, even the procedure for improvement identification should be a strong, repeatable process in and of itself. By way of example, a multinational Paris-based train manufacturer employs over 2,000 people in the UK, including many maintenance technicians. The company uses the strong, repeatable process of managing for daily improvement (MDI), which involves a daily walk-through of the business at a specified time by the entire management team. At 9 o’clock every morning, the members of each department in the company’s five depots and fleet control centre meet for an in-depth discussion of the previous day’s performance, specifically to identify any problems that need attention. They consider safety, quality, delivery, and cost performance metrics, discuss solutions, and what needs to be done to improve performance.
This happens every single day, and it places the managerial team in an ideal position to oversee the company’s operational strategy, gives them a clear understanding of how the business operates from top to bottom, and enables the separate departments to work together as they identify areas for ongoing improvement and agree upon targets moving forward.
Achieve Operational Excellence with Renault-Nissan Consulting
In order to achieve operational excellence, you need a strong strategy in place to deliver continuous improvement right across your organisation. It requires you to be able to identify and visualise key operational processes, optimise workflows, develop disciplined measurement and reporting systems, and much more besides.
At Renault-Nissan Consulting, we identify the changes required in your organisation to ensure that it works more efficiently and effectively from top to bottom and implement the right tools and methods for ongoing operational excellence success.
Importantly, the work we do isn’t finished once your strategy is in place. Instead, we aim to work with your organisation on a long-term basis to implement successful change management, and ensure that all planned processes put into practice are effective. We also ensure that team members at all levels are engaged, inspired, and take responsibility for delivering exactly what’s required at each stage.
With 28 years’ experience and 300 consultants working in a range of sectors, reap the benefits of world-class operational excellence, become more successful and more profitable with Renault-Nissan Consulting.