Operational Excellence is a common term that is used in a variety of manufacturing operations. OE has been employed for quite some time in the automotive and parts manufacturing industries and has recently been more of a focus in the food and beverage industries. Operational Excellence is a business methodology which involves making continuous improvements to a company and its processes to achieve a competitive advantage. Although it seems like a straightforward definition, implementing and sustaining continuous improvement is challenging.
A common misconception among leadership teams and upper management is that Operational Excellence is just a short-lived “new thing” or “idea of the month” that executive management wants to try out, while the line workers are afraid that it is a tool to eliminate their jobs. So why would employees think that? Some of the reasoning comes down to the employees’ past experiences with other organizations where the implementation of such programs was a failure. In one instance, the plant had made significant strides in the OE process, but a few members of the leadership team were not on board with the program. This ultimately caused the program to disappear and things went back to status quo. So, what are the key elements needed to be successful in your journey toward Operational Excellence? I drafted some of the key components, all of which are interrelated.
A Strategic Plan is needed to set the tone for the organization. The Strategic Plan should contain a vision/mission statement which defines where the company wants to be in the future and how they plan on getting there. A strategic plan that is well thought out, communicated, and implemented gives a company increased productivity, a better culture, employee empowerment, and overall effectiveness.
A high-performing culture cannot be achieved and sustained without a solid leadership team. This includes everyone—from ownership to middle management and the team members working on the floor. As a rule of thumb for leadership meetings (or other meetings for that matter), I would recommend establishing rules of engagement which might include respecting confidentiality, being engaged, being an active listener, speaking the truth, et cetera. If a leadership team member walks out of the conference room after an Operational Excellence meeting and proceeds to talk about how “this program isn’t going to work” or “Bob has no idea on how to run his department,” then the team dynamic is affected. Ultimately, this negativity will trickle down to the plant floor, making the journey more difficult. Leaders must embrace the OE opportunities and effectively drive the implementation.
No matter what type of manufacturing environment you work in, the ultimate benchmark for a high-performance culture is the company’s ability to consistently perform the necessary behaviors to execute a high quality (and safe) product on a regular basis. Understanding the type of organizational structure is helpful to gauge the level of complexity when implementing Operational Excellence strategies. There are many types of organizational structures, such as flat (horizontal), tall (vertical), matrix, historical, team, quality-based, and geographical organizations. Depending on the type of organizational structure, the decision-making authority will differ. Companies with a CEO tend to be highly centralized, while companies whose middle managers are authorized to make key decisions are decentralized. Understanding the organizational structure will help the Project Manager and key stakeholders formulate a plan to minimize disruption and navigate through bureaucracy. Employees must be engaged in their jobs and understand what they are doing. They must have a thorough grasp on why they are performing the tasks and striving to meet the realistic, achievable day-to-day goals and other goals that have been established for continuous improvement. Once team members understand their roles and become empowered, you’ll start to notice differences in the culture and productivity, and the OE journey becomes easier.
A word of caution: before embarking on a CI initiative, perform an assessment (either by a 3rd party or internally if you have the correct resources) to evaluate your current business environment. It would be an unrealistic expectation to achieve continuous improvement if your company does not have basic business and manufacturing processes in place (e.g. SOPs, work instructions, and a general understanding of what is expected on a day-to-day basis).
Once the basics are in place, make sure the primary focus for any OE project includes the necessary team members. Verify that the project is not isolated or done in silos. Always keep the customers in focus, as they are the most important people in any business! There should be a clear understanding of what the goal is amongst all the team members.
There are a variety of process management/continuous improvement tools to use such as 5s, PDCA, Kaizen, DMAIC, value stream mapping, cycle time reduction, total productive maintenance (TPM), Overall Equipment Effectiveness (OEE), Kanban, Visual Factory, and Ishikawa (Fishbone). Although they all focus on CI efforts, each has its own unique advantages and constraints. Research and familiarize yourselves with the various methods and choose the best one for your needs.
Establishing Key Performance Indicators (KPIs) is essential to monitor your process in your Operational Excellence efforts. KPIs must be set for key metrics in the areas of Safety, Quality, Yield, and Productivity. When choosing your KPIs, make sure they are well-defined, quantifiable, achievable, and applicable to the process. More importantly, take the time to educate your team members on what the KPIs mean and why they are vital to the business. Success comes when you measure the right things, meet targets, and strive for continuous improvements. Alchemy’s customized Total Operational Performance System (TOPS) is a great tool to help companies assess Operational Excellence and drive continuous improvements. Remember, you treasure what you measure!
Running the day-to-day operations of any manufacturing facility can be a challenging task, but when you implement Operational Excellence initiatives in your facility, your company should reap the rewards of success. Most importantly… celebrate the achievements!