How to Achieve Operational Excellence: Part 1 of 2 – Understanding Operational Excellence

May 22, 2012 at 2:55 pm 8 comments

Operational Excellence is the foundation of business growth, profitability and competitive advantage. An organization can only begin to forge new growth strategies and business models after it has developed a mature capacity for managing its current business operations effectively and efficiently in the course of meeting the needs of its customers/stakeholders as no one can grow a profitable business on an unsecured foundation.

Based on the criteria of the Malcolm Baldrige National Quality Award, Operational Excellence must be demonstrated by results, not just by words. About half of the 1,000 points associated with the Baldrige award are results focused. In order to maximize the degree to which these 450 points are attained, an organization must show sustained improvement over time, in all areas of importance, against ‘best in class’ organizations.

Operational excellence is therefore demonstrated by results that reflect sustained improvement over time, improvement in all areas of importance (both performance areas and segments within each area), and performance at a level that is at, or superior to, ‘best in class’ organizations. Common areas of importance for a cost center are safety, quality, people, and cost. Profit centers add the revenue generation performance, processes, and information and technology areas to this mix. Common segments within each performance area include employee groups, facilities, departments, and external customer types. Organizations today are seeking to be operationally excellent for three key reasons: costs, customers, and competitors. They are continuously seeking the best ways to achieve operational excellence (lower costs, improve flexibility and speed to market, quality and reliability, and customer/stakeholder satisfaction and value. By effectively analyzing and managing operations, organizations can produce the right products with the right features at the right cost.

Part 2 of 2: Achieving Operational Excellence, to be continued…

Question: Does your organization have Operational Excellence initiatives in place?

Entry filed under: Dan Trojacek.

How to Improve Employee Satisfaction and Retention AND Reduce Labor Costs How to Achieve Operational Excellence: Part 2 of 2 – Achieving Operational Excellence

8 Comments Add your own

1. Jim Adkins | May 24, 2012 at 8:21 am

You are so right-on! Operational excellence in its truest form is an undertaking that requires vision, commitment of many resources, not just cash … dedicated leadership that fully grasps the totality of endeavor … a willingness to educate, listen and implement steps [oftentimes impeding faster progress] … but recognizing that the effort is a marathon … and not a sprint.

Best in class needs to be ingrained as away of life [an active culture] that is understood and practiced at all levels. Folks should take the time to review the requirements/standards of the Malcolm Baldridge Quality Award; foundationally it clearly isn’t for the uncommitted.

Great post!
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2. dave gonier | May 25, 2012 at 6:13 am

well put.. it is important to relaize all you say now esp with the economy is such disarray..
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3. Don Turnblade (@arctific) | May 25, 2012 at 8:44 am

Below is the finest book on seeing how Operational Excellence is created, sustained, destroyed or evaded is a study of both corporations and sports franchises — where all start staff roll over is normal so it is about sustainable investment, organization and talent rather than heroics.

I get no commission, http://www.barnesandnoble.com/w/confidence-rosabeth-moss-kanter/1100625401
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4. asadriad | May 31, 2012 at 7:46 pm

Reblogged this on Dr. Asaad Riad.
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5. Tom B | July 16, 2012 at 9:13 am

The problem today is that corporate America has no patience. Everything must be 6 or less months or it gets tossed aside. For example, in an economic slowdown, the answer is not to RIF employees and begin China migrations but to entrench on excellence programs and employee investments. Only true competitive advantage is the quality,integrity and capabitlity of your workforce. Processes can and will be duplicated.
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- 6. Floyd O Leyba | November 19, 2012 at 11:24 am
  
  Excellent Point. In America our short term vision often causes us to over-react and lose sight of the bigger picture that keeps us in the forefront of our individual industry.
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7. Emile kanaan | January 22, 2013 at 10:25 pm

I read it and I enjoyed it very much! My concerns are related to the role of the leadership engagement with the workforce. No excellence can take place without a ” belief” factor from an engaged workforce.
It is critical to get the vision “believable” and supported by a Role Model and a communication plan.
Where operation excellence fails is more related to the belief factor than any system in the change strategy.
In a brief the People must see that they belong to the journey and not only the passengers on the company bus.
Emile kanaan
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8. Mark Bodhaine | May 21, 2013 at 3:46 am

I agree with Dan as well, except that I believe that Operational Excellence begins with our people. I have just spent the last few days in Nogaya Japan touring the Toyota facility.
They are not in the car or truck business, they are in the people development business.
That holds true for the company I work for as well. We can manufacture anything, it just so happens that we manufacture home safes, (Cannon Safe), we are in the business of developing our people. With the right people, believing the right core values, we can build anything and be successful doing it.
We have not reached Operational Excellence, (neither has Toyota) but we are on our way,

Mark
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