Operational Excellence – Matter Of Industry Survival

My friends in the manufacturing industry often ask me a question, ‘What are the chances that a business dies if it does not invest on Operational Excellence?’. My answer to the question is simple – ‘Definitely it Won’t Survive’. How can a business survive in today’s competitive world if it doesn’t care about being more efficient on continuous basis.

Today, I will focus explaining why focusing Operational Excellence is imperative for manufacturing industry’s survival?

What Exactly Operational Excellence Means?

Operational Excellence is a philosophy of organizational leadership that stresses the application of a variety of principles, systems, and tools toward the sustainable improvement of key performance metrics.

Much of this philosophy is based on earlier continuous improvement methodologies, such as Lean Manufacturing, Six Sigma, and Scientific Management. The focus of Operational Excellence goes beyond the traditional event-based model of improvement toward a long-term change in organizational culture.

Biggest change in an organization’s culture appears when leadership defines it as a business goal to operate competitively and efficiently and derive the best value, while protecting people and environment.

Many industries have common business objectives such as achieving an incident- and injury-free workplace; minimizing environmental and process safety risks; maintaining competitiveness; optimizing asset utilization; and using natural resources efficiently. To achieve business objectives such as these, industrial companies need to align leadership, management and workforce, and have both a positive problem-solving attitude and an unquenchable desire for excellence.

Core Principals Of Operational Excellence

  1. Respect every individual
  2. Lead with humility
  3. Seek perfection
  4. Assure quality at the source
  5. Flow and pull value
  6. Embrace Scientific Thinking
  7. Focus on process
  8. Think systemically
  9. Create constancy of purpose
  10. Create value for the customer

How To Achieve Operational Excellence

There are tangible and intangible factors that effect manufacturing’s operational excellence. The tangible factors include:

  • Unplanned shutdowns and slowdowns,
  • Efficiency and yield losses, and
  • Quality and reliability losses.

Intangible factors include:

  • Delays in decision making,
  • Ineffective strategies,
  • Lack of collaboration,
  • Insufficient cross- functional visibility,
  • Non-compliance to practices, and
  • Non-value added efforts.

The biggest challenges in eliminating some of these losses include: the inability to identify and measure; to get to the root cause; and lack of actionable information.

Industrial companies need to adopt a good business analytics solution that can provide the right information, from the right source, at the right time and to the right place/people, thereby reducing losses and enabling Operational Excellence.

Business Analytics Solution – Big Picture

In most organizations, data are trapped in various departmental solutions deployed over the years. The first step in deploying a good business analytics solution is to collate the information spread across multiple systems within the plant into a single repository. This would clearly need a strong pre-built connector framework with the ability to readily access the data from the process historians, ERP (enterprise resource planning), LIMS (laboratory information management systems), custom applications, Excel spread sheets and other sources. And the data needs to be collated in a data repository/model that can allow easy analysis and flexibility to enable users to “slice and dice” it as needed. Besides real-time structured/unstructured data and relational data, the data model also needs to ensure respective subject data stores and provision for easy querying.

Now, various analytic engines allow this information to be presented to various users from the field/plant level to the executive level in user-friendly formats on a variety of computing devices, such as PDAs, laptops, and mobile phones. Additionally, leveraging cloud computing with a good technology partner would permit organizations with multiple sites to collate and exchange best practices. This will enable users to make on-time decisions and monitor their performance against their KPIs (key performance indicators), thus improving individual and organizational performance.

In short, an enterprise business analytics solution should cater and align all the different roles/levels starting from operators/supervisors, line and functional managers, functional analysts/strategists, and executives.

The most important factor in such a solution is the industry specific domain knowledge and in-depth understanding. Building such business analytics solutions can be implemented in a very short period of time based on management commitment.

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