What is Operational Excellence?

TXM is dedicated to helping companies around the world achieve Operational Excellence since 2004. We have a proven track record of helping our customers achieve sustained superior operational performance.

Operational Excellence is the objective of operational performance improvement. It can be defined as a business that delivers sustained superior operational performance to its competitors. Our team understand operational excellence, because they have experienced it working for some of the best companies in the world including Toyota, Boeing, United Technologies, Ford, AstraZeneca, Eaton and Rolls Royce.

Our track record of helping hundreds of companies in over 25 countries has given us unique insight into what it takes to deliver operational excellence in a huge range of industries and in businesses ranging from startups to global majors.

Lean Thinking and Operational Excellence: What’s the Difference?

At TXM we are experts in applying Lean methodologies to improve operational performance. Lean or the Toyota Production System is the most widely used and proven methodology to achieve operational excellence in business. Lean focuses on the elimination of waste, defined as any activity or use of resources that does not add value to the customer.

By defining waste so broadly, Lean provides endless scope to identify opportunity for improvement. Zero waste is never achieved, instead businesses continually strive to identify new forms of waste and find innovative ways to eliminate. Lean provides a set of effective business tools to improve operational performance. However, more importantly it defines underlying cultural behaviours and beliefs necessary to sustain operational excellence and sets challenging goals for improvement.

Just in time is about trying to only have the materials and resources you need when you need them in the quantity you need. Anything more is waste. Just in time has driven businesses to shorten supply chains and reduce lead times, eliminating large amounts of waste and cost in the process. First time quality is the idea that every employee should strive to do their job right first time every time. This has transformed quality culture and changed the paradigm that quality must be achieved by expensive inspection and that defects are inevitable.

Just in time and first-time quality are the pillars of Lean thinking and are also effective approaches to achieve sustained operational excellence in your business.

Operational Excellence and Continuous Improvement: What’s the Difference?

The terms operational excellence and continuous improvement are often used interchangeably, but in fact they are quite different. Operational excellence is an objective or an outcome whereas continuous improvement is a culture or way of behaving. Companies aim to achieve a culture of continuous improvement  in order to achieve operational excellence.

In companies with a culture of continuous improvement, team members at all levels constantly strive to make small improvements every day. Once this culture is established, the cumulative impact of this continuous improvement culture is sustained operational excellence and a competitive advantage over companies that do not relentlessly pursue improvement and excellence.

Other Approaches to Operational Excellence

Lean thinking is not the only way to achieve operational excellence. Increasingly companies are looking to digital technologies included under the broad umbrella of Industry 4.0 to achieve operational excellence. Cheap, internet of things sensors connected to business intelligence software provides businesses with real time data on performance enabling fast proactive action to solve problems.

Increasingly companies are looking to artificial intelligence and machine learning to develop machines and systems that diagnose and solve their own problems and improve themselves. Cheap intelligent robots and cobots can work alongside humans to automate labour intensive, difficult or dangerous tasks. Integration with design software now means that robots can be programmed to perform one-off tasks for customised products.

Many other approaches to operational excellence have been developed and are used for more niche applications. Six Sigma developed out of the quality movement of the 1980’s and focuses on reducing variation in processes to give more consistent quality outcomes. The Theory of Constraints is an approach developed in the 1980’s that looks to increase the throughput of processes by identifying and eliminating process bottlenecks. Agile originated as a technique for project management of software development.

By providing constant engagement with stakeholders including the “voice of the customer’, breaking projects down into small tasks and checking progress on these tasks at short intervals, Agile aimed to prevent the scope deviations and cost and time over-runs that plagued many projects. Agile has been successfully adapted as a tool to manage other kinds of projects, but its value and effectiveness in improving operations performance is contested.

Why Operational Excellence Matters

In the past 20 years the growth of production in low-cost countries has kept prices down for many products. However, in the past few years, rising costs in those countries and increasing risks associated with extended supply chains mean that companies will no longer be able to use outsourcing to reduce costs. Instead to stay competitive, businesses will need to find ways to improve productivity and make more out of their existing people and resources. In this context a focus on operational excellence is essential to stay in business. Without this focus business will see rising costs and falling margins making many companies unviable.

TXM are global experts in operational excellence providing practical solutions to improve operational performance across more than 20 countries and a huge range of industries. Contact us to find out how we can drive operational excellence in your business.

Operational Excellence is a mindset and a journey that organizations embark on to continuously improve their performance. It starts with a commitment from leadership to drive change and improvement throughout the organization. Everyone from top management to front-line employees must be involved and engaged in the process.

Operational Excellence is not just about improving individual processes; it is about transforming the way an organization does business. It requires a holistic approach that looks at all aspects of the business, including people, culture, strategy, technology, etc. Operational Excellence is a journey, not a destination. Companies that have achieved Operational Excellence are always looking for ways to further improve their performance. They understand that there is no such thing as “perfection” and are constantly striving to get better.

If you are interested in learning more about Operational Excellence, TXM can help. We have a team of experienced consultants who can help your organization on its journey to Operational Excellence. Contact us today to learn more.

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