In an increasingly volatile and competitive economy, only the most agile companies that are quickest to adapt to market stimuli can thrive year on year. To do this is a challenge and, in fact, approximately only 10% of the companies that made the Fortune 500 list in 1955 remain on the list today. What distinguishes these companies that have remained at the top for decades? There are several factors, but undoubtedly among them is Operational Excellence.
What is operational excellence
Operational Excellence is usually known as the improvement of all operations through the implementation of projects focused on cost improvement. It is important to note that operations include not only the most transactional areas, such as production, logistics, procurement, maintenance and quality, but also all other areas, from sales to research and development to finance. Furthermore, it is important to note that the focus of projects aimed at excellence is not only related to cost but rather with all the components related to the business of an organisation, known as GQCDM, that is, growth, quality, cost, delivery and motivation. Therefore, it is possible to characterise excellence in operations as the continuous search for improvement of the whole operational part of a business. This implies two approaches: continuous, incremental and daily improvement in all the teams of an organisation, and occasional, disruptive, planned and focused improvement in certain areas with a specific and ambitious goal.
On this journey towards excellence, numerous situations will arise in which change will be necessary. For it to happen successfully, it is essential to make it a strategic priority before anything else. Therefore, it should be included in the Strategy Deployment Policy and clear goals should be set. This is the only way to ensure that everyone in the different areas of the organisation can understand the need for and importance of this change, thus ensuring involvement and commitment at all levels of the organisation.
After being defined as a strategic priority for a given period, it is important that two types of change are conducted: carrying out projects to change the Gemba (the ground/place where the action takes place) and instilling new behaviours in the different teams. In addition, ubiquitous agents of change must be created, capable of positively influencing the organisation in this transformation. This is achieved by implementing successful pilot projects that represent the strategic vision and by involving managers and team leaders.
Finally, changing behaviours is a difficult and lengthy process, which is why it should be done in small steps, involving the various teams in the organisation and following a clear deployment model appropriate to its size. When deploying, it is essential to ensure a good follow-up of the various teams, namely through frequent coaching sessions, and practical, focused and highly motivating workshop sessions with several people from different areas.
The adoption of the various principles of change, and consequently the success of such a journey, depends directly on the active role of leadership. Management must be present at the Gemba to understand the concerns of the team members and to participate in the creation of the solutions. Proximity to teams should be a priority and planned with high frequency, as this also contributes to improving employee morale and a sense of appreciation.
On arrival of material at the shop warehouse, opportunities are immediately identified regarding the stock organisation and amount ordered. Excessive stock of items makes its storage difficult, which consequently contributes to increased stock outages and loss of productivity in handling. Palletised storage complicates not only handling but also ergonomics at the time of replenishment.
Improvement requires continuity, there is no such thing as ‘good enough’. Leaders and organisations must make their search for improvement a habit, an everyday occurrence. To achieve this, they must look at all collaborators, throughout all levels of the organisation, as the source for maintaining success. Creating the right culture will foster autonomous, motivated and empowered teams. This is the only way to achieve sustained and continuous growth, year on year.