Assets / Operations
Creating Operational Excellence
According to Joseph Juran, any commercially focused organization (and some may say any) only has three core functions or processes – these are: to generate demand for its products and services (in simple terms engaging in marketing and selling), to fulfill the demand (from the marketing efforts) and finally to generate cash (or collect money from customers). While the first and last of these functions (sell and collect the money) are well-appreciated and much written about in terms of how to do this well, the middle function (fulfilling demand or engaging in operational activity) is much less written about. This article therefore describes a few ways in which any enterprise (of any size or type) can focus on the demand fulfillment side of things and to create operational excellence.
Although it varies somewhat from one organization to the next, high performance and success in terms of operational excellence are significantly based on five key factors. These are that:
- The organization’s overall quality approach is clear and constant (with an effective system of control in place at every important level).
- Organizational service efficiency, effectiveness and responsiveness all help drive customer satisfaction and ultimate success for the enterprise.
- The organization can only develop its full potential if a climate of full employee involvement is created.
- Aligned processes and systems deliver excellence in operating performance.
- Individual and team knowledge and creativity are effectively designed to be the ‘oil’ in the organizational machine
Let’s therefore look in more detail at all five of these factors or categories and what they mean.
This means that clear and purposeful strategy for quality is in place and leaders have a firm grip on what needs to be done to continuously improve on a systematic basis. The two sub categories of quality which impact on operational effectiveness are:
- Quality control: This is the extent to which a quality control system has been established and significant processes are being monitored on an on-going basis according the framework.
- Continuous improvement: This is the extent to which a clear and tangible strategy for continuous improvement exists throughout the major activities of the enterprise at all levels.
This means that processes are designed to operate in optimal ways so as to ensure that process problems or product/ service defects are minimized and customer responsiveness is maximized. The two sub categories of Service which impact on operational effectiveness are:
- Cycle time/responsiveness: This is the extent to which the major processes within the enterprise are measured and regular efforts made to continually improve the time taken from the beginning to the end of each cycle in order to improve service responsiveness.
- Defect elimination: This is the extent to which systems are in place to identify process shortfalls or defects and to subsequently take steps to eliminate them once and for all.
This means that a climate of openness and trust is in place in which people are motivated to make a full individual contribution and can strongly support one another in teams. The two sub categories of Involvement which impact on operational effectiveness are:
- Teamwork: This is the extent to which people work together in flexible, cooperative and understanding ways to achieve high levels of operational efficiency and effectiveness.
- Motivation: This is the extent to which people feel motivated by their organizational leaders and that work performed is interesting, satisfying and stimulating.
This means that operating processes and systems are well designed and are constantly monitored and measured in order to identify opportunities for improvement. The two sub categories of Processes which impact on operational effectiveness are:
- Measurement: This is the extent to which measurement systems are designed and applied appropriately to overall strategy, goals and tasks, and logical ‘staging points’, are identified where necessary.
- Design: This is the extent to which operating processes and practices are well thought through and designed to work as efficiently and as effectively as possible.
This means that the organization continually builds internal knowledge by training and developing its people and by encouraging creativity and innovation at all levels. The two sub categories of Knowledge which impact on operational effectiveness are:
- Innovation: This is the extent to which the enterprise actively encourages creativity and innovation at all levels and uses the input to improve operating practices as much as possible.
- Knowledge: This is the extent to which people are appropriately trained and able to perform their work and major job related tasks at all levels in the most competent way possible.
Operational Excellence or Demand fulfillment is the key organizational process between Demand generation (sale and marketing) and Cash generation (collecting money). The more that any organization therefore spends time and attention on making its operations more efficient and effective the better and the above categories are helpful ways of thinking about and doing this.