Operational excellence: it’s a popular industry buzzword that’s had its fair share of use, getting tossed into the mix with other words like lean and continuous improvement. But while many people recognize operational excellence as “a good thing”, what it is may not be so clear, nor is what value it provides to an organization. Yet now, more than ever, when businesses are experiencing dramatic upheaval in demand and resourcing, executing with operational excellence is indispensable to company survival. This may seem like a dire call to action: “Achieve operational excellence now or fail!” The good news is, most businesses already have a roadmap to get there in their back pockets – their data.
So – Operational Excellence?
Contrary to popular belief, operational excellence is not a process or practice like continuous improvement. A scholastic definition may be something along the lines of Operational Excellence being a workplace philosophy that focuses on customer needs and empowers employees to act in the interest of those needs to continuously improve the organization. More simply, Operational Excellence is a state where each employee understands how value flows to the customer and engages in correcting that flow when it fails or falls short. The implication of such behavior is enormous. The business’s processes are now self-correcting as frontline personnel observe issues and correct them in real time. Management, freed from firefighting, is now able to turn their attention toward innovation and enhancing the business.
How Does Data Help Achieve Operational Excellence?
Data generation, particularly in the past few years, has been increasing exponentially. While people remain the primary sources, industry trends toward digital transformations and IoT are vastly expanding the information businesses have at their disposal. Data on its own does not add value, but as the basis for decision-making and process visualization, it can be amazingly powerful. Early adopters have already begun to recognize and realize this competitive edge. It's expected that most corporate strategies will include information and analytics explicitly within the next few years.
In the world of operational excellence, data is an invaluable tool to build and foster employee ownership of processes. Data output from lines and processes combine into holistic representations of plant systems, providing feedback on events as they occur. When individuals across the organization see the effect their workflows and output impact have on the organization’s goals, they readily engage in problem-solving. This facilitates a real sense of ownership down to the frontlines, who leverage the data provided to drive for success by identifying roadblocks, removing obstacles, suggesting and designing improvements.
What to Look for In Data To Drive Operational Excellence?
Achieving Operational Excellence with data requires deliberating which points provide process insights that align with business strategies; as the saying goes, "What gets measured gets managed and improves." The growth in digital systems throughout business departments such as Finance, Purchasing, and Operations, provide a plethora of information to be utilized in making administrative calls.
While this volume of data allows the process interconnections and dependencies within a firm to be more accurately depicted, it can also inhibit decision-making if the site does not distinguish its Key Performance Indicators (KPIs) from the rest of its numbers and measurables. Defining KPIs not only drives a business to new innovations and efficiencies to fulfill customers’ needs, it also highlights which of their site metrics are levers to improvement.
The data that drives Operational Excellence, depicted by KPIs, should encourage a shift from a reactive response to a proactive approach to issue resolution. Leading indicators are those analytics which look ahead in the process to predict probable outcomes and prescribe corrections. Compared to lagging indicators, data points that show outcomes, leading indicators represent the process inputs that lead to such results. Historical data can be used to identify leading indicators in a system by correlating variations of input factors to outputs. For example, the number of near-miss safety events that occurred may be a leading indicator to OSHA recordable events.
How to Share Data?
As demonstrated, data that is accessible across an organization is a key component to building Operational Excellence. The next question, therefore, is how to share such information throughout the business. Fortunately, there is a plethora of tools available to display the critical indicators of processes and help employees visualize where issues should be addressed and which issues must be addressed first.
Traditional methods of data display are primarily manual: using whiteboards to document and broadcast periodic throughput, stacking Kanban cards to indicate demand volume, or switching on an Andon light to indicate when equipment is down. Although collecting and sharing information using these tools requires more interaction, it also propelled employees to actively engage with the data and relate to it. It can be powerful, therefore, to leverage these methods when beginning your Operational Excellence journey as a way to cultivate process ownership and accountability.
Today’s efforts toward IoT and automation, which create data-rich environments, are also coupled with digital transformations. Through these efforts, a tapestry of inputs and data points are woven together to virtually depict a factory with dashboards representing the critical measures across processes. This technological approach ensures real-time information capture and sharing to promote issue resolution and innovation. Furthermore, a digital factory allows individuals from across the shop floor to monitor and manage processes remotely, removing physical barriers to support and engaging a broader team in ensuring operational success.
Operational Excellence, as the pinnacle organizational capability, can seem like an unobtainable company goal: "The ability to execute strategy more effectively, more consistently, and more reliably than the competition". Yet by leveraging its existing information assets, a company can build the management infrastructure and instill the mindset in employees who are the foundations of this way of working.
See how Leading2Lean can put your data to use in achieving operational excellence today.
Recognizing Operational Excellence: The 2020 OpEx Award Winners