Operational excellence is simply creating value for your customers and shareholders effectively and efficiently.
In other words, it’s the process of seeking to maximise the resources provided by the shareholders to meet the customers’ demands.
Hence operational excellence is a philosophy and also a never-ending journey that the business is on.
Operational excellence is also about looking for ways to maximise the operating margins of your business. In accounting terms, looking for ways to increase revenue, decrease cost or both.
This blog will focus on four essential pillars of operational excellence critical for sustainable business growth.
The customer is central to everything that happens in your business, and it’s no different for achieving operational excellence.
In the first instance, you must be very clear about what the customer wants and is willing to buy.
That knowledge allows you to define the most effective strategy and operational setup to meet the customer requirements.
The 2nd crucial part is that you need to have a system for constantly engaging with your customers. The system must detect changes in customer requirements and their impact on the operations.
In essence, you must be proactive about understanding customer requirements and their evolution from an operational excellence philosophy.
How does your organisation stay on top of customer requirements? What can you do to get closer to your customers?
Operational excellence requires a business to have strong leadership and a clear strategy for delivering on customer requirements.
The first task of the leadership team is to create a clear strategy for meeting customer requirements while maximising return to the business and its owners.
It’s essential to have a system for regularly reviewing the strategy based on changing customer requirements, business objectives and operating environment.
Secondly, the leadership needs to create an environment of trust, respect, and transparency. As a result, have employees who clearly understand the business needs and their responsibilities.
In addition, they need to communicate with the employees regularly, not just in setting tasks and deadlines but also in offering guidance if needed and being open to feedback.
When employees enjoy working for the managers, their contribution to the company’s success will be much more robust – recognition and support go a long way.
It’s essential to constantly assess the strengths and weaknesses of the team to maximise stability and improve on any areas of weakness.
In most companies, poor Execution of their strategy and processes is the most significant source of problems and failure.
Simply put, create your standard operating plans based on your strategy and then focus on executing the objectives with as slight deviation as possible.
Combined with Execution is the importance of tracking the performance of your operations and plans.
Do you have clear plans and processes for executing your strategy? Do your employees and teams understand these plans and processes?
If not, how do you plan to address this?
Does your organisation have a strong leadership team? Clear strategy?
If not, what can you do to improve?
The fourth pillar is continuous improvement.
Given that operational excellence is a journey, the operations (people and processes) must constantly improve.
By continually measuring what is going on with execution and customer requirements, you will see what is working well and the areas that require improvement.
The continuous improvement process will involve both incremental and breakthrough improvements continuously. Hence necessary to constantly monitor your processes and seek opportunities to meet customer requirements effectively and efficiently.
How does your business practice continuous improvement?
Have you embraced the philosophy of operational excellence in your business?
Do you need help creating and implementing an operational excellence strategy?
As a lean six sigma expert, I support my clients in driving their business’s operating excellence philosophy and approach.
Book a complimentary strategy review session with me, and let’s discuss your operational excellence strategy.