Operational Excellence: 10 Principles for Success


The word it says about excellence and operational excellence is not a common term if you are still following your bachelors’ degree. But in the industry, business process excellence, manufacturing excellence are concepts that practice for better improvement of the organization.

The operational excellence definition can elaborate as the philosophy of maintaining business activities of the organization by enhancing the teamwork, leadership, and processes by mainly focusing the needs of the customer in a supportive, agile, and open working environment.

Even though most of the fortune 500 companies do have operational excellence practices, some prefer used to stay in their same business strategy due to inconsistent leadership and team management. When talking about the process excellence, it is not only about the way of saving money and reducing the cost. The concepts of process excellence include even the work culture enhancements, and it has to be a habit for higher success with the involvement of everyone in the organization. At the end of the day, and the organization may not achieve their respective targets if not its people. Therefore, it is required to understand the operational excellence principals in a better way.

Operational excellence framework

The areas in operational excellence have a more comprehensive range, but the commonly accepted areas would be;

Process excellence

Even a small tiny small operation will be a massive loss if you do not use the proper tool to optimize your process. Hence, it is essential to have a value stream mapping to identify the importance of the process. To illustrate, take a vehicle manufacturing company, the cost to fix some of the parts may differ from one to another in the automobile industry. A high-value addition operation that has to conduct in a precise way needs to have a proper maintenance plan as well as guidelines in order to succeed. In the present manufacturing companies, usage of recycled raw material can be given as a cost reduction that enhances the organization processes

Lean excellence

The best example to provide for lean excellence would be the Toyota production system by Kiichiro Toyoda, Taiichi Ohno, and others who invented the methods by prioritizing the process flow in a practical manner. Lean excellence cannot achieve within a concise period of time. It requires training, consultations, and monitoring. The KPIs for lean excellence can set to a finical year to understand the gaps in the business.

Continuous improvement

Even though it is known as a key lean tool (Kaizen). I would like to emphasize about it separately. Continuous improvement is mandatory for every organization. Due to globalization, theories change, concepts change, and management changes happen. Therefore, if any downfall occurs a system must be there to get back without an issue which is where the placing of continuous improvement not only for the machines but also for the rest of the sections is important.

Manufacturing excellence

There is no significant explanation regarding this area. Cause the lean manufacturing concepts are mainly tied up with manufacturing excellence. Some companies do have manufacturing excellence audits as well as mainly focusing on the production lines.

Work culture and leadership

The conventional way of working has had a top board with directors who give orders to 2nd line managers and the rest of the people. But to have operational excellence in it is all about being supportive of each other and must have that open and supportive culture in the organization. It is crucial because passing the ideas for better improvement from the bottom to the top in the company.
The leadership must be agile towards making tactical decisions towards long term as well as short-term goals. The top management must also set examples to the middle management and junior management level people. To illustrate, if the company adheres to 5S in every part of the company premises, the bosses also need to show the way they work.

Operation excellence Shingo prize:

The Shingo prize is known to be a top-rated operational excellence award that is given worldwide for the organization that success in operational excellence. A company needs to submit its reports on improvements in a considered time period that is granted by the Shingo institute. The ten core principles considered by Shingo institute for getting the price is listed below;

1. Respect every individual in the organization

As an organization, not only the executive grade people are contributing. Actually, it is the blue-collar employees who make an ample amount of contribution in most of the manufacturing companies. Therefore, some of the companies do conduct recognition award ceremonies to appreciate the excellent work of quality employees. With the recognition of the workers, it will be easier to get the workforce involved for any feasible improvement in the organization.

As an organization, not only the executive grade people are contributing. Actually, it is the blue-collar employees who make an ample amount of contribution in most of the manufacturing companies. Therefore, some of the companies do conduct recognition award ceremonies to appreciate the excellent work of quality employees. With the recognition of the workers, it will be easier to get the workforce involved for any feasible improvement in the organization.

2. Lead with humility

Since we are still not in the era of using a hundred percent automated robots in our production lines, we will have to deal most of the time with people. If you are a good leader should lead your team with humanity. If in case a team member is absent for a prolonged time without informing, you must search about the person-situation first before making a decision. This is where it is important to listen and get the suggestions of others, which would make the team into a family.

3. Seek perfection in work

Having an OEE value of 85% above for the production line at the start of day 1 in a newly built production plant is not possible. It takes time to achieve a target like that. Instead of that, it is better to try to simplify the processes and move towards phase by phase. The evergreen concept is one of this kind that has the same model as PDCA.

4. Assure Quality at the source

The defects and quality issues should identify at the start of any process. Cause if you recognize the defects in the middle of the process, after processing, it will cost you the time and money significantly. This is where it is vital to have quality assurance. The best practice would be, if you find any defect in the middle of the process, it is to stop it and remove the affected entire bulk from the production line and start over again.

5. Flow and pull value

This is regarding providing the correct products and the right service to the customer. Cause retaining the customer is vital if an organization needs to sustain for an extended period. Therefore, the organization needs to have a smooth flow where waste and insufficient must reduce to a minimum level and provide what the customer demands. In this case, some of the old, outdated, low products may need to remove as well

6. Embrace scientific thinking

This pillar is mainly focusing on the research and development component of the company. Most of the fortune 500 companies do have even a separate Research and development centers on a regional basis. Importantly, it gives the organization to try new products and strategies and check feasibilities before entering into the market. The scientific thinking should not only limit to the top management and middle management, but the entire workforce must also involve contributing to it.

7. Focus on the process

If there is a company where it has a high-turnover in executive grade, it may have been related to not only the salary and packages. Sometimes insufficient, improper workplaces can result in people to leave. Defining processes not only for the operational aspect but also for Human resources or any other sector must be there.

8. Think systemically

Systematically thinking means proper mingling of each party in an organization. If you are in a company that has sites in different locations, then you must know the importance of having an ERP system to coordinate the products to achieve great heights in Operational excellence.

As an example, back then, leave is granted to the people only with a manual approval of a superior person. But currently, HR leave systems are there in many organizations, which has enabled easy access to any attendance information. In some manufacturing companies, they use to service and maintenance software to analyze the job queue. This provides the most needed Job to complete without any delays in the production and provide the most needed Job to complete without any delays in the production.

9. Create constancy of purpose

If the company workers come only for the salary, it will just not make a dynamic company. The truth is every person in the company must know the vision and mission of the company. I mean, it does have to be a 100% logical thing, but the basic idea should be there. When it comes to employee assessment for performance, the people who are responsible for the making of criteria and should focus on making targets with respect to the vision and mission of the company.

10. Create value for the customer

If you do not have customers, you are not doing business. Having said that customers are everything, they are the one who brings every single dollar to the organization. From time to time, customer requirements may change. That is where proper customer support must be there in any organization to success in operational excellence.
The evergreen concepts are one of those universal concepts where customer satisfaction does with delivering of frequent deliveries with many updates.

Why some companies do well in operational excellence

The main idea in here is that the doing great in operational excellence needs to be agile towards making decisions if you two companies that have the same business field and same product range in a region, an operationally excellent company will have a minimum cost and higher revenue compared to its competitors and most importantly it will create a big value to the customers as well as the shareholders

Most of the fortune 500 companies are doing well in their business is because they do use the correct operational strategies at the right time. Time is the key here. We have seen some companies like Kodak, which was a giant in the camera industry, went into a downward spiral because of not making the products aligning with the time and markets. The same scenario happened to Nokia as well.

How you can develop a successful operational excellence plan

From my experience, I can say that bundling an operational excellence plan may require some time and patience as well. The performance gaps should identify in every section of the company. Then the following the four fundamental concepts should consider to develop the plan

1. Operational risk management and compliance

The company should operate the business with all the regulatory requirements. The overall safety must be ensuring to have a smooth operation, and the planning should start focusing on here.

2. Growth and strategy for success

To retain the shareholders, the value of the company must go upwards as well. A high stakeholder engagement plan needs to be there. The KPI must also align with the strategies.

3. Organizational development

Getting the right people into the organization with the right processes to drive the business results. The company management may have to change in some instance for better development

4. Cost optimizations

This would be the hardest thing to start for an organization. The cost differs from the location to location, and locating the plants in regions where getting labors and raw materials for lower prices would be the ideal scenario here. If not, the waste reduction plan should take place. Continuous improvement strategies can use for this scenario to reduce the cost.

Meanwhile, have to say that the above mentioned four concepts always need not be there at the start, but its better if it can start with it.

In summary, the operational excellence is there in most of the companies but not in a methodical way, but it is not identified and make sure to have not only the management but also the company employees adhere to concepts of operational excellence.

You can read the below article for “List of Training Programs for Employees for Success” that would help you.

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