Discover how real-time data and streamlined processes can enhance your business operations. Learn proven methodologies to achieve operational excellence, minimise waste, and deliver superior customer power.
Many challenges exist in today’s fast-paced and highly competitive business environment, such as rapid technological advancements, data security and privacy, evolving customer trends, digital transformation, and evolving customer trends.
Operational excellence has become a critical differentiator for organisations striving to thrive and stay ahead of the competition. These strategies help streamline processes, optimise efficiency, and foster a culture of continuous improvement.
You can enhance productivity, minimise costs, and deliver exceptional value to your customers by achieving it.
This comprehensive roadmap discusses business excellence and some strategies to empower your organisation and help you thrive in today’s competitive landscape.
What is operational excellence?
While every company runs its business differently, several factors, such as business strategies and customer experience, must be considered.
This strategic approach focuses on continuous improvement and optimisation of business processes to achieve better results. It seeks to minimise waste, enhance productivity, and align resources with your business objectives.
Organisations must keep up and undergo an end-to-end business transformation in today’s rapidly growing and technology-based business landscape. Otherwise, they’ll be left behind by their competition.
This business strategy is not a one-time endeavour but rather an ongoing journey of continuous improvement.
However, before embarking on this journey, organisations must clearly understand their goals, current processes, performance metrics, and areas for improvement.
Are operational excellence and continuous improvement the same?
While the two are interconnected concepts with a symbiotic relationship, they have key differences.
- Scope: The scope of the former is broader and more holistic, while the latter is focused on making incremental improvements.
- Duration: Operational efficiency is a long-term initiative, whereas continuous improvement, from the name itself, is an ongoing process.
- Focus: The former optimises all aspects of your business operations, and the latter makes small improvements to specific areas.
- Mindset: Business excellence embraces efficiency and effectiveness, while continuous improvement welcomes constant learning and making gradual progress.
An organisation must adopt continuous improvement to reach business excellence. After all, you can always find ways to refine operations.
The only way to go is up, and even once you’ve reached the summit and showcased your full potential, you must know how to maintain that peak performance.
Both concepts are critical in enhancing an organisation’s sustainability and competitiveness while fostering a culture of innovation and efficiency.
Why is operational excellence important?
One of the significant ways business excellence matters to your business is it streamlines workflows and removes disorganisation, resulting in better decision-making skills.
With data analytics and key performance indicators (KPI) to track performance, you can better identify trends and understand customer behaviour. Minimise risks due to incomplete information and make factual and evidence-based decisions rather than gut feel or intuition.
Operational efficiency allows you to identify things that aren’t working well and know what changes must be made. You develop a keen mindset and a sense of agility, especially in rapidly changing business landscapes.
Moreover, adapting a strategic approach allows you to meet your customer’s needs better and deliver exceptional value. This approach allows you to optimise processes, foster a customer-centric culture, and leverage data-driven data insights.
Lastly, operations management lets you foster a thriving company culture and push for a system upgrade. Stray from broken processes and failed frameworks and focus on building an organisation founded on continuous improvement, employee empowerment, and customer-centricity.
Building a positive and dynamic work environment makes employees feel engaged, motivated, aligned with the company’s goals, and, more importantly, valued.
Achieving business excellence with Shingo Model
The Shingo Model, known as the Shingo Prize for Operational Excellence, is a framework for building sustainable organisational excellence.
The Shingo Institute, part of the Jon M. Huntsman School of Business at Utah State University, developed it. It was modelled after Dr. Shigeo Shingo, a Japanese industrial engineer and a key contributor to the development of the Toyota Production System.
This model emphasises the importance of how and why operational efficiency is achieved. With Shingo Model, you break down each system into smaller parts, giving you a deeper understanding of the right KPIs and indicators to measure success.
The Shingo Model has ten core principles divided into four categories: Cultural Enablers, Continuous Improvement, Enterprise Alignment, and Results. Note that a principle in one category may interlap with others.
This is focused on creating a company culture that fosters continuous learning and excellence. It recognises that business culture is crucial in shaping how employees think, behave, and approach their work, ultimately influencing the organisation’s overall success.
For instance, the “respect every individual” principle teaches every person within the organisation must value one another, regardless of their role or position.
Meanwhile, “lead with humility” lets leaders embrace modesty and be open to feedback. Moreover, “seek perfection” sets high standards for performance and strives for excellence.
This category is focused on improving the flow of information from one department to another and continuously seeking ways to improve business operations. It centres on long-term goals and strives to perfect processes.
“Embrace scientific thinking” is a way to practice this category, which bases decisions on data and evidence derived from scientific methods. It also helps to “focus on the process” rather than solely pay attention to outcomes.
When you “assure quality at the source,” perfect quality is achieved the first time, and should an error occur, it’s best if it is detected and corrected when it is created.
This category ensures the entire organisation is aligned towards a common purpose and goal.
With this category, every department and function must be coherent and synchronised to achieve business excellence. It also addresses the value of creating a unified vision and a culture supporting the company’s objectives.
It helps to “create constancy of purpose” and align all efforts towards a common mission. Employees who embrace your goal are more likely to be committed to achieving it.
You should also “create value for the customer” by looking through a consumer’s perspective. Doing so lets you know what they want, encourages you to “think systemically”, and find ways to create better value for them.
Once you’ve implemented the above-mentioned categories and their principles, you measure their outcomes and impacts on the organisation. The Results category evaluates the tangible and intangible effects that your company has achieved, reflecting the effectiveness of your efforts, performance improvements, and drive for success.
One of the key indicators of success and sustainability is how you “create value for the customer.” After all, the goal is to meet their expectations. You measure customer satisfaction and strive to sustain this level of business excellence.
Achieving business excellence with Lean Manufacturing
This systemic approach aims to eliminate waste and maximise efficiency in production processes.
Many of its characteristics are closely related to the Shingo Model but were first applied in the automotive production process, specifically by the Toyota Production System (TPS) in the 1950s. Since then, many industries have adopted this approach.
Lean Manufacturing has five core principles: value, value stream mapping, flow, pull, and perfection.
Value refers to a consumer’s perspective and how much they are willing to pay for your products and services. It emphasises the importance of understanding their needs and preferences to create something valuable.
When you prioritise value, you exert effort on activities that truly matter to customers, reducing waste and enhancing customer satisfaction.
Value stream mapping
This principle maps out the entire production process from start to finish, analysing the resources required to produce a product or service. It identifies areas of waste and inefficiency, examining anything that doesn’t add value and finding ways for improvement.
Disharmonious production processes incur costs, delays, and waste. Creating flow means reducing bottlenecks and other obstacles that create waste and slow production. It ensures a smooth process for improved lead times.
Pull is a concept that optimises workflow and materials throughout the value stream. Unlike traditional “push” systems forecasts drive production, a Pull system is driven by actual customer demand. Inaccurate forecasts create waste, as too much or insufficient product is produced to meet demand.
Perfection refers to the relentless pursuit of excellence and continuous improvement in all aspects of an organisation, from processes to products and services.
It is based on the understanding that there is always room for improvement and that no process or system is perfect. You achieve higher performance levels once you commit to this ongoing journey of eliminating waste and inefficiencies.
Achieving business excellence with Kaizen
This next methodology is of Japanese word that can be broken into two parts: “kai,” which means change, and “zen,” which means good or for the better. Therefore, it essentially translates to “change for the better.”
Similar to continuous improvement, Kaizen focuses on enhancing processes and systems through small and incremental changes over time. It believes every process, product, or service within an organisation can get a system upgrade, regardless of how efficient it may seem. The primary goal is to boost efficiency, quality, and overall performance by involving every team member in the improvement process.
Here’s an example of guide questions with continuous improvement initiatives in mind. It’s a continual process that goes back to the beginning as it keeps on finding areas of improvement.
- What is the root cause of the problem?
- How can it be addressed?
- Are the changes carried out consistently, by everyone, and in all areas?
- What impact do these efforts create?
- How else can we keep improving?
The core principles of Kaizen
Like Lean Manufacturing and the Shingo model, Kaizen rests on various fundamental principles.
Know your customer
Kaizen encourages organisations to have a customer-centric focus where all improvements are done to benefit the customer ultimately. There are various ways to value customers and enhance their experience, such as providing better products and services, shortening lead times, and improving satisfaction.
Let it flow
Kaizen further aims to achieve zero waste or raw materials, movement, and time used to accomplish a task. While it may seem like an impossible goal, this methodology aims to improve continuously. By letting it flow, every person in the organisation works toward removing any waste from their area.
Go to Gemba
Gemba is derived from the term gemba or gembutsu, which literally translates to “the real place.” It encourages leaders to learn how a specific process works and know what actually happens at every level of the organisation. It also pushes for gaining insights from every team member. Kaizen urges to follow the action, as value is created where something is happening.
There are three elements to an effective Gemba Walk.
- Go See: As leaders immerse themselves in every level of the organisation and observe the process, they get an idea if everything is done according to standards and if intended results are produced. It’s best to devise a checklist to maximise the Gemba Walk.
- Ask Why: The purpose of a Gemba Walk is to learn by probing the value stream, identify opportunities for system improvement, and communicate and listen actively to every member. Leaders should show sincerity about an employee’s work and solicit feedback and suggestions to improve it.
- Show Respect: Gemba Walk focuses on the organisation’s challenges, not the employee’s performance. It is the perfect opportunity to understand these concerns and determine how they can be addressed.
Having data is a measure for success, allowing you to track performance and improvement. It also lets you decide where and how to refine the system. The results you wish to achieve must be measurable and tangible. Apart from measuring progress, organisations can use this information to identify areas for improvement and set performance targets.
Leaders must set uniform goals for all team members and be given the tools, processes, and systems needed to achieve them.
Unleash operational excellence with the power of these different methodologies. Enhance customer satisfaction, streamline operations, and drive continuous improvement to keep up with today’s competitive landscape.
About the Author
Anna Marie Martinez has been writing professionally since 2018, covering various clients like travel, chiropractic, dog health, interior design, digital marketing, and more. She is a full-time web content writer for Utak POS for almost three years.