Operational Excellence FAQs

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What is Operational Excellence? How does operational excellence compare to process excellence? How do lean and six sigma methodologies contribute towards operational excellence? How would you define 'World Class' in terms of operational excellence?

As an examiner for the Malcolm Baldrige National Quality Award, what attributes do you look for relative to operational excellence What is the most critical factor in making an improvement initiative successful? What is Activity Based Costing and how does its use support operational excellence?

How can managers in a facility monitor the performance of supervision to ensure they are properly carrying out the daily tasks an maximize the effectiveness of the improvement process? Would you like to learn more about operational and process excellence tools and concepts?

What is Operational Excellence? Back to Top

My definition of operational excellence is based on the criteria of the Malcolm Baldrige National Quality Award, and how I have seen apply these criteria to make their organizations more sustainable. Operational excellence must be demonstrated by results, not just 1,000 points associated with the Baldrige award are results focused. In order to maximize the degree to which these 450 points are must show sustained improvement over time, in all areas of importance, against best in class organizations.

Operational excellence is therefore demonstrated by results that reflect (1) sustained improvement over time, (2) improvement in all performance areas and segments within each area), and (3) performance at a level that is at, or superior to, best in class organiza importance for a cost center are safety, quality, people, and cost. Profit centers add the revenue generation performance area to th within each performance area include employee groups, facilities, departments, and external customer types. How does operational excellence compare to process excellence? Back to Top

My answer to this question is influenced to some degree by my operations background as a production supervisor and plant manage excellence reflects a broader focus than operational excellence does. For example, with a process excellence focus, groups like the department, and upper management teams are expected to consistently improve the processes they own, just like the people in ope phrase "operational excellence" as being a little restrictive - process excellence encompasses all work, whereas operational excellen those processes that exist directly in the value stream.

My preference is to pursue process excellence over operational excellence. The superior results obtained by those organizations wh Baldrige award for performance excellence at the state and national level have convinced me that viewing ALL WORK as a process have. Many lean initiatives are difficult to sustain simply because we fail to involve all work groups in the lean effort. In other words, improvements, but the sales and marketing teams fail to improve in a similar manner. In turn, companies find that they need to layoff lean operations improvements, instead of using the time and money which has been saved to support increases in sales from existin a limited operational excellence focus made it difficult to sustain your improvement initiatives? How do lean and six sigma methodologies contribute towards operational excellence? Back to Top

Stated simply, the goal of any lean initiative should be to minimize waste while maximizing customer value. In an operationally excell practices are applied to all key processes, not just those of a operations nature. Additionally, value is defined from the perspective internal customer in a measurable manner it is not just what management thinks the customer wants. Lean tools are just that - a s on a regular basis to help you pursue operational and process excellence.

According to Womack and Jones, there are seven types of process waste rework, overproduction, excess inventories, non-value excess people movement, excess material transportation, waiting, and non-value added goods of services. Common examples of p organizations include accidents, rework, downtime, material waste, absenteeism, equipment damage, product damage, customer co customers. A variety of lean tools are used to reduce and minimize these common causes of waste across the organizations value

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Operational Excellence FAQs

http://www.greatsystems.com/oefaq.html

end customer).

Six sigma at its core is simply a measure of process variation. In an operational or process excellence world, process variation is bo much as possible through the use of effective waste stream identification, root cause analysis, and project driven systems change. K are used to support the daily continuous improvement efforts of each process owner, but they are not seen as the sole drivers of the initiative. Too many companies are currently making this mistake - they are striving towards operational or process excellence as a g primarily on their kaizen or six sigma teams to drive their process improvement efforts and (2) in turn failing to attain high levels of em pursuit of process excellence. How would you define 'World Class' in terms of operational excellence? Back to Top

World class operational excellence is exemplified through the selection of best in class benchmarks that are global in nature. For e might be able to demonstrate best in class performance within its industry in the United States, while an operationally excellent orga level would be able to demonstrate superior performance against organizations that extend beyond its industry and country of opera are content with surpassing the industry average within their country of operation this is not world class excellence.

As an examiner for the Malcolm Baldrige National Quality Award, what attributes do you look for to gauge operational exce

This question is in essence answered in my definition of operational excellence. I will add however that there are three key things w especially when we visit a finalist for the award. First and foremost, we try to ask questions of a high percentage of the workforce to which the organizations high performance work practices and approaches have been deployed. You cant achieve a significant p approach / deployment points (55% of the total) if your key approaches are not deployed to a high percentage of the workforce. In employee engagement is a prerequisite for pursuing operational and process excellence..

Secondly, we review lots of documentation and talk to more people to help validate the degree to which what was said on paper act organization. Eleven core values serve as the foundation for the award and its criteria (things like fact-based management, visionary employees). Most organizations can talk a good game, but few can back it up in the workplace. Thats where the third thing comes where an organization might have the right systems in place, they can rarely demonstrate how these systems have been consistentl have lead to improved results, again in all areas of importance. What is the most critical factor in making an improvement initiative successful? Back to Top

This is a tough question, because I am torn between two possible answers. An improvement initiative will not succeed if time is not that time, if allocated, is used effectively. That said, an organization can allocate this time on paper (in a strategic plan, job descript example), but fail to require EACH of its leaders to demonstrate the degree to which they are personally using this time to improve t responsible for. If I could only change one thing, I would change what I expect from each of my leaders, because most people will f that goal is clearly stated, along with significant consequences for failing to achieve that goal. What is Activity Based Costing and how does its use support operational excellence? Back to Top

My experience has convinced me that activity base costing (ABC) is a requisite for operational excellence. Most importantly, activity allocate overhead to each product more effectively, instead of using ratios based on a percent of direct labor dollars, pounds per lab ABC, the primary cost driver for each expense group (cost center) is identified, and then product specific percentages are derived fo example, rental expense is allocated to each product based on the percentage of floor space that product occupies. Engineering or are allocated to each product or service based on the amount of time each engineer or sales person reports spending on a given pr costs might be allocated to each product based on the number of labor hours worked per product.

The key is that the cost driver type varies with each cost center no single set of multipliers is used to allocate all overhead costs. helps more clearly define a products or service's true profit margin, instead of allowing one product or service to carry an excessive products overhead burden. For example, I have seen one candy bar type essentially die on the vine because it was carrying an exc labor costs. Because sanitation costs were allocated based on line hours of operation (both products ran for the same amount of tim the sanitation hours that were actually needed to clean the line (the other product was very messy, and required twice as many peop clean' products profit margin was understated, and in turn, management was hesitant to try to grow that brand. Additionally, the pro product was overstated.

Activity based costing also helps an organization focus more on transaction costs instead of merely managing to a budgeted number excellent organization, the goal should be to consistently drive down the cost per transaction (i.e. the cost per pound or the cost per process area, not just overall. ABC helps non-production groups in particular, because it helps clarify the primary reason they exist. human resource cost per person hired or per employee? How has this number changed over time?

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Operational Excellence FAQs

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How can managers in a facility monitor the performance of supervision to ensure they are properly carrying out the daily t necessary to maximize the effectiveness of the improvement process? Back to Top

As with any type of supervision or process ownership, a balanced set of metrics and reporting should be used to track leadership be effectiveness. A bottom up Leadership Index should be provided to each supervisor by his direct reports at least once a year as metric. The process owner should also be held responsible for the safety, cost, quality, and people metrics that his or her processe form of trend lines and a balanced scorecard). A key mistake which is made in most organizations is related to expecting an externa Safety, Quality, or Human Resources, to manage the process results in these areas across multiple process groups.

I also expect each of my process owners to provide the following each month a key project list for their processes, a monthly sum accomplishments and challenges, and a performance summary spreadsheet that shows DAILY process inputs and outputs. Becaus to spend 30-60 minutes a day on these items and use a spreadsheet to compile and organize them, I can review their progress at a the spreadsheet itself, the results trend lines posted in their process areas, and/or their hard copy monthly report (or intranet web p Excellence From the Inside Out" workshop is specifically designed to help you install a similar process for your process owne Would you like to learn more about process excellence tools and concepts? Back to Top Click on one of the following links to explore other ways you can accelerate the pursuit of process excellence in your organization: Process Excellence From the Inside Out Workshop Performance Improvement Articles Process Excellence Certificate Process Other Great Systems workshops Other Great Systems workbooks Great Systems! home page

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