What is Operational Excellence?

Business operations can always be improved, especially if they aren’t performing as desired. Although it is something that is not easy, its something needs to be done. This is where the concept of operational excellence comes in, which is not an easy concept to define. If you ask two organizations to define it, you will most likely be given two versions. But at the core, you will find it boils down to making meaningful change gradually.

Knowing Operational Excellence is paramount to achieving it. With that said, let us look at what it is a little more detail.

Operational Excellence Defined

Operational Excellence is a management philosophy that champions continuous improvement to drive results. Basically, an Operationally Excellent organization is one with low overhead, low expenditure and increased profitability compared to its competitors who carry out the same operations. Ultimately, a company striving for operational excellence must be willing to go wherever their journey of continuous improvement takes them.

Top 5 Operational Excellence Methodologies

There are many methodologies that can be used to achieve operational excellence. Here are five of the best.

1. Lean

Lean is an operation improvement process that focuses on reducing wastage. When Lean is used, the focus is placed only on that which increases the value of the product or service for customers. Also, everything that doesn’t add value is removed, which greatly decreases costs.

2. Six Sigma

Six Sigma is a set of tools that allow organizations to improve processes. The end result is that the organization increases the value of its offerings. It is a data-driven approach that aims to eliminate defects in the process, bringing it closer to perfection. It usually goes well with the Lean methodology described above.

3. Theory of Constraints

In the Theory of Constraints, it is believed that every process has bottlenecks. Essentially, a bottleneck is a child process within a parent process whose limitations affect the performance of the parent. This methodology is about continuously finding bottlenecks and eliminating them to improve the process.

4. Kaizen

Kaizen is the Japanese word for “continuous improvement.” The guiding principle behind Kaizen is that every process can be improved through teamwork. It aims to establish a continuous improvement as organizational culture.

5. Statistical Process Control (SPC)

Every process will produce variability from one product to the next. The greater the variability, the less the products produced from the process will be of quality. SPC emphasizes on looking at the process data in order to reduce variability as much as possible between products. One of the SPC tools is Process Control Charts.

Every company wants to make products that customers want and, in the process, create a sustainable business with the potential for growth. With that in mind, it becomes clear that processes need to be improved – not just once, but continuously. Operational excellence is one of the best ways to achieve this. This makes its definition and methodologies a must-know for organizations wishing to apply it to their various business operations.