Operational excellence

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Operational Excellence (OE) is the systematic implementation of principles and tools designed to enhance organizational performance, and create a culture focused on continuous improvement. It is intended to enable employees to identify, deliver, and enhance the flow of value to customers. Common frameworks associated with operational excellence include: lean management and Six Sigma, which emphasize efficiency, waste reduction, and quality improvement. Organizations that adopt these practices may report increased customer satisfaction and operational efficiency. [1] [2] [3]

Contents

Operational Excellence leverages earlier continuous improvement methodologies such as Lean Thinking, Six Sigma, OKAPI, [4] and scientific management [5] . The concept was introduced in the 1970s by Dr. Joseph M. Juran [5] , who taught Japanese business leaders quality improvement methods. It gained prominence in the United States during the 1980s as a response to the competitive pressure from Japanese imports, leading to what some termed a "quality crisis". [6]

Key Components of Operational Excellence

Models of Operational Excellence

The Juran Model

In the early 1970s, Dr. Joseph M. Juran was one of the few experts at the time who taught Japanese business leaders how to improve quality. As more companies began to adopt the methods of Juran, William Edwards Deming, and others, Toyota's Operational Excellence movement grew. In contemporary manufacturing, Operational Excellence employs a strategic approach to achieve lean operations. [7]

According to Juran's Model, there are five key components fundamental to operational excellence: [5]

The first component, an Integrated Management System (IMS), offers a framework of processes and standards that help define the organization's direction, identify potential risks, mitigate those risks, manage change, and ensure continuous improvement. A single integrated management system may reduce overlap, redundancy, and conflict. Early adopters of this practice include companies such as ExxonMobil and Chevron, which have implemented the Operations Integrity Management System (OIMS) [8] and the Operations Excellence Management System (OEMS), [9] respectively.

The second component, a culture of operational discipline, refers to the consistent adherence to established procedures and standards ensuring tasks are performed correctly and uniformly. This culture is based on five guiding principles derived from the practices of the United States Nuclear Navy. The guiding principles consist of integrity, a questioning attitude, level of knowledge, team backup, and formality. These principles define the expected behaviors of employees and explain how they contribute to achieving the goals and objectives of the organization.

The core components of the Juran Model for operational excellence are as follows:

  1. Understand Juran's guiding principles, [10] which provide the foundation for operational excellence.
  2. Shift the organizational culture from viewing quality as a product attribute (often referred to as "little q") to recognizing it as a comprehensive customer experience (often referred to as "Big Q").
  3. Recognize when and how to involve leadership and the workforce to enhance performance.
  4. Establish an effective and efficient change infrastructure by utilizing appropriate tools and methods.
  5. Focus on improving business process effectiveness and agility.

The Shingo Model

Devised by Dr. Shigeo Shingo, the Shingo Model encompasses ten guiding principles for operational excellence. The Shingo Institute, an organization that awards the Shingo Prize, has identified "Ten Guiding Principles in the Shingo Model" as forming the basis for building a sustainable culture of organizational excellence: [11]

  1. Respect every individual
  2. Lead with humility
  3. Seek perfection
  4. Assure quality at the source
  5. Flow and pull value
  6. Embrace scientific thinking
  7. Focus on process
  8. Think systemically
  9. Create constancy of purpose
  10. Create value for the customer

The FLEX Methodology

The FLEX methodology, also known as PBED (Plan-Brief-Execute-Debrief), is a structured management system originally used in aviation and later adapted for business operations in 1998.

The FLEX methodology involves four iterative steps to improve performance and align objectives:

See also

Related Research Articles

Total quality management (TQM) is an organization-wide effort to "install and make a permanent climate where employees continuously improve their ability to provide on-demand products and services that customers will find of particular value." Total emphasizes that departments in addition to production are obligated to improve their operations; management emphasizes that executives are obligated to actively manage quality through funding, training, staffing, and goal setting. While there is no widely agreed-upon approach, TQM efforts typically draw heavily on the previously developed tools and techniques of quality control. TQM enjoyed widespread attention during the late 1980s and early 1990s before being overshadowed by ISO 9000, Lean manufacturing, and Six Sigma.

<span class="mw-page-title-main">Lean manufacturing</span> Methodology used to improve production

Lean manufacturing is a method of manufacturing goods aimed primarily at reducing times within the production system as well as response times from suppliers and customers. It is closely related to another concept called just-in-time manufacturing. Just-in-time manufacturing tries to match production to demand by only supplying goods that have been ordered and focus on efficiency, productivity, and reduction of "wastes" for the producer and supplier of goods. Lean manufacturing adopts the just-in-time approach and additionally focuses on reducing cycle, flow, and throughput times by further eliminating activities that do not add any value for the customer. Lean manufacturing also involves people who work outside of the manufacturing process, such as in marketing and customer service.

Six Sigma () is a set of techniques and tools for process improvement. It was introduced by American engineer Bill Smith while working at Motorola in 1986.

The Toyota Production System (TPS) is an integrated socio-technical system, developed by Toyota, that comprises its management philosophy and practices. The TPS is a management system that organizes manufacturing and logistics for the automobile manufacturer, including interaction with suppliers and customers. The system is a major precursor of the more generic "lean manufacturing". Taiichi Ohno and Eiji Toyoda, Japanese industrial engineers, developed the system between 1948 and 1975.

<span class="mw-page-title-main">PDCA</span> Iterative design and management method used in business

PDCA or plan–do–check–act is an iterative design and management method used in business for the control and continual improvement of processes and products. It is also known as the Shewhart cycle, or the control circle/cycle. Another version of this PDCA cycle is OPDCA. The added "O" stands for observation or as some versions say: "Observe the current condition." This emphasis on observation and current condition has currency with the literature on lean manufacturing and the Toyota Production System. The PDCA cycle, with Ishikawa's changes, can be traced back to S. Mizuno of the Tokyo Institute of Technology in 1959.

Quality management ensures that an organization, product or service consistently functions well. It has four main components: quality planning, quality assurance, quality control, and quality improvement. Quality management is focused both on product and service quality and the means to achieve it. Quality management, therefore, uses quality assurance and control of processes as well as products to achieve more consistent quality. Quality control is also part of quality management. What a customer wants and is willing to pay for it, determines quality. It is a written or unwritten commitment to a known or unknown consumer in the market. Quality can be defined as how well the product performs its intended function.

<span class="mw-page-title-main">Shigeo Shingo</span> Japanese engineer (1909–1990)

Shigeo Shingo was a Japanese industrial engineer who was considered as the world’s leading expert on manufacturing practices and the Toyota Production System.

The Toyota Way is a set of principles defining the organizational culture of Toyota Motor Corporation. The company formalized the Toyota Way in 2001, after decades of academic research into the Toyota Production System and its implications for lean manufacturing as a methodology that other organizations could adopt. The two pillars of the Toyota Way are respect for people and continuous improvement. Jeffrey K. Liker popularized the philosophy in his 2004 book, The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer. Subsequent research has explored the extent to which the Toyota Way can be applied in other contexts.

In business, engineering, and manufacturing, quality – or high quality – has a pragmatic interpretation as the non-inferiority or superiority of something ; it is also defined as being suitable for the intended purpose while satisfying customer expectations. Quality is a perceptual, conditional, and somewhat subjective attribute and may be understood differently by different people. Consumers may focus on the specification quality of a product/service, or how it compares to competitors in the marketplace. Producers might measure the conformance quality, or degree to which the product/service was produced correctly. Support personnel may measure quality in the degree that a product is reliable, maintainable, or sustainable. In such ways, the subjectivity of quality is rendered objective via operational definitions and measured with metrics such as proxy measures.

<span class="mw-page-title-main">Norman Bodek</span> American teacher and consultant

Norman Bodek was a teacher, consultant, author and publisher who published over 100 Japanese management books in English, including the works of Taiichi Ohno and Dr. Shigeo Shingo. He taught a course on "The Best of Japanese Management Practices" at Portland State University. Bodek created the Shingo Prize with Dr. Vern Beuhler at Utah State University. He was elected to Industry Week's Manufacturing Hall of Fame and founded Productivity Press. He was also the President of PCS Press. He died on December 9, 2020, at the age of 88.

<span class="mw-page-title-main">Continual improvement process</span> Ongoing effort to improve products, services, or processes

A continual improvement process, also often called a continuous improvement process, is an ongoing effort to improve products, services, or processes. These efforts can seek "incremental" improvement over time or "breakthrough" improvement all at once. Delivery processes are constantly evaluated and improved in the light of their efficiency, effectiveness and flexibility.

Lean Six Sigma is a process improvement approach that uses a collaborative team effort to improve performance by systematically removing operational waste and reducing process variation. It combines the many tools and techniques that form the "tool box" of Lean Management and Six Sigma to increase the velocity of value creation in business processes.

Quality by design (QbD) is a concept first outlined by quality expert Joseph M. Juran in publications, most notably Juran on Quality by Design. Designing for quality and innovation is one of the three universal processes of the Juran Trilogy, in which Juran describes what is required to achieve breakthroughs in new products, services, and processes. Juran believed that quality could be planned, and that most quality crises and problems relate to the way in which quality was planned.

Lean IT is the extension of lean manufacturing and lean services principles to the development and management of information technology (IT) products and services. Its central concern, applied in the context of IT, is the elimination of waste, where waste is work that adds no value to a product or service.

Lean integration is a management system that emphasizes creating value for customers, continuous improvement, and eliminating waste as a sustainable data integration and system integration practice. Lean integration has parallels with other lean disciplines such as lean manufacturing, lean IT, and lean software development. It is a specialized collection of tools and techniques that address the unique challenges associated with seamlessly combining information and processes from systems that were independently developed, are based on incompatible data models, and remain independently managed, to achieve a cohesive holistic operation.

Design for lean manufacturing is a process for applying lean concepts to the design phase of a system, such as a complex product or process. The term describes methods of design in lean manufacturing companies as part of the study of Japanese industry by the Massachusetts Institute of Technology. At the time of the study, the Japanese automakers were outperforming the American counterparts in speed, resources used in design, and design quality. Conventional mass-production design focuses primarily on product functions and manufacturing costs; however, design for lean manufacturing systematically widens the design equation to include all factors that will determine a product's success across its entire value stream and life-cycle. One goal is to reduce waste and maximize value, and other goals include improving the quality of the design and the reducing the time to achieve the final solution. The method has been used in architecture, healthcare, product development, processes design, information technology systems, and even to create lean business models. It relies on the definition and optimization of values coupled with the prevention of wastes before they enter the system. Design for lean manufacturing is system design.

Gwendolyn Galsworth is an American President and Founder of Visual Thinking Inc and also an author, researcher, teacher, consultant, publisher and leader in the field of visuality in the workplace and visual management. Her books have won multiple Shingo Prize awards in the Research and Professional Publication category, focusing on conceptualizing and codifying workplace visuality into a single, comprehensive framework of knowledge and know-how called the "visual workplace."

Total productive maintenance (TPM) started as a method of physical asset management, focused on maintaining and improving manufacturing machinery in order to reduce the operating cost to an organization. After the PM award was created and awarded to Nippon Denso in 1971, the JIPM, expanded it to include 8 activities of TPM that required participation from all areas of manufacturing and non-manufacturing in the concepts of lean manufacturing. TPM is designed to disseminate the responsibility for maintenance and machine performance, improving employee engagement and teamwork within management, engineering, maintenance, and operations.

<span class="mw-page-title-main">Shingo Prize</span> Award

The Shingo Prize for Operational Excellence is an award for operational excellence given to organizations worldwide by the Shingo Institute, part of the Jon M. Huntsman School of Business at Utah State University in Logan, Utah. In order to be selected as a recipient of the Shingo Prize, an organization "challenges" or applies for the award by first submitting an achievement report that provides data about recent business improvements and accomplishments and then undergoing an onsite audit performed by Shingo Institute examiners. Organizations are scored relative to how closely their culture matches the ideal as defined by the Shingo Model™. Organizations that meet the criteria are awarded the Shingo Prize. Other awards include the Shingo Silver Medallion, the Shingo Bronze Medallion, the Research Award, and the Publication Award.

<span class="mw-page-title-main">Steven J. Spear</span>

Steven J. Spear is a Senior Lecturer at MIT's Sloan School of Management and Senior Fellow at the Institute for Healthcare Improvement. As a Researcher and Author, he is the recipient of the McKinsey Award and five Shingo Prizes. His book, The High Velocity Edge, won both the Shingo Prize for Excellence in Manufacturing Research and Philip Crosby Medal from the American Society for Quality (ASQ).

References

  1. "Six sigma versus lean manufacturing – An overview".
  2. Morash, Edward A. (2001). "Supply Chain Strategies, Capabilities, and Performance". Transportation Journal. 41 (1): 37–54. ISSN   0041-1612.
  3. Morash, Edward A. (2001). "Supply Chain Strategies, Capabilities, and Performance". Transportation Journal. 41 (1): 37–54. ISSN   0041-1612.
  4. Flint, Jacob (September 5, 2023). "Unveiling Success With the OKAPI Framework". Salford Professional Development. Retrieved 16 October 2024.
  5. 1 2 3 "What Does Operational Excellence Look Like?". Juran. 2020-08-05. Retrieved 2021-12-07.
  6. DeFeo, Joseph (5 January 2024). "What Does Operational Excellence Look Like?". Juran. Retrieved 16 October 2024.
  7. "Operational Excellence Programs for Organizations | Juran". Juran Institute, An Attain Partners Company. 2024-01-05. Retrieved 2024-10-15.
  8. "Learn about the Operations integrity Management System at ExxonMobil". ExxonMobil. Archived from the original on 2017-12-06. Retrieved 2017-12-07.
  9. "Chevron OEMS - Chevron". chevron.com. Retrieved 2017-12-07.
  10. "The Juran Model". Juran. Retrieved 2021-12-07.
  11. "The Shingo Model". The Shingo Institute.

Further reading