This may seem like a fairly straightforward question, but it’s not that easy to answer since how we describe the benefits of Operational Excellence cuts to the heart of how we think about our manufacturing operations and their relationship to business growth.
All the operational benefits we normally associate with continuous improvement – enhanced on-time delivery, inventory turns, lead time, performance to budget and quality – dramatically improve once we achieve Operational Excellence. However, the true impact of Operational Excellence on an organization is much deeper and far more profound: remarkable business results in a short amount of time.
Once an operation has achieved Operational Excellence, it will require very little (if any) management intervention. The employees who work directly in the flow will be capable of not only of getting the product to the customer, but also of recognizing problems with the flow before they happen and fixing them on their own using pre-established standard work.
In an environment like this, when an organization’s managers and leaders are not chasing parts and people, putting out fires and going to meetings, how will they spend their time? They will be working on offense, or growing the business: meeting with new customers, interfacing with existing clients, developing new products, and breaking into emerging markets. By extension, we can also reapply the time, capital, and personnel once allocated to operations to other areas of the business.
With Operational Excellence, we move from an environment where operations simply produces the product to one in which the operational side of the organization becomes capable of contributing to the overall growth of the business. And that’s the true power and benefit of Operational Excellence, because we can’t grow the business if we don’t have the time we need to do it.
All the other benefits we’ve come to expect from a journey of continuous improvement will be realized once we achieve Operational Excellence. But its true benefit is not so much what it will do for the operation, but what it will enable the operation to do for the rest of the business.
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Below is a sampling of the benefits some companies have seen as a result of implementing and achieving Operational Excellence.
Parker Instrumentation Products Division Europe (IPDE) makes fittings, valves, and manifolds for the oil, gas, and petrochemical industries. After following the principles of Operational Excellence, the operations side of the business now runs using “self-healing flow” where the employees fix flow when it breaks down. The company was able to reallocate time, capital, and additional resources from production to other areas of the company to drive innovation and growth. The results?
At IDEX Health & Sciences (IH&S), a business unit that produces fluid handling equipment for analytic and diagnostic systems, growth soared after the company achieved Operational Excellence.
At Micropump, another IDEX-owned business, the company also runs according to the principles of Operational Excellence, freeing up time and resources to devote to innovation.
At Hypertherm, a small, privately held company located in Hanover, New Hampshire, Operational Excellence is simply the way they do business. There is virtually no management for a 600-plus associate production staff who work off of visual indicators that tell them when to produce and when to reorder raw materials, essentially eliminating the need for a production control department. With so many resources freed up by Operational Excellence, Hypertherm has focused its efforts almost entirely on business growth.
These gains in market share and top line growth did not come from improvement efforts focused on eliminating waste; they came from the companies setting a destination where “Each and every employee can see the flow of value to the customer, and fix that flow before it breaks down.”SM By creating self-healing flow and removing the need for management intervention in the operation, these companies have freed up their leadership to unleash the power of their organizations to grow.