When someone asks, “What is Operational Excellence?” I think the best way to start is by talking about its purpose. The main goal of Operational Excellence (OE) is to help an organization reach its vision.
So, what areas does Operational Excellence improve? Usually, OE focuses on three important things: increasing profit margin, growing sales, and using company assets more effectively. The final goal is to make the company more profitable and give better value to shareholders.
Operational Excellence works by creating a strong strategy to eradicate any losses that become barrier to the progress in these three areas. OE also builds a culture where people always try to improve and think of new and better ways to work.
There are two important things that support Operational Excellence:
- First, all people in the company must be aware what “losses” are, how to see them, and feel responsible to eradicate them.
- Second, everyone—not just the top 20% of the best employees like Jack Welch once said—but really everyone must be involved in seeking and eradicating losses.
To make this happen, the company needs to build the skills of its people. People need to learn how to see losses, and the company must help decide which losses to prioritize. This depends on how big the impact is to the business and how many resources the company has.
Some companies use something called “pillars” to support this.
So, what is a pillar?
A pillar is a “non-departmental” function in the company. It cross function from several departments. The job of a pillar is to help the company seek for losses. You can say they are like the “eyes” that search for losses. Pillars are also experts in how to eradicate losses, and they help others learn how to do this.
The second job of a pillar is to build the company’s ability to eradicate losses. Pillars own special methods. These methods are used to solve different types of losses. Pillars make sure the company uses the right method for the right type of loss.
After the loss is removed, it’s also important to stop the same loss from coming back. Pillars help the company build systems to prevent recurrence. The diction “eradicate” is to emphasize losses prevention to happen again.
This OE section blog will share many articles about how companies can use Operational Excellence methods (TPM/IWS or others) to transform and improve. If you have questions, want to share your opinion, or want to discuss, please feel free to use the comment section under each article.