Appleton Greene – Operational Excellence
Where will your lean journey take you?
Appleton Greene Many companies drive operational excellence into their operations. Yet when asked exactly what it is, there is always hesitation. Answers such as “It’s about process quality (making perfect parts every time),” or “Applying lean tools everywhere to eliminate waste” are common. It is not an easy concept to quantify, and very difficult to explain in simple practical terms to an operator on the production floor, so they know what to do to create and sustain it. Lean is a big component of Operational Excellence. Lean is based on elimination of waste, and the best way to eliminate waste is to create flow. Therefore the lean journey is one of creating flow. Flow is created at a cell level by using one piece flow techniques. Flow is continued at the value stream level by connecting processes or cells with FIFO (First In First Out) or supermarket (Kanban or Pull) systems. Flow is created in the office through work flow cycles, integration events, virtual office cells, and pitch and recently more progressive companies have created flow in the supply chain by setting up formal connections such as Sequenced FIFO and Kanban with suppliers. The intent of lean is to flow value at the rate of customer demand which is the first step towards Operational Excellence. The answer to the question, “Where will your lean journey take you?” – Operational Excellence.
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Defining operational excellence
Operational Excellence is when each and every employee can see the flow of value to the customer, and fix that flow when it breaks down. It’s that simple. What this means is that each employee knows that the product moves from process A to process B in a specific quantity, at a specific time, to a specific location; otherwise, something is wrong. Additionally, when something does goes wrong (and it will), they know what to do to fix it, without seeing their supervisor, reporting to management, or having a meeting. This happens in the office as well, where employees can see the flow of a customer order through several business processes and fix that flow when it breaks down in the same manner. Think of it as orders flowing (from order entry through manufacturing to delivery) through a pipe. Someplace (in the office or on the manufacturing floor) the pipe gets clogged and the flow stops. The operators would know what to do to unclog the pipe and allow flow to resume without any management involvement. Employees create and maintain a lean flow, while management focuses on growing the business.
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Seeing the flow of value
What if anyone could walk to any area on a production floor and visually depict exactly how many processes each station is away from the customer? From any process, they would know how long it takes to get to shipping from that point. If it is simple enough so a visitor could see the flow, then each operator can see exactly where they are in the value stream, and how the flows works. All that is left is to create it in a way that each employee can see it. Enter visual systems. The myth is that visual systems organize a factory and make it look nice and neat. Everything is labeled and everyone knows where everything is. It’s time to break that myth. Visual systems should be designed to allow everyone to see the flow, even visitors. They should allow everyone to have the capability to answer the questions, “Are we on time to customer demand?” and “Is everything flowing the way it should be?” Simple ways to accomplish this can be color coded FIFO lanes, colored zones in supermarkets and identified areas of overproduction indicating a problem.
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Fixing flow
It is inevitable that value stream flow will fail; therefore, what matters is how the problem is addressed when it does happen. Standard work is the solution that drives Operational Excellence. So the question then becomes, “What is the standard work when flow breaks down?” In the lean environment, the answer cannot be to call the supervisor. The key is to keep the decision making to a minimum, and that can be illustrated in a simple example. Two processes are connected by a FIFO lane that is divided into three zones green, yellow, and red. If parts are backed up into the green, everything is normal. If parts are backed up into the yellow (caution), something is going wrong. The consuming process may have standard work that tells them to rotate breaks to catch up (without asking a supervisor). If parts are backed up to the red section, the operator would go to the phone and call in second shift early, again, without asking a supervisor. Other methods include an escalation method to let management know that flow broke down and a fix is in process. Operational Excellence is when each and every employee can see the flow of value to the customer, and fix that flow when it breaks down. Lean provides the road map to get there.
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Focus on the process
When things go wrong there is a tendency to want to blame other people but often the problem is rooted in the process, not the person. This is because even great employees can’t consistently produce ideal results with a bad process. When a mistake occurs, rather than immediately pointing fingers at the employees involved, assess what part of the process the error occurred in. Once you have done this you can make adjustments to try to achieve the results you want. High quality can only be achieved once every part of the process is done correctly. It can be helpful to organize work areas in a way that will allow potential problems to become visible right away. When a mistake does occur, stop working immediately to correct the mistake before continuing.
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The ultimate goal
Operational excellence is the ultimate goal of all organizations striving for continuous improvement. Projects and tools are a useful place to start but on their own, they are not enough to create lasting change. Lasting change can only happen when the principles of operational excellence are understood and deeply rooted in the culture of an organization. If you were to honestly evaluate your business, how much wasted time and non-productive activity is actually taking place? Do you have a recurring problem that just seems to keep cropping up no matter how many times you thought you fixed it? Are the activities of your organization truly creating more value for your customer? When you perform a business-related task, is it that first time you have completed that task? Or do you find yourself constantly re-processing paperwork, responding to emails, and fixing mistakes created by other people? Most business owners have found themselves in this situation and know how frustrating it can be. This is why so many businesses strive to create a culture of operational excellence.
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Cultural transformation
Operational Excellence is the cultural transformation and technical enablement of business that allows it to perform optimally and achieve its strategic objectives. Sounds simple, but it’s a method that has far reaching implications for any organisation. At its heart, any business is about its people, its processes and how those are managed. By focussing on how people work, what they do and why they do it, we can refine the execution of your operating model to greatly improve efficiency and productivity. Operational Excellence is customer-centric. By supporting your business to look at what your customer really values and needs, we can enable your business strategy, operating model, people and processes to meet your customers’ demands. Even tough business process improvement projects can be carried out in a specific department or business function, they have greatest impact when implemented throughout an organisation.
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Unifying purpose, strategy and behaviors
Business processes inherently carry with them inefficiency and they force people to behave in specific ways. If these processes are complex and broken then even the performance of the best people will be inhibited. Operational efficiency always suffers when a business’ strategy and culture are misaligned. This causes unnecessary work, inhibits communication and leads to functional ‘silos’. By deploying an Operational Excellence approach we can make real changes to work culture and operating practices aligning them with strategy.
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Aligning front line work with business objectives
It’s common to see a strong agreement on strategy at the board level, which then gets lost or diluted as it filters down through the organisation. This can become especially evident at the level of customer interface. More often than not, this is due to people at the operational frontline carrying out tasks that seem important but which aren’t aligned with the strategy. At times the challenge is at the senior and mid-level management, where priorities aren’t effectively communicated to the workforce. Operational Excellence quickly shines a light on the business ‘pain points’, no matter if they occur at the very top or at the frontline of the organisation.
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Improving the effectiveness of decision making
It can be tempting to think that an organisation’s problems can be solved by investing heavily in technology. While this can sometimes be the case, especially in sectors such as manufacturing, it is far more effective to look for non-technical solutions first. If people aren’t working efficiently, or processes are not fit for purpose, technology will rarely fix the issue. As part of your business process improvement we’ll help you see which parts of the business may benefit from a technology solution, and help you choose and implement the right one. If the issue is more fundamental then we’ll address that first, ensuring you don’t invest in technology where it’s not needed.
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Identifying the value of your customer set
Not all customers are created equal. Many businesses presume that all customers bring value and are worth serving with the same level of priority, but this can result in inflated business costs, spending time on customers that are costly to serve but offer little value to your business. By identifying which customers create good demand for your business, this will enable you to focus your efforts across your customer set to achieve maximum value. Along with a renewed focus, we will also help your business to improve how it operates to meet customer needs, as well as establishing how best to attract new customers.
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The drive for operational excellence
The drive for operational excellence is relentless, impacting every business, organization, or institution, wherever you operate, whatever your role in the industry. The push comes from many sides. Regulatory oversight demands raise the bar for operational requirements. Reduced margins and increased cost pressures necessitate greater efficiency. The immediate reputation consequence of any operational failure looms; customers expect high-quality products and services. You need resilient operating centers. You need to plan for business continuity and long-term capacity. You need 24/7 operational monitoring. The challenges of adopting the right governance, processes and controls are significant. Whether you have the internal resources to undertake the implementation or you must leverage external organisations with appropriate resources, you will need support, services, and expertise. Your people, processes, practices, every aspect must align to achieve operational excellence.
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Mr Sundaram is an approved Senior Consultant at Appleton Greene and he has experience in information technology, e-business and finance. He has achieved a Master in Business Administration, a Master of Arts in Finance and Economics and a Bachelor of Arts. He has industry experience within the following sectors: Banking & Financial Services; Insurance; Consultancy; Technology and Internet. He has had commercial experience within the following countries: United States of America; India and United Kingdom, or more specifically within the following cities: New York NY; Trenton NJ; Hartford CT; Chennai and London. His personal achievements include: billing & payment processing center of excellence; infrastructure & data center consolidation; strategic sourcing shared services; global program management office and IT & application portfolio rationalization. His service skills incorporate: process, productivity; benchmarking, PMO; security, regulatory; strategy, COE and operational excellence.
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