What is the Purpose of Operational Excellence?
The entire goal of operational excellence is to achieve and sustain a superior level of performance within an organization. Any company in any industry can strive for operational excellence through continuous and consistent improvement of processes, systems, and workplace culture. Through operational excellence, companies can deliver better services and products to customers, which in turn affects overall performance and profitability.
Tools for Operational Excellence
Operational excellence is a business philosophy that drives businesses to improve efficiency and performance while also reducing waste to a minimum. However, achieving it is usually easier said than done. This is why companies are encouraged to use various tools to make it easier to attain operational excellence, such as:
Lean
Lean is a common principle that businesses adopt which is aimed at detecting waste, whether this be materials or effort. That way, all processes have a direct effect on the business and help them achieve their goals.
Six Sigma
This data-driven methodology aims to identify and eliminate defects and variations in processes. It uses statistical analysis to measure performance and improve processes.
Total Quality Management (TQM)
This comprehensive approach involves the entire organization in continuous improvement efforts. TQM also emphasizes customer focus, process improvement, and employee involvement.
Kaizen
Translated from Japanese, Kaizen means continuous improvement. It involves making small, incremental changes to processes on an ongoing basis. The philosophy encourages involvement from all employees in identifying and implementing improvements.
Theory of Constraints (TOC)
The TOC approach aims to identify and manage the most critical constraints that limit an organization’s ability to achieve its goals. By optimizing these constraints, overall performance is improved.
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While operational excellence may be a difficult milestone to achieve, it can definitely be done. Here are a few examples of operational excellence in the real world to give you a better idea of how you can achieve this with your own company.
Toyota Production System
Arguably the most popular and well-known example of operational excellence is in Toyota’s production system or TPS. This Lean manufacturing system focuses on a culture of continuous improvement and waste reduction. TPS emphasizes the elimination of overproduction, waiting times, excess inventory, and defects.
Amazon Fulfillment Centers
Amazon is an e-commerce giant known for delivering its products in a timely fashion and having a very fast fulfillment process. To accomplish this, the company has built fully optimized fulfillment centers equipped with advanced technology and algorithms that enable streamlined order processing and rapid delivery.
Southwest Airlines
US-based Southwest Airlines is one of the most popular airlines in the industry due to its operational excellence. Their unique operational model has allowed them to maintain high levels of customer satisfaction while remaining profitable.
Starbucks’ Standardization
A big reason for Starbuck’s global success is the uniform training that all employees receive and their standardized processes. That way, they deliver products efficiently while keeping quality consistent to satisfy customers.
Walmart’s Supply Chain
As one of the world’s biggest retailers, it should come as no surprise that Walmart’s supply chain is a great example of operational excellence. With their fully optimized supply chain, Walmart can keep product volume high, costs low, and quality at a level that continuously satisfies their customer base.
