Almost every company I talk with has created, or is creating, an operational excellence department. This makes me very happy. I love operational excellence and the fact that companies are embracing it’s new meaning.
What concerns me is that many of these companies are not going to maximize their results from these departments. Operational excellence is not just about improving processes or eliminating non-value added activities. It’s about identifying what outcomes you want to achieve and then figuring out the fastest and most effective way to achieve them.
The most effective operational excellence functions need to have these four components:
- An ability to help the organization prioritize. This might mean prioritizing strategic initiatives, projects, or even ideas. Most organizations have too many priorities and then wonder why they are not able to move forward on them. Operational excellence functions need to help the organization focus on those ideas, strategies, and initiatives that will help it move closer to its ideal future state.
- An ability to identify leverage points. Think of process re-engineering on steroids. A great operational excellence department will identify ways to leverage each step of a process so that things are not just being put together, but are being enhanced every step of the way.
- An ability to make the intrinsic extrinsic. Identifying what is working well internally and then replicating that across an organization is a skill most organizations lack. Finding and replicating best practices is one of the quickest and easiest ways to improve overall organizational performance. Your operational excellence function needs to help make that happen.
- An ability to identify areas for operational transparency. Every inquiry a customer makes is failure work. A strong operational excellence function will help the organization find ways to increase operational transparency with customers, thus reducing the time and effort spent on answering basic questions and inquiries.
I was speaking with an executive last week and he told me his company reduced costs by more than $500,000 when they realized the majority of customer questions were related to when customers were going to receive their order. By giving the customers access to the order flow online, all of those inquiries went away.
Is your operational excellence department finding those kinds of opportunities?
If not, then it is failing you.