Unlocking Sustainable Growth: Achieving Business Results through Operational Excellence

Operational excellence is the primary focus for companies in today’s dynamic business landscape, as they strive to improve their performance and drive sustainable growth. OpEx (Operational Excellence) is a philosophy using a set of strategies, principles, and tools focused on optimizing business processes, reducing waste, and increasing overall efficiency.

By adopting this systematic approach, organizations can gain a competitive advantage in the market through streamlined processes and operations and minimized costs. In this article, I would like to show you the concepts of Operational Excellence and highlight its potential to transform your business by increasing efficiency and productivity and maximizing the innovation potential all for long-term success.

Operational excellence is a persistent pursuit of perfection in all organization’s operations. It pushes all employees and managers to adopt a mindset focused on delivering superior value to customers, eliminating all forms of waste, and never stopping improving. At its core, OpEx seeks to increase the bottom line through optimized processes, increased quality and efficiency, and reduced costs.

“Progress cannot be generated when we are satisfied with existing situations.”

Taiichi Ohno

Key Principles of Operational Excellence

To achieve excellence, the company must embrace some key principles:

1. Lean Thinking: This philosophy focuses on creating flow through operations and improving resource utilization by eliminating waste and non-value-added activities in processes. The wastes that every company has are transportation, inventory, unnecessary movement, waiting, overproduction, overprocessing, and scrap/defects.
2. Six Sigma: By applying a data-driven approach and by using statistical methods, Six Sigma aims to reduce process variation which improves quality, and consequently increases customer satisfaction.
3. Continuous improvement: Encouraging employees to never accept the status quo in any process or job leads to the identification and addressing of inefficiencies. Removing those inefficiencies drives incremental enhancements across the organization.
4. Standardization: Standardizing processes and procedures secures consistency, reduces all forms of errors, and enables organizations to operate efficiently and effectively.

Implementing operational excellence initiatives brings several benefits to organizations

a) Higher Productivity and Efficiency: Operational excellence optimizes processes, eliminate non-value-added tasks and activities, and reduces bottlenecks, resulting in increased bottom line through higher productivity and better resources utilization.

b) Reduction of Cost: By eliminating waste, increasing quality, and increasing process efficiency, it reduces costs and enhances profitability.

c) Enhanced Customer Satisfaction: Improving processes and implementing quality assurance measures ensures consistent product/service delivery, which leads to increased customer satisfaction and loyalty.

d) Innovation and Agility: OpEx encourages a culture of innovation and agility by supporting experimentation and continuous learning, and adaptation to changing market dynamics.

e) Competitive Advantage: Companies with implemented OpEx philosophy differentiate themselves by delivering superior products and services, faster and with better quality which helps them being in front of competition.

Successfully implementing operational excellence requires a structured approach

“We are what we repeatedly do. Excellence, then, is not an act, but a habit.”

Aristotle

a) Commitment of Leadership: Management must provide resolute support, by aligning all operational excellence initiatives with the company’s strategic goals.

b) Engaged Workforce: To encourage ownership, active participation and accountability, employees must be empowered. Only then they will actively participate in continuous improvement efforts.

c) Data-Driven Decision Making: Leveraging data and analytics enables us to measure and identify improvement opportunities, make informed decisions, and measure the impact of operational excellence activities and initiatives.

d) Continuous Training: To advance in knowledge needed to drive improvements we have to equip employees through training programs and resources.

e) Monitoring and Measurement: As Peter Drucker said, “If you can’t measure it, you can’t manage it.” To track progress, identify the following problems and bottlenecks and make data-based decisions and adjustments, key performance indicators (KPIs) must be defined and implemented.

Operational excellence is a powerful philosophy that transforms organizations. It enhances performance and drives sustainable growth. By adopting its principles, companies are improving their bottom line and start delivering superior value to the customers, through optimized processes, improved productivity, and cost reduction. The strongest part of this philosophy is that it fosters a culture of continuous improvement, innovation, and agility, which helps organizations never stop developing in the ever-evolving business environment.

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”

Charles Darwin

The article is written by Manuel Brković, COTRUGLI alumnus from EMBA 17 ZG generation.
In case you would like to know more about this topic, feel free to contact him at [email protected].