What is operational excellence?

As usual I will start by quoting the definition from Wikipedia, “Operational Excellence is a philosophy of leadership, teamwork and problem solving resulting in continuous improvement throughout the organization by focusing on the needs of the customer, empowering employees, and optimizing existing activities in the process.”

If you read through the definition, you can clearly identify the key tenets: leadership, continuous improvement, focus on customer, and optimizing current processes. Simply put, operational excellence is executing in an efficient and effective manner across the value chain with a focus on delivering value to customers.

The Operational Excellence program provides a framework to understand why and how performance needs to improve. The road to achieving operational excellence is by identifying value chain business processes, identifying strengths/weaknesses of them (based on key measurements and benchmarks) and redesigning these processes to align with corporate / strategic goals and ensure that organizations, resources and assets are utilized in the best possible manner.

When you pore through the reference material on operational excellence, you will see terms/phrases like “on par with industry”, “best in class”, “world class”. There are differences in all these phrases, if you choose to embark on operational excellence, focus first to meet/exceed your competition’s performance and then become the best of your peers and then become the best among organizations outside of your industry and region.

Each and every industry and organization/business unit within each company can create and run their operational excellence program. In most cases, value chain processes span across multiple organizations, so the focus should be on process execution (related to handoffs) and ensure the best use of assets and resources across the enterprise. Automation and business process re-engineering have great potential so does streamlining / integrating data and business system like ERP, CRM etc.

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