Operational Excellence 2.0 ™
Let me tell you a little bit about how the puzzle pieces come together to be one system that really can change your business. I want to show you a model here that has become somewhat of our trademark.
When we talk about Operational Excellence, World Class Manufacturing (WCM), World Class Operations Management (WCOM), Lean Manufacturing, World-Class Business Process, TPM, Supply Chain Excellence, etc, it can be a struggle to explain the whole system in a simple way. You can see that as a reflection in businesses that the people who are in charge are often engineers who are promoted into a position to then, lead the implementation of continuous improvement of some sort. There’s a downside to that, and that is everything could become technical. We really believe that IQ * EQ = Unity and Results.
So, think about that. It’s about technical aspects as well as emotional aspects that actually generate the results. Companies that are successful have managed to address the emotional side of people to really bond them with the system. And that’s the point. It’s a system; it’s not a set of tools. We often see that it shows up when you are asking engineers to drive it. No offense to engineers. I’m an engineer myself, at least a recovering engineer, but the point is, that, if you look at it as a nice toolbox, that you can use whenever you like, people choose to opt-out more often than not. It’s Not a Toolbox. It’s a way of thinking and living and acting in a business.
It’s a System not a collection of Tools
Let me take you through this model here and as you know, no model is perfect, but some are useful, and we found this to be quite useful in the interaction and explanation of the operational excellence system or, whatever you would call it where you work. Or maybe I could say what you want to call it maybe as well because a lot of companies have not really started to implement a system they’ve started to train people in tools and they don’t hang together. You’d be surprised how much easier it is for people when they see a picture of things that hang together then suddenly they look, and you can kind of know what’s going on. And you can see that everywhere in life I guess, but especially here and there’s a lot of puzzle pieces everywhere and then there’s a picture, it’s not too bad.
Operational Excellence (OpEx)-Working ON the Business
So anyway as you can see from the drawing above it has three sides to it and one side on the right hand here is what we call working on the business, it’s about disassociating yourself from the content of the work to be able to look at the processes and see if they are meeting your requirements or not. And think about it like this, I call it “watch the family, watch the movie” so if you sit with your family watching the movie, you’re going to see a movie, if you sit behind your family watching them when they are chewing away or having a drink or whatever you will know what happened to them and once in a while you need to do that, you need to back away and watch people working so that you understand what is really going on, that is working on the business. But having said that, we start with a management team or steering committee or whatever they want to call it and they need to set the clear direction on where they want to go, if people don’t know where they are heading, they don’t really know what they are going to leave behind. Does that make sense? If you know where you’re going you know that you’re building this, but after you’re done with whatever work you are doing, this has to be in place so what is that?
What you leave behind matters
That is what you learn when you run this system, that you need to leave something in place that can bring the operational system forward. Often you have a team of people who analyze this – the business in different parts. It would be very hard to analyze everything in one goal so you can split it up in smaller teams. In some systems, like world class manufacturing, et cetera, it’s called pillars, you have other names and other systems but if you think about it as a team that takes time out, they’re going to back away, watch the family, watch the movie and they might concentrate on your quality, or maintenance related issues or industrial engineering issues or production floor issues, et cetera. So, you concentrate on different parts.
This means that if you set up a direction on where you want to go, a vision let’s say, this team of people can say, “okay here’s why we’re not there yet”. They analyze that, they do something, it’s called lost intelligence in our lingo. But they understand that, then they launch improvement teams, you can call it Kaizen teams, improvement teams, continuous improvement teams, whatever you want to call it, but there are teams of people and it’s important to be a team of people because here’s one thing that happens in businesses. We are so disconnected today from each other from different functions in a business, different layers in a company, that if we never come together to learn from each other, the disconnection stays and that is the difference that makes the difference. If you are connected to each other and you more unified, you are going to get the result. And two brains are smarter than one that’s how it is. So you put the team together and they come up with some type of output.
The problem here is that when you work on the business, it’s like putting a boulder up on the top and it rolls down to the bottom corner, and when comes to this point it’s going to go out to outer space never to be seen again and that happens often. People run projects and they promote them they show people or whatever but they are never really sustained and everybody knows that I mean seriously, we know how often that happens. Why is that? because maybe, they never thought about holding the gains. We normally point at people and say “You are supposed to do it” which is also creating disconnections. So how do you create a system to hold the gains?
Well at the bottom of this triangle is what we call “the ownership transformation”, it’s about transformation in general, to transform into the culture, which is important that the knowledge and capabilities of the people create processes, to create value, to bring results. But, it’s also about taking the output from teams and handing it over to the line organization.So, this has to be designed, right? Not to be forgotten, because then all the work you’ve done here is going to be wasted soon.
OpEx 2.0-Working In the Business
On the left side, is what we call “working in the business”, so every day when you’re working you could potentially use the thought process of operational excellence. What I mean by that is the only thing you can affect when you are working and want to change the output, are two things, good news it’s not 200 things, but there are still two. You can add Time, so if you want to have more output, a lot of companies add time , more resource or overtime, right. In the short term it’s nice, maybe you make a little bit more money and in the long term you’re also sacrificing home life and stuff like that and that may be hell for people, so nobody really wants that, plus it costs you more money. You can still add time, every person from the CEO down to an operator or any direction in the company can add time, normally.
The second thing you can do is you can reduce your Losses, and the definition of a loss is everything outside of the ideal. If you can do something in an ideal way, you have no losses, that is the fastest you can go. If you can get it down to zero loss, which should be your target to be honest, why would you target to have some losses left it doesn’t make sense, might be hard to reach it and sometimes impossible I do understand that but it’s good to be unreasonable at times, I think. Anyway, you aim for something like that to eradicate the losses, that’s the fastest you can go, the right amount of time, no losses, maximum output. That’s it, so this means if you work in an area and you don’t know the losses you have, you cannot eradicate/reduce/minimize them. This means you’ll need help from the Pillar teams to analyze it, but where you are working it’s good to practice, to get new eyes, to see the world with new eyes, to see where the losses are.
If you don’t know your losses you don’t know your business
If you don’t know your losses you actually don’t know your business I would argue, ’cause imagine if you have a 50 percent output of a machine, 50 percent of the time people are spending are on losses. So, if you don’t know them, you actually don’t know your area, would you say? You need to get those eyes. When you walk to a meeting as a leader, for example, you pass through a production area did you walk without looking or did you actually see what’s going on around you? because if you see it, you can see a lot of losses that you could potentially address at one point. I see this as a bunch of candles on the table, they’re burning and you put your hand on top of it it’s like “Ow!”, and some people, they like that, crazy. Anyway, so you burn yourself everyday on the same candle, right, and on Friday you know that guess what’s happening on Monday? I’m going to burn myself again, really, how do you live with that? Exhausting just to think about and the next week it’s going to be another candle and you will burn yourself again and again…
Performance Control System (PCS)
In the performance control system world, which is the left side of the triangle, working in the business, it’s all about understanding what losses you have and attack them to create the output; it’s not focusing on the output because you can’t focus on that.
It’s like focusing on the gross profit of the United States, right, how do you do that? You focus on something you can actually do something about. Operators on shift are meeting every shift, weekly you have trends to review, you see where you are going so you know if you are getting better or worse, do we need to do something and what is actually sabotaging our shifts every day, you can see trends in the week and then attack them once a week. Then every month, you will add money to it. That creates working on the business, transformation, working in the business, that is operational excellence, that is world-class manufacturing, that is lean thinking, that’s the system.
PDCA, DMAIC, A3, 8D…
The core is Plan, Do, Check, Act and I know other people say, “No, no it’s DMAIC, 8D, or A3 whatever, think about it like this; it doesn’t have to be that complicated. If you are going to train people and you have PDCA, you understand that you are in good shape, you could argue that all the other models are linked to PDCA. Maybe you don’t agree, so let me know if you don’t but, the thing is that it’s a mindset of following a process, it’s more effective than arguing what you want, right. You have good leadership of managing change, loss intelligence, loss eradiation, and loss prevention, and prevention means holding the gains but also making sure that the problems you design into your own process because guess who did that, it was you. We need to stop losses from being introduced in our processes. We need to learn from history and change how we act when we introduce and act differently new Machines, new Products, and new people into the process. Keeping adding the same losses into the Processes and then running Projects to eradicate them sounds exhausting.
Build Unity with your people and build a system together
This is the Operational Excellence System, we call it “Operational Excellence 2.0” for the reason that we think that the heart has to be involved. It’s not only the brain that is needed and if you want to start to bring the heart into it, the passion, then make sure people can see that this is One System and Not a Toolbox. IQ * EQ = Unity which gives the results.
Leading Change is a topic worth spending time on and in this article I explain more about the basic conditions needed for success, Taking Charge of your Change.
If you see the need of a successful system like Operational Excellence 2.0™ for your organization, send us an email and let’s discuss. Thank you so much for taking the time to read this.
Johan Majlov, CEO Lean Dimensions International