Operational excellence is the relentless pursuit of finding ways to improve performance and profitability.

The concept of operational excellence effectively started in the manufacturing industry with concepts like Lean and Six Sigma and the Toyota Production System. The problem is that we have not made enough breakthroughs since those methodologies were created. In fact, we have become so heavily reliant upon these methodologies that we sometimes forget to use good judgment and common sense.

When we talk about manufacturing, we need to consider that technology is very important in the industry; in many cases, technology is taking over jobs that people used to perform. This trend makes managing quality even more important because we are removing the human ability to control that quality. It’s no longer sufficient to create a quality review department at the end of the manufacturing line, where a team of people fixes the defects. As a result of automation, we need to build that quality right into each step of the manufacturing process so we don’t accelerate issues. Organizations that sacrifice quality for size and speed will be left behind.

Operational excellence is a mindset, not a methodology. It is the relentless pursuit of finding ways to improve performance and profitability. It is finding money and performance boosts in areas that organizations don’t normally look.

The future of operational excellence for manufacturing is not in words like productivity, efficiency, and standardization. It will be in concepts like growth, innovation, and customization. The world is more connected and fast-paced than it has ever been, and the manufacturing industry needs to keep pace.

When I work with manufacturing companies, there are some characteristics that the most successful ones have:

• Seamless integration between the various elements of the supply chain. Products can be tracked all the way from the raw material stage until they are in the hands of the end customer, and the fewest number of people possible touches the products as it moves along the chain.
• Sales, marketing, and research and development are closely linked to the manufacturing process. This ensures alignment between what is being developed, what is being produced, what is being sold to customers.
• Formal management of the innovation and product launch processes. Products are launched on time, with the involvement of all the appropriate departments in the organization, and there is a formal way to manage new ideas and get them implemented for the greatest impact.
• Collaboration with customers and suppliers to improve results. This means that business partners share strategic direction and help each other achieve it. It also includes the sharing of data and demand forecasts to optimize the manufacturing process.
• People who are cross-trained in various roles. The aim here is to minimize downtime and ensure that organizations are constantly developing key people. This strategy becomes most effective when the right people are hired in the first place.
• Processes that focus on speed optimization. Although it may sound counter-intuitive, these organizations know when to speed up and when to slow down in order to get the best results and they have indicators in place to help them do that.

One of the biggest opportunities I see with manufacturing organizations is to ensure operations are able to keep up with sales. Too often I see organizations focus on ways to increase sales, attract new customers, and enter new markets, but then become overwhelmed in trying to meet all of the new demand that has been generated for their products.

What are you doing to ensure that your supply equals demand without sacrificing the quality of what you offer?

Source: IndustryWeek (by Andrew Miller)