The eight key elements of operational excellence

Julia Grobe
Specialist Industry 4.0

05.07.2019 | 4 min

Operational excellence – the term coined by Kevin J. Duggan is not new at best. However, operational excellence is more relevant than ever now. While digitization completely challenges, redefines or completely substitutes established business models, the pressure on industrial companies is increasing. The customer has long since determined what is produced, in what quality and at what price. Long gone are the days when the market offered what was possible and the customer used existing portfolios for his own purposes.
What is operational excellence?
Through operational excellence, companies can win the fierce competition for customers. What exactly excellence is is ultimately also defined by the customer – by deciding on a particular offer. It is therefore important for every company to continuously improve its own operational performance in every area. In theory, this is quite simple: all you have to do is omit all unnecessary things, concentrate on the essentials and keep checking again and again where you can become even leaner – i.e. remain dynamic.

„Obviously, perfection doesn’t come when you have nothing more to add, but when you can’t take anything away,“ as the French writer and pilot Antoine de Saint-Exupéry already knew in the first half of the 20th century.

There are approaches for more minimalism and higher efficiency in production plants like sand on the sea: the palette ranges from Lean Management to Six Sigma to Business Process Reengineering – to name but a few. The decisive factor for sustainable success, however, is above all the consistent and targeted implementation of measures to achieve operational excellence.

This requires a lot of discipline and the avoidance of the following waste.

The eight key elements of operational excellence

1. Transport
Long and poorly planned transports reduce the profitability of any product. Therefore, take a targeted look at how you serve your sales markets, whether local production is worthwhile, or how transport costs can be reduced.
2. Inventory
Rent or buy? How long do you need a machine? Is the purchase worthwhile or is there perhaps an attractive leasing offer for a short period of time? Is it possible to buy a used production machine and retrofit it, or is it possible to turn your unused inventory into money? Check permanently what you really need and create space for the relevant objects or the freedom of movement of your employees.
3. Movement
What are the routes of your employees during operation? Check movement profiles and, above all, the time required for movements from one place to another. Is it worth redesigning your production to make necessary paths more efficient?
4. Waiting times
Waiting time means stagnation. During this time you pay your employees, but do nothing for you, because the machine stands still. Reduce changeover times and check which activities your employees can perform during a production downtime. Perhaps your employee can even help with the retooling with the help of suitable instructions and thus save expensive external personnel.
5. Overproduction
Anyone who produces too much not only bears the additional costs of materials, but also usually has to pay for the disposal of overproduction. Precise calculations are particularly worthwhile in times of small batch sizes. In this way you waste fewer resources and contribute to greater sustainability for society.
6. Over-processing
Are all production steps really necessary to finish a product? Is it possible to do without certain steps or to optimize them and thus reduce the production time and effort? In particular, ask the employees who work on a product on a daily basis about their specific optimization suggestions. You will be amazed at the potential that lies not only in your workshops, but above all in your colleagues.
7. Errors and defects
This aspect hardly needs explanation. Errors and defects of any kind slow down production, reduce the quality of your products and, in the worst case, lead to considerable costs. Find out here how to keep the quality of your work constantly high.
8. Unused talent
Inefficient use of human capital is one of the biggest brakes on productivity. Employees who are not deployed in accordance with their qualifications can quickly destroy cash, regardless of whether they are over- or underchallenged with their task – unmotivated employees will not help you achieve operational excellence.

Like this article? Why not share it!

How can a software help you
achieve operational excellence?