What is operational excellence?

Operational excellence (OE) is a competitive advantage: it translates to increased production flexibility, improved customer responsiveness, and cost minimization. (Deloitte)

“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.” (source: http://improveprocess.blogspot.fr/2009/08/what-is-operational-excellence.html)

“Operational Excellence is when each and every employee can see the flow of value to the customer, and fix that flow when it breaks down. It’s that simple. What this means is that each employee knows that the product moves from process A to process B in a specific quantity, at a specific time, to a specific location; otherwise, something is wrong.
Additionally, when something does goes wrong (and it will), they know what to do to fix it, without seeing their supervisor, reporting to management, or having a meeting. This happens in the office as well, where employees can see the flow of a customer order through several business processes and fix that flow when it breaks down in the same manner“. http://www.industryweek.com/companies-amp-executives/operational-excellence-defined

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Operational Excellence is a structured and systematic approach to strive for sustainable outstanding performance. Performance is to be understood in the broadest way and in the context of the purpose of the organization.

• For a manufacturing company, performance means high productivity, high quality, low scrap and minimum wastes and tight control of operational expenses.
• In services, Operational Excellence is fast and accurate response, swift and error-free handling of files, and a pleasant customer experience, e.g. not required to repeat same data over and again because of multiple internal handovers.
• For a hospital, performance is about patient care and experience, effective treatment, seamless journey and so on.

Operational Excellence was/is sometimes referred to as “world class” or “best in class”.

Operational Excellence is built on continuous improvement, which uses many methods, tools and techniques. Among these, Theory of Constraints (ToC), Lean and Six Sigma are the most common, each having specificities but also sharing many common tools and complementary mindsets.

About the author, Chris HOHMANN