How can operational excellence be measured

PQRM TD

Why constant increase in performance is indispensable and three criteria for higher process performance.

What do you think of when you think of “Operational Excellence”? Are you thinking of efficiency, effectiveness, added value and top performance? Or are you thinking of methods such as Lean Management, TQM, TPM, Kaizen, Six Sigma, Business Process Reengineering, Industry 4.0 and the like?

Operational Excellence must not be confused with tools and methods.

Operational Excellence must not be confused with tools and methods. In principle, operational excellence is the highest level of performance in a company. It concerns the real value of the company: what is inside.

In practice, however, many companies fail to achieve their potential. And that is often quite considerable: the potential earnings left behind is often three to five times the profit generated. Not to mention the future development opportunities of the company and its employees, which are lost in mediocrity.

But who wants to stay mediocre? Many, or almost most of them, want to be recognized and rewarded for their work. Operational Excellence as an approach is a pragmatic way to step out of mediocrity through daily improvement and to distinguish yourself.

Excellence is defined by customers, not tools

What defines high performance is determined by the customer. You decide for one offer and against everyone else. And competition is not getting easier, but tougher: volatile demand, globalization, internet economy, digitization, regulation, scarcity of raw materials, demographics, price pressure, etc.

The customers do not care where and why the service they expected was not provided. In the age of plenty, they click to the next provider.

The companies with the "business-as-usual" approach are shown in the insolvency statistics.

Therefore, only those companies will survive that score with continuously higher performance. The companies with the "business-as-usual" approach are shown in the insolvency statistics. Others find themselves before the cartel judge, and still others hope for the luck of being bought by a strategic investor. For managers, however, ultimately only the company's performance counts - measured in terms of customers and euros.

Increase in performance through the operational excellence approach starts where the performance is produced: in the processes, formerly called “work”. The operational processes must meet three criteria in order to achieve top performance in the long term. Higher performance depends on these three factors:

  1. Added value for the customer
  2. Core competence for competitive advantage
  3. Employee engagement

First: The processes must primarily be geared towards creating value instead of producing costs. As the eight wastes in Lean show, customers are not willing to pay for activities that do not add value: whether high inventories, long waiting times, avoidable errors, overproduction or simply wrong processes, all of them lead to costs without performance. Operational excellence is achieved through a high proportion of added value in all operational activities.

Increased performance in operational excellence has to be strategically designed: you have to be able to do exactly what counts better.

Second, the processes don't just have to create something valuable, because the competitors do that too. The services must also be produced with special core competencies that provide a competitive advantage. This advantage over the competition, called “differentiation”, is decisive for the company's success.

Only then can a profitable price be demanded that the competitor cannot easily undercut. Only then can not only the customer but also the company benefit from his performance. Improvement is not arbitrary. Increased performance in operational excellence has to be strategically designed: you have to be better at exactly what matters.

Third, processes do not work without the commitment of employees. Motivated employees not only conscientiously produce the performance required by the customer, they also implement the decisive improvements on a daily basis. Active thinking and collaboration requires a high level of commitment.

Only committed employees orient themselves towards goals, see opportunities for improvement and think about solutions to problems that they can implement together as a team.

At least a higher one than the current engagement data from Gallup shows: According to this, 70 percent of employees push work according to regulations. But only committed employees orient themselves towards goals, see opportunities for improvement and think about solutions to problems that they can implement together as a team.

Through the management of processes that live value creation, core competencies and commitment, sustainable high performance is produced for the benefit of customers, employees and the company. A top performance that shows that you can “do something really well.” That is the achievable promise of operational excellence.

 

Andreas Sattlberger worked as a manager and on the board of international and medium-sized companies. As a consultant, he has already managed strategic and operational projects for international management consultancies and has achieved measurable increases in earnings. At procon, he uses his expertise to fill the Performance Excellence division, which he will develop and expand. His expertise lies in the scaling of operational excellence - prosperity through improvement. Sattlberger increases productivity in companies through the use of Industry 4.0, lean management, sales optimization, supply chain logistics and change management. Andreas Sattlberger is at your disposal with his know-how for further discussions at any time.

About Andreas Sattlberger

Andreas Sattlberger worked as a manager and on the board of international and medium-sized companies. As a consultant, he has already managed strategic and operational projects for international management consultancies and has achieved measurable increases in earnings. At procon, he uses his expertise to fill the Performance Excellence division, which he will develop and expand. His expertise lies in the scaling of operational excellence - prosperity through improvement. Sattlberger increases productivity in companies through the use of Industry 4.0, lean management, sales optimization, supply chain logistics and change management. Andreas Sattlberger is at your disposal with his know-how for further discussions at any time. View all posts by Andreas Sattlberger →