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The Executive Guide to
Operational Excellence
Operational Excellence is a management 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.



What Is Operational Excellence


In "The Discipline of Market Leaders," Michael Treacy and Fred Wiersema describe three distinct value propositions an organization can choose to compete in their market or industry:

  1. Operational Excellence,
  2. Product Leadership, and
  3. Customer Intimacy.

The core of the book is based on five years of research by Treacy and Wiersema into a number of blue chip companies, including Wal-Mart, Dell, Southwest Airlines, Home Depot, Intel, and Sony. Market leaders choose to excel in delivering extraordinary levels of one of these three value propositions, while maintaining reasonable standards in the other disciplines. So, what exactly is Operational Excellence?

Operational Excellence is a well established management philosophy. It 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.

There are many approaches, frameworks, and models that have been presented under the term Operational Excellence. It is also closely related to other continuous improvement methodologies, such as Lean Manufacturing and Six Sigma. See our list of the top 100 Operational Excellence frameworks and OpEx best practices of 2024.


Operational Excellence Strategy & Framework


An effective and robust Operational Excellence Framework is founded upon 4 core building blocks:

Thus, to formulate a Operational Excellence Strategy that will achieve Operational Excellence requires the successful implementation of an integrated Business Execution System that effectively and seamlessly integrates the above 4 building blocks.
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INTRODUCTION TO OPERATIONAL EXCELLENCE

Learn about the 4 building blocks to Operational Excellence: Strategy Deployment, Performance Management, Process Excellence, and High Performance Work Teams. Download a FREE PowerPoint on Operational Excellence.

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Let's delve briefly into each of these components.

Strategy Deployment

Strategy or Policy Deployment is the process that aligns and links business strategy and execution. The (Hoshin) Strategy Deployment Process follows a 6 phase approach:

There are many tools and frameworks we can leverage to assist in the Strategy Deployment process, such as Strategy Maps, Strategic Grids, and Hoshin X-Matrix.

Performance Management

Performance Management is the process that translates strategic initiatives into measurable objectives and goals. A powerful tool for Performance Management used in Operational Excellence is the Balanced Scorecard (BSC) framework, developed by Dr. Robert Kaplan and Dr. David Norton. BSC is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organizational performance against strategic goals.

There are numerous benefits to developing and deploying Balanced Scorecards in an organization. These benefits include:

Process Excellence

Well designed, efficient, and effective Management, Value Chain, and Support Processes are necessary to deliver world-class results. On a high level, to attain Process Excellence, follow this 5-phase approach:

There are numerous frameworks and tools for achieving Process Excellence, including a full suite of Lean Six Sigma methodology tools. Examples include BPI (Business Process Improvement) 7, 8D (8 Disciplines) Problem Solving, DMAIC (Define-Measure-Analyze-Improve-Control), and so forth.

High Performance Work Teams

Operational Excellence can be achieved and sustained with the right attitude, the right mindset, and the right competencies. In the "Empowerment Continuum," the high performance team has the highest level of empowerment. This requires the team to have sufficiency across the areas of authority, resources, information, accountability.

While an organization transitions from a more traditional top-down organization to an organization built around high performance work teams, the role of a supervisor or manager changes to the role of a leader and coach, with six distinctive capabilities: living example, coach, barrier buster, result catalyst, facilitator, and business analyzer.


Improve Operational Excellence


The foundational Operational Excellence Strategy focuses on the aforementioned 4 building blocks. To further improve Operational Excellence, there are additional building blocks we can integrate into our Operational Excellence Strategy. These include:

The applicability and priority of these secondary building blocks to further improve Operational Excellence will vary depending on your organization's industry, specific business challenges, and goals.


Why Implement Operational Excellence


The pursuit of Operational Excellence generates numerous business benefits. Here are several of the most impactful ways Operational Excellence can drive efficiencies, savings, and other benefits to your organization:

This article provides a very rudimentary introduction to Operational Excellence. To develop a more in depth understanding, we suggest downloading a free copy of the 48-slide Introduction to Operational Excellence presentation and consulting the business training guides below. Also, watch the video below for a glimpse of Flevy's breadth of OpEx and Lean Six Sigma best practice materials.


Operational Excellence Subject Matter Experts


Flevy's document contributors are Subject Matter Experts in their respective industries. Below, we have showcased our authors that specialize in Operational Excellence and Lean Six Sigma. Each of these authors and their respective consulting firms have developed training guides on Operational Excellence.

Allan Ung, founder of Singapore-based Operational Excellence Consulting, has over 30+ years of experience playing global and regional roles leading Lean, Six Sigma, and TQM initiatives in global organizations such as IBM, Microsoft, Underwriters Laboratories, and Infineon Technologies.

His firm provides corporate learning programs and management advisory services to assist clients to achieve breakthrough in business performance and effectiveness. Operational Excellence Consulting works with government bodies, multinational corporations, and small and medium-sized enterprises of a wide spectrum of industries. Some of their valued clients include Analog Devices, Borouge, Micron Technologies, B|Braun Medical Instruments, Panasonic, NEC, NileDutch, CLS Communication, Elsevier, Wow Education, Ministry of Social & Family Development, Temasek Polytechnic, Defence Science & Technology Agency, Immigration & Checkpoints Authority, etc.

» View Allan's Lean Management training guides here

Frank Adler, co-founder of US-based Operational Excellence Consulting, has over 25+ years of international executive leadership experience in General Management, multi-site Operations & Supply Chain Management, Quality & Customer Support Management, and Operational Excellence, Lean Management & Six Sigma.

Frank is a certified and experienced Lean Six Sigma Master Black Belt, with a proven track record of implementing these methods, concepts and tools in various organizations and industries. He holds a in Mathematics and Physics from the Freie University of Berlin (Germany) and a in Applied Mathematics and Industrial Economics from the Helsinki University of Technology (Finland).

His firm provides assessments, training solutions, kaizen event facilitation, and implementation support to organizations that are committed to achieve superior performance through Operational Excellence.

» View Frank's Lean Management training guides here

Vishnu Rayapeddi, founder of Productivity Solutions, is a management executive with over 30+ years of experience in End-to-end Supply Chain Management, Manufacturing Operations Management, Strategic Planning, Business/Operational Excellence, and Process Re-engineering/Improvement.

Vishnu is a pioneer in Lean Management, combining the power of Lean Thinking, TOC, Six Sigma, TQM, TWI, Balanced Scorecard, cGMP, and other best-class methodologies like DMAIC, Value Stream Mapping, Root Cause Analysis, 5S, Quick Changeovers, Quality and Reliability, TPM, Visual Management, Standard Work, Pull, JIT, and Kanban.

Vishnu has worked in Pharma Manufacturing and FMCG Supply Chain environments for over 21 years with some of the most reputed organisations in New Zealand and India, including Unichem Laboratories, Aristo Pharmaceuticals, Intas Pharmaceuticals, Standard Medical & Pharmaceuticals Ltd, Fonterra, George Weston Foods (part of AB Foods) and others. In the past 6 years, Vishnu has been providing consulting, training, coaching and mentoring services in the Operational Excellence arena.

» View Vishnu's Lean Management training guides here

Hemant Gham, founder of QMaxima, is an executive with over 20+ years of strategic and program-level experience leading Business Transformation, Performance Improvement, Lean Six Sigma, Change Management, and Customer Experience initiatives with over $40M+ contribution to the bottom line.

Hemant is a Lean Six Sigma Master Black Belt with an extensive track record applying Lean Six Sigma principles, Change Management tools, Standardization and Agile/Product Management techniques. He has trained 300+ Green Belts/Black Belts who have become successful leaders.

His firm QMaxima helps organizations focus and achieve productivity gains, stable operations, reductions in cost through improvements, standardize processes and improve workflows. QMaxima offers a wide range of services from Lean Six Sigma Deployment to Kaizen workshops to Custom Tool Development.

» View Hemant's Lean Management training guides here


Operational Excellence Business Training Guides


Flevy is the leading online provider of business frameworks, methodologies, and training guides. These documents are of the same caliber produced by top tier consulting firms, like McKinsey, Bain, and Deloitte. Most documents were developed by seasoned executives and consultants with 20+ years of experience. The training guides selected below have all been developed by management consulting firms specializing in Operational Excellence. The select training guides below have all been developed by the subject matter experts showcased above.


[NOTE: Our Hoshin Kanri presentation has been trusted by an array of prestigious organizations, including industry leaders such as Apple, Boeing, Shell, [read more]

Our Strategic Planning Process, based on Hoshin Policy Deployment, provides an organization with proven and effective methods to develop, communicate and align its strategic [read more]

Explore the evolution of Kaizen, a transformative strategy originating in the 1980s that has revolutionized the success of renowned Japanese companies like Toyota. Beyond a [read more]

Total Productive Maintenance (TPM) is a comprehensive approach to equipment maintenance that aims to optimize equipment efficiency, reliability, and performance. It [read more]

Value Stream Mapping (VSM) is a lean management technique used to analyze the flow of materials and information currently required to bring a product or service to a [read more]

The 8D Problem Solving Process has become a standard in many industries as problem solving or improvement process, as internal Corrective Action Request (CAR) Process or [read more]

In this Lean Manufacturing presentation, we explore the Lean philosophy, which is rooted in the Toyota Production System (TPS). Lean aims to enhance customer value by [read more]

The Gemba Walk is a powerful Lean management tool that has its origins in Toyota's manufacturing processes. Gemba refers to the actual place where value is created, and a Gemba [read more]

In this Lean Office presentation, we delve into the Lean philosophy, drawing inspiration from the principles of Lean Manufacturing and the **Toyota Production System [read more]

Every organization depends on customer service. Due to rising customer expectations, delivering excellent service is no longer a choice but a necessity. When you equip your [read more]

Leveraging the 012_Introduction to Mapping, this module takes a detailed look at process maps, swim lane diagrams and brown paper maps. Process maps are easy to construct and [read more]

5S good housekeeping and workplace organization is a set of basic management principles that are widely adopted in industries today. Also commonly known as 5S System, **5S [read more]

This presentation has 114 slides and and comprises of the following: * What is Kaizen? * The 10 Commandments of Continuous Improvement * Value versus Waste concept * The 7 [read more]

Please read the Preview Document "Lean Six Sigma 50 Tools Bundle Information Booklet" for complete details. The 50 Lean Six Sigma Tools file can download to your desktop [read more]

The Lean - Standard Work Training Module includes: 1. MS PowerPoint Presentation including 113 slides covering - History of Lean Manufacturing, - The Five Lean [read more]

This workshop introduces various concepts of best-class practices, such as TQM (Total Quality Management) WCM (World Class Manufacturing), Agile and Flexible [read more]

This 2 day Lean White Belt presentation is suited for the executive management and consists of 193 slides in all and comprises of the following: This is meant for the senior/top [read more]

This Green Belt, Black Belt Training Design Aid Bundle includes: 21 PowerPoint Presentations 1630+ Slides 74 Minitab / Excel-based Exercises Use it as-is or to improvise [read more]

Being able to measure a processes performance is a hallmark of Lean Six Sigma and selecting the appropriate metric is critical. LSS metrics fall into one of three categories: [read more]

Gathering the Voice of the Customer is one of the easiest and one of the most difficult tasks a process improvement professional faces. It is easy because when you have a clearly [read more]




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