The Staircase to Operational Excellence

Raymond Hill - Monday, October 30, 2017

The search for Operational Excellence (OPEx) among wholesale distributors (and manufacturers and service companies, too) is becoming more commonplace — and is now considered essential for mission critical functions and applications. Through a clearer articulation of proven process improvement approaches, it’s now possible to embark on innovation initiatives that avoid waste, improve customer experiences, and keep work processes under control. Those who anticipate and drive this future will effectively deliver value to their customers and organization.

 
The quick pace of change in most businesses, particularly over the past decade, has wide reaching consequences in enabling new ways of working and driving changing business models, bringing with them entirely new ways of thinking about business operations and processes. This means continuing to make processes simpler, easier and better. It also means going beyond these basics and looking at how emerging technologies can enable new ways of delivering value, freeing up employees for more productive and creative tasks. It means moving beyond the limits of merely “process thinking” and adopting new approaches to tackle the challenges and opportunities that lie ahead. It won’t be enough to have processes that merely work. Business processes will need to become engaging, and capable of understanding how to help people — whether customers or employees — drive desirable outcomes. That’s the key!
 
Operational Excellence, unlike “Lean” is not just about eliminating waste. It’s about possessing an operation that will enable perpetual business growth.
By following a step-by-step approach and implementing a “design for business operations,” a company can, in fact, achieve OPEx in a relatively short amount of time.
The demographics of both customers and employees will continue to shift enormously, opening up opportunities for process change and increasing pressures on the business to raise productivity and efficiency.
With more and more millennials in the workforce, the way work will need to be done will be starkly different from previous generations. Although some distributors may be slower to hire the next generation, the reality is that their customers may not be. Equipping millennials with the tools and processes they need, and are comfortable with success, is key for achieving the most productive work environment possible.
 
The reality of OPEx

Over the recent past, many companies have embarked on a continuous improvement journey where team members target an area of the operation for improvement, then propose the improvement, management approves, and the team implements the proposal.

Once the improvement is implemented, it needs to be integrated — embedded — into the standard work in order to sustain it. Management monitors and measures the results and each day this process continues; finding areas that need improvement, improving them and then embedding them into the standard work. This is called a process of “improve, sustain, measure and monitor”. Repeating that cycle over and over again will create a culture of continuous improvement.
 
It often looks like this:
 
Note: The staircase is not always a straight-line.
 
Question: So, what is the destination, and what does it look like?
 
Answer: It’s what is at the end of the roadmap to your company’s “value stream” creation and its flow, starting from the time an order is taken or a service request made, from a customer, until the time the product or service is delivered — and paid for! It’s your “Value-Stream”! There is a lot in between, sometimes taken for granted, but it’s what the customer perceives as your value! It must be lean, easily flow, a standard process understood by all — and provides “consistent outcomes” — the desirable outcomes. The latter requires that every employee knows what to do and when to do it.
 
Whether you are big enough to qualify for S&P status, or not — maybe this is you ...or maybe not, the message is clear!
 
It does mean that it will be harder for companies to maintain their competitive advantage without continual improvements in services — and products — and how they are delivered. The pace at which innovations and improvements need to be delivered is growing ever faster; companies could lose market share at an unprecedented pace.
 
Companies have to develop their own innovation capabilities and cultural learning. Sometimes it means accepting some failures along the way (notice the “staircase” picture above). Companies need to keep an eye on the future customer; what causes them to purchase product from you, versus the competition? What is it that you do differently...and better?
 
But as the world races ahead with new capabilities, including process improvement and automation, data analytics, wearable technology, warehouse “speed-of-flow”, cloud computing, etc., it will take some time for some organizations to work out what to implement — for what purposes — and in which ways.
 
But don’t expect technology alone to resolve the issues that you have in your operations and processes. You have to understand what you are improving. You need to have a complete understanding of process. Much of wholesale distribution has yet to see “an Apple” revolution in business process development and technology.
 
In fact, go to your favorite website to shop or browse. You might have a great experience and see that the process is seamless. The content is relevant and being shown in a visually appealing way. But the solutions we ask our employees to use are often terrible. The processes need to be fluid and make sense. You can apply lean principles and good process excellence principles to those systems. Where are the people who can design intuitive systems?
 
What are you waiting for?
 
So,
  • Manage your processes as strategic assets;
  • Build into your processes the flexibility to enable rapid business change;
  • Increase investment in process automation capabilities;
  • Allow customers and employees to influence your processes;
  • Incorporate data (big and small) into your processes as a key focus going-forward;
  • Get the process basics “right” — a critical foundation.
 
OPEx could completely alter, I believe, the face of the distribution industry and change the way businesses operate. With that in mind, it begs the question — if change is imminent, then what are you waiting for?
 
Do the right things — do things right!