flevy_8

1 - April 20, 2023 – v8.0

An Introduction to Operational ExcellenceAn Integrated Business Execution System

by Operational Excellence Consulting LLC

“We are what we repeatedly do. Excellence, then, is not an act, but a

habit.”

Aristotle

2 - April 20, 2023 – v8.0

Top 10 CEO Challenges & Priorities

3 - April 20, 2023 – v8.0

Operational Excellence – A Philosophy

A Philosophy: 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.

4 - April 20, 2023 – v8.0

Operational Excellence – An Approach

A Value Stream Management Approach: Operational Excellence is when each and every employee can see the flow of value to the customer, and fix that flow before it breaks down.

5 - April 20, 2023 – v8.0

Operational Excellence – A Model

A Process Excellence Model: The Shingo Model

The Shingo model is comprised of two elements: the house and the diamond.

The diamond represents the transformation process for embedding the principles of operational excellence into the organizational culture.

The house details the principles of operational excellence and the power of balancing effort across all the dimensions.

6 - April 20, 2023 – v8.0

Operational Excellence – A “Checklist”

A “Checklist”: Oliver Wight Class A Checklist for Business Excellence

There are nine chapters describing latest practical and proven best practices. Implementation follows the “Proven Path Methodology”.

These support five further chapters that address the prime processes in most organizations: Products & Services, Demand, Supply Chain, Internal Supply, and External Sourcing.

The Oliver Wight Class A Checklist is aimed so that organizations can see for themselves what "excellence" is and what they have to do to be excellent. Its scoring method allows organizations to visualize and measure progress toward excellence in every part of the business.

The four priority chapters describing the processes and practices that enable the whole business to be excellent: Strategic Planning Managing and Leading People Driving Business Improvement Integrated Business Planning

7 - April 20, 2023 – v8.0

Various approaches, frameworks and models exist that are presented under the term Operational Excellence.

What is Operational Excellence?

8 - April 20, 2023 – v8.0

Operational Excellence – A Definition

A Business Strategy: In "The Discipline of Market Leaders“ (1995), Michael Treacy and Fred Wiersema describe three distinct value propositions or disciplines: Product Leadership, Customer Intimacy and Operational Excellence.

Market leaders choose to excel in delivering extraordinary levels of one of these three value propositions, while maintaining reasonable standards in the other disciplines.

Market leaders will not pursue a diffused business strategy across two or even all three disciplines, but will continually focus on their organizational design, processes, technology and competencies to improve the one particular value discipline that they want to provide to their Customers better than anyone else.

Organizations pursuing an Operational Excellence strategy, strive to deliver a combination of quality, price, and ease of purchase and service that no other organization in their market or industry can match.

9 - April 20, 2023 – v8.0


Achieving Operational Excellence requires the successful implementation of a integrated Business Execution System that effectively and seamlessly integrates the following four building blocks: Strategy Deployment, Performance Management, Process Excellence, and High Performance Work Teams.

Strategy or Policy Deployment is the process that aligns and links business strategy and execution.

Performance Management is the process that translates strategic initiatives into measurable objectives and goals.

Operational Excellence can be achieved and sustained with the right attitude, the right mindset, and the right competencies.

Well designed, efficient, and effective Management, Value Chain, and Support Processes are necessary to deliver world-class results.

Strategy Deployment

Performance Management

High Performance Work Teams

Process Excellence

Operational Excellence Business Execution

System

10 - April 20, 2023 – v8.0




Strategy Deployment



Process Excellence


System

11 - April 20, 2023 – v8.0

“People and their managers are working

so hard to be sure things are done right,

that they hardly have time to decide if

they are doing the right things.”

Stephen R. Covey

12 - April 20, 2023 – v8.0

Operational Excellence – Strategy Deployment

Only 5% of the workforce understands their company strategy.

Only 25% of managers have incentives linked to strategy.

60% of organizations don’t link budgets to strategy.

86% of executive teams spend less than one hour per month discussing strategy.

Source: Balanced Scorecard Collaborative

Strategy is an expression of what an organization intents to do to get from a current state to a future state. Strategy is often expressed in terms of a vision statement, objectives, goals, and initiatives.

13 - April 20, 2023 – v8.0

14 - April 20, 2023 – v8.0

Operational Excellence – Strategy Deployment Process

Phase III – Strategic Vision Elements

Phase IV – Strategic Breakthrough Objectives

Phase II – Current State Analysis (CSA)

Phase I – Organize the Process

Phase V – Strategic Initiatives & Tactics

Phase VI – Strategy Implementation & Review

15 - April 20, 2023 – v8.0


Once you have completed the strategic grid, go back and make sure everything fits with your overall strategy. A set of strategic grids should provide the strategic model for running the business, outlining the specifics of the strategy. All stakeholders should be able to look at the grids and follow the flow of the organization’s strategy.

Strategy Maps or Strategic Grids:

Strategic Focus Area: Increase Shareholder Value

Financials Revenue Growth of 20% by 2014

CustomersAcquire More Customers

Become the Price Leader

InternalProcesses

Improve Operational Efficiency

Cost Reduction Program

Knowledge BasedSystem

Reduce Non-Core Activities

Learning &Growth

Training – Lean Six Sigma Program

Database Network on Operational Performance

Re-Align Organization with

Core Competencies

Dim

en

sio

ns o

r P

ers

pecti

ves

16 - April 20, 2023 – v8.0


The Hoshin X-Matrix is a tool that visualizes an organization’s

strategic objectives,

strategic initiatives,

key performance indicators,

key projects & action items, and

human resources requirements

in one simple matrix.

The Hoshin X-Matrix enables an organization to easily review the alignment of its strategic objectives, strategic initiatives, key performance indicators, key action items and human resources.

The Hoshin X-Matrix, if used properly, improves the likelihood of a successful execution of the strategic plan.

17 - April 20, 2023 – v8.0


7. …x 6. Initiate RFQ Process for Customer Service x x

x x 5. Implement reliability program for new products x x x xx x 4. Establish LSS Black Belt project for return drivers x x x x

x 3. Establish & train order-to-cash process team xx 2. Identify Lean Six Sigma consulting company x xx 1. Define Lean Six Sigma Program x x x

Qua

lity

Ma

nage

r

Sys

tem

Te

st M

ana

ger

Sys

tem

s E

ngi

nee

rin

g M

an

ager

Cus

tom

er S

upp

ort

Ma

nag

er

…

x $15M in annualized cost savings in 2012 x x x x xx Order-to-Cash cycle time reduction of 25% x xx DSO reduction from 90 days to 45 days x x

x x Return Rate reduction from 15% to less than 8% x x x…

Rev: <Rev#> Revised: <Date> Author: <Name> Status: Draft - Not Released

4. …

3. I

mp

rove

Net

Pro

mo

ter

Sco

re t

o +

50%

2. R

educ

e D

SO

fro

m 9

0 d

ays

to le

ss th

an 4

5 d

ays

1. R

educ

e O

pera

ting

Co

sts

by 1

5%

1. I

mp

lem

ent

a L

ean

Six

Sig

ma

Pro

gra

m

2. M

ap &

str

ea

mlin

e o

rde

r-to

-ca

sh p

roce

ss

Resource Planning

Operational Excellence Consulting Strategy Deployment Matrix 2012

3. R

eso

lve

TO

P 3

pro

duct

ret

urn

driv

ers

4. I

mp

rove

pro

duct

ve

rific

atio

n a

nd

va

lidat

ion

5. O

uts

ou

rce

Cu

stom

er S

ervi

ce f

unc

tion

6. …

Measures & Targets

Action Items

Str

ate

gic

Initi

ativ

esS

trate

gic O

bje

ctives

Measures & Targets

Action Items

Str

ate

gic

Initi

ativ

esS

trate

gic O

bje

ctives

Organization’s Strategic

Objectives & Goals

Organization’s Key Performance

Indicator (Balanced Scorecard)

Organization’s Strategic Initiatives

& Tactics

Organization’s Tactical Projects &

Action ItemsOrganization’s

Human Resource Allocation

18 - April 20, 2023 – v8.0

Operational Excellence – Strategy Deployment

“I sure wish I’d done a better job of communicating with GM people. I’d do that differently a second time around and make sure they understand and shared my vision for the company. Then they would know why I was

tearing the place up, taking out whole divisions, changing our whole production structure . . . I never got this across.”

Roger Smith, CEO of General Motors (1981 - 1990)

19 - April 20, 2023 – v8.0

Strategy Planning & Deployment – Resources

Ackoff, R.L. – A Concept of Corporate Planning (New York, New York: Wiley, 1970)

Colletti, Joseph F. – A Field Guide to Focused Planning: Hoshin Kanri - American Style (The Woodledge Group, 1995)

Cowley, Michael and Domb, Ellen – Beyond Strategic Vision: Effective Corporate Action with Hoshin Planning (Burlington, Massachusetts: Butterworth-Heinemann, 1997)

Treacy, Michael and Wiersema, Fred - The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market (New York, New York: HarperCollins Publishers, 1995)

To learn more about our proven Operational Excellence Strategy Planning & Deployment Solution, review our “Operational Excellence Strategy Planning and Deployment Training Module”.

20 - April 20, 2023 – v8.0





Strategy Deployment



Process Excellence


System

21 - April 20, 2023 – v8.0

“Tell me how you will measure me, and then I will

tell you how I will behave. If you measure me in

an illogical way, don’t complain about illogical

behavior.”

Eli Goldratt – “The Goal”

22 - April 20, 2023 – v8.0

Operational Excellence – Performance Management

“Balanced Scorecards tell you the knowledge, skills and systems that your employees will need (learning and growth) to innovate and build the right strategic capabilities and efficiencies (internal processes) that deliver specific value to the market (customer) which will eventually lead to higher shareholder value (financial).”

“Having Trouble with Your Strategy? Then Map It.”

by Robert S. Kaplan and David P. Norton - Harvard Business Review

23 - April 20, 2023 – v8.0


Benefits of developing & deploying Balanced Scorecards in an organization include:

Help the management team focus on the execution of their business strategy

Focus and align an organization towards common goals and objectives

Enable an organization to understand the relationship between measures and performance

Improve communication of organizational priorities across an organization

Help employees to understand and focus on organizational priorities and realize relevant results

Reduce the number of metrics to the few vital key performance indicators

Strengthen and formalizing the project selection process to focus on key capabilities and enablers

24 - April 20, 2023 – v8.0


FINANCIALS

How do you want to look to your shareholders? - Indicators focus on whether your strategic and operational plan contributes to your top-line, bottom-line and/or market share.

CUSTOMERSHow do you want to look to your Customers? - Indicators focus on the specific measures that matter the most to your Customers.

INTERNAL BUSINESS PROCESSESAt which internal processes and capabilities do you want to excel? - Indicators focus on internal operations that enable Customer satisfaction, growth and profitability.

LEARNING AND GROWTHWhat skills and competencies do you need to implement your strategic and operational plan? - Indicators focus on your organization’s ability to innovate, improve and execute.

Objectives Indicators Targets Projects




Vision&

Strategy

Vision&

Strategy

25 - April 20, 2023 – v8.0

Operational Excellence – Performance Management Process

Phase I - Strategic FoundationStep 1: Strategic Alignment

Step 2: Key Strategic Focus Areas & ObjectivesStep 3: Strategic Grid & Model

Phase II - Three Critical Components

Step 4: Key Performance IndicatorsStep 5: Goals & Targets

Step 6: Initiatives & Programs

Phase III – Deployment ProcessStep 7: IntegrateStep 8: CascadeStep 9: Manage

Balanced Scorecard Development & Deployment Process

26 - April 20, 2023 – v8.0


Strategic Focus Area: Increase Shareholder Value

Financials Revenue Growth of 20% by 2014

CustomersAcquire More Customers

Become the Price Leader

“Internal”Processes

Improve Operational Efficiency

Cost Reduction Program

Knowledge BasedSystem

Reduce Non-Core Activities

Learning &Growth

Training – Lean Six Sigma Program

Database Network on Operational Performance

Re-Align Organization with

Core Competencies

For each objective on your strategic grids, you need at least one performance indicator. Can you have an objective without a performance indicator? Yes, it is possible, but not having a measurement makes it difficult to manage the objective. It’s best to revisit this objective and ask the question: Why is this an objective?

Dim

en

sio

ns o

r P

ers

pecti

ves

27 - April 20, 2023 – v8.0


From: January 2010

ORGANIZATION: TBD Until: December 2010

Current Month: TBD 2010

KPIKPI Name

(Unit)KPI First Name

Champion Last Name

10 STRETCH

9

8

7 GOAL

6

5

4

3 BASE

2

1

0 ZERO

WEIGHT 0

2010 TOTAL SCORE

J ANUARY

FEBRUARY

MARCH

APRIL

MAY

J UNE

J ULY

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

CURRENT SCORE 3 4 7 2 3 5 6 9

Stretch 2010 1000Goal 2010 700Base 2009 300Actual 0

TOTAL

ORGANIZATION

OPERATIONAL EXCELLENCE BALANCED SCORECARD

FINANCIALS CUSTOMERS PROCESSES

RESULTS

1 2

5 7

4

12

11

8

9

3

6

10

For each strategic objective on your strategic grid, you need at least one performance indicator. Can you have an objective without a performance indicator? Yes, it is possible, but not having a measurement makes it difficult to manage the objective. It’s best to revisit this objective and ask the question: Why is this an objective?

28 - April 20, 2023 – v8.0

Performance Management – Resources

Chang, Richard Y., and Morgan, Mark W. – Performance Scorecards: Measuring the Right Things in the Real World (New York, New York: John Wiley Sons Inc., 2000)

Kaplan, R.S. and Norton, D.P. – The Balanced Scorecard (Cambridge, Massachusetts: Harvard Business School Press, 1996)

Kaplan, R.S. and Norton, D.P. – Putting the Balanced Scorecard to Work (Harvard Business Review, September/October 1993)

Kaplan, R.S. and Norton, D.P. – Balanced Scorecard: Translating Strategy into Action (Cambridge, Massachusetts: Harvard Business School Press, 1996)

To learn more about our proven Operational Excellence Balanced Scorecard Solution, review our “Operational Excellence Balanced Scorecard Deployment Training Module”.

29 - April 20, 2023 – v8.0






Strategy Deployment



Process Excellence


System

30 - April 20, 2023 – v8.0

Process Input:Strategic and Annual Operating Plan (Objectives, Goals, Initiatives)

Process Input:Strategic and Annual Operating Plan (Objectives, Goals, Initiatives)

Process Output:Exceeding the Plan

Process Output:Exceeding the Plan

Operational Excellence – Process Excellence

• Clarify big picture using strategic & operating plan

• Prioritize projects based on impact, value, resources, timing

• Select key projects with leadership buy-in

• Check accountability - business and personal

• Clarify big picture using strategic & operating plan

• Prioritize projects based on impact, value, resources, timing

• Select key projects with leadership buy-in

• Check accountability - business and personal

Select the Right

Projects

Select and Train the

Right People

• Ensure the right leadership and ownership

• Select the right team leader & team

• Develop a training plan

• Dedicate time for training & application

• Ensure the right support resources are available

• Ensure the right leadership and ownership

• Select the right team leader & team

• Develop a training plan

• Dedicate time for training & application

• Ensure the right support resources are available

Develop and Implement

Improvement Plans

• Utilize the right improvement methodology for the right project

• Utilize the right improvement methodology for the right project

Manage for Excellence in

Execution

• Stay focused• Frequently review

progress and remove barriers

• Check real business impact

• Continuously communicate progress

• Link to performance management and R&R

• Stay focused• Frequently review

progress and remove barriers

• Check real business impact

• Continuously communicate progress

• Link to performance management and R&R

Sustain the Gains

• Implement effective control plans

• Conduct regular training focused on the process

• Review the system effectiveness at least quarterly

• Continually identify and launch new projects based on strategic & operating plan

• Implement effective control plans

• Conduct regular training focused on the process

• Review the system effectiveness at least quarterly

• Continually identify and launch new projects based on strategic & operating plan

31 - April 20, 2023 – v8.0


Balanced Scorecard Project Selection Matrix

KP

I #1

KP

I #2

KP

I #3

KP

I #4

KP

I #5

KP

I #6

KP

I #7

KP

I #8

Weights 20 10 15 10 5 20 10 10 100 50 30 20 100 70 30 100

Project Definition

1 Project #1 10 0 5 0 0 3 0 0 3.4 5 0 5 3.5 0 5 1.5

2 Project #2 0 3 0 5 0 0 0 0 0.8 0 5 0 1.5 3 0 2.1

3 Project #3 5 5 10 10 3 3 8 8 6.4 3 8 5 4.9 5 8 5.9

4 Project #4 0 0 10 5 0 0 5 0 2.5 0 0 10 2.0 3 3 3.0

5 Project #5 5 10 0 0 1 0 0 3 2.4 10 5 3 7.1 3 5 3.6

Ranking 0 = none Not Started

3 = low On Track

5 = medium At Risk

8= high Behind Schedule

10= very high

CORRELATION MATRIX

MA

NA

GE

ME

NT

RIS

K

TOTA

L R

ISK

PR

OJE

CT

STA

TUS

CA

PIT

AL

RE

SO

UR

CE

S

DU

RA

TIO

N O

F P

RO

JEC

T

TOTA

L E

FFO

RT

TEC

HN

ICA

L R

ISK

EFFORT RISK

PE

OP

LE R

ES

OU

RC

ES

IMPACT

FIN

AN

CIA

LS

CU

STO

ME

RS

PR

OC

ES

SE

S

LEA

RN

ING

&

GR

OW

TH

TOTA

L IM

PA

CT

32 - April 20, 2023 – v8.0


10

9

8

7

6

5

4

3

2

1

0

0 1 2 3 4 5 6 7 8 9 10

EFFORT

IMP

AC

T

Size of the Ball = Size of the Risk

1

2

3

4 5

33 - April 20, 2023 – v8.0


State of Michigan Department of Management and Budget

(DMB)

Coordinator Kathe Carter:

"Our management team evaluates potential new programs/initiatives

by seeing how they fit in with our strategy. In the past we would

continue stacking new projects on everyone's plates, but now

if it doesn't fit with our strategy we don't do it." Just as

important for the DMB is that "whenever a new project or initiative is

proposed, our people ask 'how does this fit in with our strategy

map /scorecard?' They feel that this connection attaches a higher

level of importance to the initiative."

34 - April 20, 2023 – v8.0


Systematic, Scientific & Disciplined Problem

Solving

Process Development, Improvement &

Management

Lean Methodology

5. PursuitPerfection

2. Map ValueStream

3. CreateFlow

4. EstablishPull

1. DefineValueLean

Principles

Six Sigma Methodology

BPI 7

8 D

35 - April 20, 2023 – v8.0


ProcessExcellence

Lean

is about creating flow and identifying & eliminating

waste in a process or value stream.

Six Sigmais about understanding and

eliminating variation in a process

or value stream.

C I A M

Project Management

D

36 - April 20, 2023 – v8.0

Process Excellence – Resources

Breyfogle, Forrest W. III – Implementing Six Sigma: Smarter Solutions Using Statistical Methods (New York, New York: John Wiley & Sons Inc., 1999)

George, Mark O. - The Lean Six Sigma Guide to Doing More with Less (Hoboken, New Jersey: John Wiley & Sons, Inc., 2010)

Ohno, Taiichi - Toyota Production System (New York, New York: Productivity Press, 1988)

Rother, Mike and Shook, John - Learning to See - Value-Stream Mapping to create Value and eliminate Muda (Cambridge, Massachusetts: Lean Enterprise Institute, 2009)

Womack, James P. and Jones, Daniel T. - Lean Thinking (Free Press, 2003)To learn more about our proven Operational Excellence Process Excellence Solutions, review our various “Operational Excellence Process Management, Lean Management, Six Sigma Methodology & 8D Problem Solving Training Module”.

37 - April 20, 2023 – v8.0







Strategy Deployment



Process Excellence


System

38 - April 20, 2023 – v8.0

“The rate at which organizations learn may soon become the only sustainable source of competitive advantage.”

Peter Senge

“The thing I have learned at IBM is that culture is everything.”

Louis V. Gerstner, Jr.

39 - April 20, 2023 – v8.0

Operational Excellence can and can only be achieved and sustained with the right attitude, the right mindset, and the right competencies.

Empowerment = f (Authority, Resources, Information, Accountability)

Low

High

The Empowerment

Continuum

Selected Employee

Input

Ongoing Employee

Taskforces

High Performance

Work Teams

Operational Excellence – High Performance Work Teams

Empowerment = 0,if Authority or Resources or Information or Accountability = 0

40 - April 20, 2023 – v8.0


In their book Gung Ho ! – Turn on the People in any Organization, Ken Blanchard and Sheldon Bowles describe three distinctive phase of transforming a traditional organization to an organization based on high performance work team.

Spirit of the Squirrel Way of the Beaver Gift of the Goose

41 - April 20, 2023 – v8.0


Spirit of the Squirrel

WORTHWHILE WORK

1. Knowing we make the world a better place.

2. Everyone works toward a shared goal.

3. Values guide plans, decisions, and actions.

42 - April 20, 2023 – v8.0


Way of the Beaver

IN CONTROL OF ACHIEVING THE GOAL

1. A playing field with clearly marked territory.

2. Thoughts, feelings, needs, and dreams are respected, listened to, and acted upon.

3. Able but challenging.

43 - April 20, 2023 – v8.0


Gift of the Goose

CHEERING OTHERS ON

1. Active or passive, congratulations must be TRUE.

2. No score, no game, and cheer the progress.

3. E = m · c2 – Enthusiasm equals mission times cash and congratulations.

44 - April 20, 2023 – v8.0


While an organization transitions from a more traditional “top-down” organization to an organization build 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.

Leader ≠ Supervisor

Coach

Facilitator

ResultCatalyst

LivingExample

BusinessAnalyzer

BarrierBuster

45 - April 20, 2023 – v8.0

High Performance Work Teams – Resources

Blanchard, Ken and Bowles, Sheldon – Gung Ho ! – Turn on the People in any Organization (New York, New York: William Morrow and Company, Inc. 1998)

Fisher, Kimball – Leading Self-Directed Work Teams (New York, New York: McGraw-Hill, 2000)

46 - April 20, 2023 – v8.0







Strategy Deployment



Process Excellence


System

47 - April 20, 2023 – v8.0

The House of Operational Excellence

"The House of Operational Excellence" provides a high-level framework for an integrated Business Execution System for Operational Excellence organizations.

48 - April 20, 2023 – v8.0

Introduction to Operational Excellence

“Perfection is not attainable, but if we chase perfection we can catch excellence.”

Vince LombardiCheck out our WEBINARS

Check out our WORKSHOPS

Check out our TRAINING MATERIAL

Check out our eLEARNING MODULES

CONTACT US

www.operational-excellence-consulting.com

http://www.operational-excellence-consulting.com/operational-excellence-e-store/opex-webinars.html

http://www.operational-excellence-consulting.com/operational-excellence-e-store/opex-workshops.html

http://www.operational-excellence-consulting.com/operational-excellence-e-store/training-material.html?layout=columns

http://www.operational-excellence-consulting.com/operational-excellence-e-store/elearning-training-modules.html?layout=columns

http://www.operational-excellence-consulting.com/operational-excellence-e-store/elearning-training-modules.html?layout=columns

http://www.operational-excellence-consulting.com/

Date post:	04-Jan-2016
Category:	Documents
Upload:	dhawal-pratap-singh
View:	8 times
Download:	0 times

flevy_8

Documents