An Ultimate Guide to Operational Excellence with Examples

October 21, 2022
Alok Suman
Process Management

In this competitive world, businesses must constantly strive hard and come up with innovative ideas to stay ahead of the competition. They face a plethora of challenges both internally and externally throughout a fiscal year. 

Digitalization, ever-changing markets, customer demands, etc., are some of the challenges businesses face. To overcome them, they have to make changes to their operational efficiency. 

This is where operational excellence comes in. It is not limited to an individual but concerns the whole organization. To keep up with the ever-changing market, businesses need to achieve operational excellence by tweaking all their existing business process strategies.

So, what exactly is operational excellence, and how can businesses achieve it?

Well, we did thorough research and have created this comprehensive guide on operational excellence that’ll transform your business for the better.

What is Operational Excellence?

Is it executing your business operations excellently?

Well, there isn't one common definition when it comes to operational excellence; every expert has their own opinions.

But we dug deeper, and this is what we think is the most relevant definition:

Operational excellence is implementing a business process strategy more systematically and consistently than competitors, with fewer risk exposures, reductions in operation costs, and higher revenues compared to the competition.

It is a complex ideology to wrap our heads around, but it is a much-needed strategy in this ever-changing market.

One crucial aspect to remember is that operational excellence is not a series of principles you must follow; it is more like a philosophy that all your team members must feel and be inspired by.

It is not about being better than your competitors. Operational excellence is about doing what’s best for your business and making it a leader that others look up to.

Apple Inc and Tesla are prime examples of operational excellence.  

Is Operational Excellence Similar to Continuous Improvement?

Operational excellence is not similar and has a different core principle compared to continuous improvement. 

Continuous improvement is more like a process – in this process, businesses develop a set of principles that the team follows to make their process better and more dynamic. 

In contrast, operational excellence is more like a state of existence.

It's a mindset that all the members have adopted to form a culture that breeds new methods to achieve excellence. It is like changing the organization's mental state, which results in better operational efficiency. 

Continuous improvement might seem to get the same results as operational excellence, but there is a major difference. 

How long do you think all the members will follow the same “improved” process? As years go by, that process will become obsolete, especially as the market changes. This means you need to build a new process once again.

This is not the case with operational excellence. Here, the team members have adapted to a new culture that demands excellence in everything they do. They don’t need a refined process to improve; they adapt to the growing market demands by themselves.

Operational excellence focuses on treating individuals in the right way by providing what they need, like tools and resources. Instead of demanding better results, it empowers employees with a better work environment that spontaneously brings out the best in them.

Why is Operational Excellence Important for Your Business?

Here’s the simple and direct answer on why you need operational excellence: It empowers your team to achieve more by doing less.

Sometimes, working smarter is more important than working harder; that’s what operational excellence can do for you. 

Besides that, here are some more compelling reasons why you need operational excellence:

Minimize Expenses 

Minimizing operational expenses is a smart strategy that will help in the long term rather than going for an expensive strategy that promises better revenue. 

Keep in mind that minimizing expenses is a far better tactic than trying to increase revenue.

With the former tactic, you'll have complete control over your cost. In the latter, you cannot control the hidden expenses that might occur when you're trying to increase revenue.

Operational excellence is a strategy that impacts every individual in an organization; you cannot propose operational excellence without performing detailed research on your existing business process.

Doing this will show you the areas of irregularity that need improvement. It increases transparency and motivates employees to do only what’s necessary for the outcome, thus minimizing operational expenses. 

Enhances End-Quality 

Operational excellence is all about creating a mindset that encourages team members to excel in what they do. When individuals are motivated and excel in what they do, it automatically improves the process and the quality of results. 

Better Communication 

A healthy work culture facilitates better communication within the team, helping them work together and make collaborative decisions. 

Operational excellence will streamline communication from development to the warehouse to the production floor.

This, in turn, results in the team leaders making the right decisions, as there is a seamless flow of information between the teams. 

Boosts Customer Experience 

Operational excellence strives to build a culture that encourages your team to work for the value they provide to the customer rather than focusing on meeting end goals. 

As the culture is ingrained in every employee, they invest their efforts in tasks that bring value to customers.

Empowers Employees 

Operational excellence is impossible without a dedicated team; they are the driving factor of excellence.

Instilling this culture will help them focus on what’s necessary for the business to reach the desired goals. It minimizes the clutter and workload and empowers them to provide maximum value for your customers. 

As we said earlier, operational excellence is all about achieving more by doing less (tasks that are needed). This increases efficiency and job satisfaction for your employees. 

How to Achieve Operational Excellence? 

Alright, now you know what operational excellence is and how it can benefit your business. Next, let’s discuss how exactly you can achieve it. 

Communication is Key

The first step in making operational excellence a reality is sharing your idea with your team members. Let them know what you’re planning and what you are expecting from them. 

If you define your expectations and keep your employees in the dark, then you cannot achieve operational excellence. 

Ask your employees what troubles them, and look for bottlenecks in the process. Identify what stops your employees from reaching their full potential. 

Just asking is not enough. If you want them to commit to your goals, then you must set an example. Streamline their process. If they’re having trouble with the tools, upgrade said tools. 

Some employees will be looking for personal workstation laptops so they can continue working in their homes. In those cases, provide them with a personal laptop. 

Make it easier for them to work. When you give them what they need - guess what - your employees will return the favor. This is how you build the mindset that propels you toward excellence. 

Cultivate Directly Responsible Individuals

This is where most businesses fail. Assigning individual responsibilities to employees is essential. Instead of having a jack of all trades, start building the ‘master of one.’

When you fluster your employee with too many tasks, they’ll start slacking. Managing two different tasks is not how you achieve operational excellence. 

Assign individual responsibilities instead of giving power to all the team members. Having a leader to lead and guide them will enhance communication within the team. 

Listen to your DRIs, and do not sign new projects without involving them. You might end up delaying your deadline and losing your reputation. 

Have a proper team structure. This way, you can increase transparency, accountability, and communication, which are essential for operational excellence. 

Minimize the Workload 

The market is getting competitive as we speak. To stay ahead, you need to empower your employees. It's time to leave manual processes and move into automation. 

Multiple business process automation platforms in the market can automate repeat, time-consuming processes. Going for one of these will minimize your team’s workload so they can concentrate on tasks that actually bring value to your customers. 

Automation is the way to the future; you cannot achieve operational efficiency without it. So, automate your tasks and boost efficiency.

Track Metrics and KPIs

So, you’ve communicated with your teams, assigned individual tasks, and used automated tools. Now what? 

Most businesses do all the above and let it go. Don’t make the same mistake. 

The next step is to track the performance and check how your team has been performing. Track your KPIs. Look for the processes that performed well and those which didn’t.

Identifying the performance will reveal what works and what doesn't, and you can identify the bottlenecks and eradicate them. Doing this can increase accountability and push your team to work at their fullest potential. 

Training and Improvement 

The last step will reveal shortcomings and discrepancies. It's hard to keep up with new technologies by themselves, train them, and provide online resources so they can learn relevant technologies. 

Most businesses now have their own cloud portal with e-classes and training materials for their employees. 

Upskill your employees and then improve all the processes that have discrepancies. This cycle should continue; it's an end-to-end process, and that’s how you achieve operational excellence. 

Examples of Operational Excellence 

Operational Excellence in Manufacturing - Toyota 

It was hard for Toyota after the end of World War 2. They were only able to produce 2000+ cars a year while their competitor, Ford, was producing around 7000+ cars per year. 

So, they turned to two incredible engineers – Shigeo Shingo and Taiichi Ohno. They revamped the entire manufacturing process by introducing a lean manufacturing system.

After that, their production soared higher and higher. The interesting aspect is that with this new system, they manufactured a huge volume of cars with minimal effort, people, time, and energy.

Operational Excellence in IT - Wipro

Wipro is a pioneer in IT services, consulting, outsourcing, and other IT-related services. They follow continuous improvement methods to stay relevant in the market. 

Order Entry hired Wipro in May 2007 to help them with their failure to fulfill orders on time. This issue was leading consumers to lose confidence in Open Entry, thus affecting revenue flow.

This is how Wipro improved its operational excellence:

  • Enhancing the customer experience by providing more flexible and reliable service and delivery schedules.
  • Order fulfillment with a predictable cost structure.

There you go. We hope you now understand that operational excellence is not a fictional strategy. It has been helping businesses long before the internet age took over. 

Improve your operational efficiency by building a new culture that demands quality over quantity. 

Parting Thoughts

Operational excellence is not about creating a set of principles and asking your employees to follow them until the results improve.

It is more like an ideology that every individual in your organization must accept and improve. It is about transforming the entire culture of the work environment by making it easier for the teams to reach goals and achieve more by doing less. 

One of the necessary tactics to achieve operational efficiency is the task automation process. You can easily automate your tasks using Hubler.

Hubler is a business process automation platform with features to automate processes like lease management, expense management, etc. It has pre-built automation templates and a workflow builder to help you create workflows for your business processes. 

Automate your tasks using Hubler and let your employees concentrate on tasks that provide value to your customers. Watch your operational efficiency elevate by the minute. 

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