Operational Excellence
Naw Eh Whey, Smedley Edman, Rick Aderlik, Tina Sung, Mohanad Ramen
MGMT 420-54
Brian McDonnell
November 22, 2020
Operational Excellence is defined as “when each and every employee can see the flow of
value to the customer and fix that flow when it is broken” (Dugan 2007). It is a foundation of
business that could not be more important in today’s operational climate. This paper goes over
what makes or breaks a company’s Operational Excellence. In order to have strong Operational
Excellence, an organization should have strong Performance Management, Work Culture,
Teamwork, Overall Performance, and Process Excellence.
Performance Management is to ensure the improvements of leadership to sustain the
gains. The goals are to make sure everyone knows the information of what jobs to do and
measuring the ‘key indicators, collecting data, and sharing performance data to the
team’(Peterka). The Performance Management usage the SMART
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goals to set the balanced
scorecard by using Gemba walk’(Peterka). Using the balanced scorecard, it helps the
management team focus on the business strategy and focus and align any common goals or
objectives. It enables an organization to understand and improve the communication across an
organization that helps employees to understand and focus on the priorities of the job to reduce
the number of metrics, while also strengthening and formalizing the project selection.
Operational Excellence applies to every person or level in the organization from
executive to employee producing the product. The first step is to make the product or
information of the flow to recognize the normal and abnormal flow. If it’s abnormal, it does not
need the help of management so the company would move on to creating the value streams that
show the rate of customer demand. It is easier for employees to see the physical flow and visuals
can be strictly for timing of the flow as when a visitor comes into the operation you can tell when
they have visited without questioning, look at computer printout and reports request. The visual
operation is for employees to see customer value and see if there is any abnormal or normal flow.
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SMART (Specific, measurable, Achievable, Relevant, Time-bound) goals
If an employee can identify the normal and abnormal of the visual, it can create the step for
standard work for abnormal flow to be corrected. When things are abnormal people have to
correct them, so the flow breaks down in the operation and see the value stream of the flow that
employees are working on. They are able to fix without the need for management intervention so
that means the operations leadership will spend their time working with sales and innovation to
develop new products that customers want or fix the operation’s capabilities. When the
‘leadership creates the vision and value, it concentrates them into strategic focus and direction,
like leaders focusing on the big picture of finding threats and keeping the business growing’
(Wurtzel). Leader have to find the threats for the company, so they can fix it to help the business
to grow.
Operational Excellence has powered performance gains in many companies like Ford,
Toyota, Amazon and more. Some companies that use Operational Excellence include Human
Resources, manufacturing, banking, and marketing. In HR, they look for ways that make their
processes like recruiting more efficient, so they operate different rather than traditional central
HR department. For Manufacturing like Toyota and Ford companies they seek to achieve
significant waste reduction and leveling the flow of production. Also, emphasize the importance
of flow visuals like providing the indicators of timing products and visible signals. In Banking,
the operation develops more efficient processes by streamlining their organization to make the
best use of technology and improve the accuracy and consistency in their operation (Stokes). The
bank improved its process effectively by taking less amount of time loan applications and
funding. In Marketing, they often emphasize the value of customers and systems as the internal
and external stakeholder. Marketing uses the data driven management for the efforts of tracking
performance of marketing. Some of the benefits for marketing are the cost reduction, engaged
stable workforce, efficiency in processes and use of resources, and many more. Performance
Management is only the first of many key factors of Operational Excellence (Stokes).
An operation must also consider a good Work Culture in its pursuit of Operational
Excellence. In Work Culture, when it comes to an operation’s goal of achieving Operational
Excellence, one of the most important factors is shifting its work culture to an environment that
can support the operations employees achieve excellent cooperation with one another. In order to
reach the quality of operational excellence, we can observe and follow the Shingo Model of
Operational Excellence. The model was developed by Dr. Shigeo Shingo. Dr. Shingo developed
this model while working with Toyota executives along with other theories in the business world
(Shingo Institute, 2020). If we follow the Shingo Model, we can identify ways to change an
operation’s Work Culture to achieve the goals of the operation. One way to shift the Work
