A Conversation about “Operational Excellence” – So what do you mean by “Practices”?
In my previous articles about OpEx I wrote about conversations between colleagues as a method of defining OpEx for your particular business and outlined a framework of Practices and Performance to guide the conversation. The premise for the framework being that sustainable excellence in performance is fundamentally underpinned by excellent practices. I’m afraid this one probably isn’t a five-minute read, but hopefully it’s worth investing your time…
So, what are these practices? A precis of the practices is shown below. They are arranged under six general headings - Lead Operations, Plan operations, Run Operations,
and for sustainability, Mobilise Knowledge, Improve Operations and Mobilise People Capability.
Have a look at the short descriptors, remember the caveat in the first article, “what OpEx means to your business has essentially to be defined by you and your colleagues, understanding your particular circumstances, the maturity of your business, your customers and competitors”.
Think about your business, think about not only “do we have these practices”, but how important and effective are they? Think about how they are perceived at all levels within the organisation because if they’re not effective at the point of use, they’re not effective. Lead Operations
Leadership, everyone’s favourite topic! Without discussing leadership styles, Lead Operations describes the critical focus areas for the operations leadership team, at all levels, to deliver the vision of the business through the successful stewardship of people and assets. To do this, it should: -Set Operations Direction
This translates and communicates the business strategy so that everyone is clear on what needs to be achieved, by whom, when, how and why.
In an excellent operation, an Operations policy, describing how operations run, has been developed and is aligned with the strategic plans. Relevant inputs are integrated from customers, suppliers and partners. The plans are communicated to all levels in the organisation where they are committed to and worked towards. Enable Operations – Through People
An appropriate operations culture and climate are embedded in the organisation to deliver an environment where all employees are engaged and contribute to deliver the business goals. Leaders “walk the talk” and people feel comfortable to challenge ‘the way we do things around here’. People feel valued and accept responsibility and accountability. Service providers are included as part of the Team. Good performance is routinely recognised, celebrated and rewarded, formally and informally, motivating people to achieve.Enable Operations – Through Structures and Processes
In excellent operations, an effective organisational structure is in place where people understand their roles, responsibilities and accountabilities. A management control and reporting system enables the structure, allocates work, devolves decision making and holds people accountable. Business processes are understood, valued, embedded and reviewed in a timely manner to confirm that they are effective.Align the Strategy with Execution
Strategies are great; however, they need to be aligned with execution to deliver results. Effective two-way communication practices describing the “what, how and why” of current performance and the strategic plans continually strengthen the alignment. A meaningful performance management system integrates departments with targets that operate across functional boundaries.Mange Risk
Operations risks, including people, plant, processes and legislation are managed by following the organisation’s risk management policies. Business processes incorporate risk identification and analysis where external and internal risks are considered. Action is taken so that the business is protected from identified risks. Change processes within the operations are controlled to mitigate risks.Plan Operations
Excellent companies understand that plans are seldom fully realised, however they measure the effectiveness of planning and work to improve it. The Plan Operations practice delivers safe, reliable and achievable operations plans in line with customer requirements. To do this it should: -Develop the Operations Budget and Plan
The operational plan and associated budget are developed for a meaningful time horizon (months/years). Plans are aligned to and cascaded from the business strategy, they are visible. The plans are developed, through negotiation, across functions in line with operations policies, strategic plans and operating baselines. Customers and Suppliers are integral to the planning process. Maintenance is integrated into the plan. Anticipated improvements are factored in and the plan is regularly reviewed against relevant KPIs. Plan Short-Term Operations, Develop Weekly and Daily Schedules.
Short-term plans are aligned to and cascaded from the Operations plan. Short-term plans have a relevant, rolling time horizon, e.g. three months. Short-term plans are visible and agreed with all Stakeholders. Weekly Schedules are derived from the Short-term plan, approved and locked to give stability to the operations. The Daily Schedule is derived from the weekly schedule. Adherence to plans, is monitored, communicated and acted upon. It is understood that plans change, the planning process emphasises flexibility and responsiveness to uncharacteristic customer demand and improvement opportunities.Run Operations
Run Operations delivers on the Operations Plan - the promise to the customer. To do this it should: -Manage Operations Resources
This addresses people, products, process materials, and assets to enable operations to deliver the operations plan. The right people, internal and external, are in the right place. The people are competent and know their roles and responsibilities. Materials and inventory are available (including raw materials, equipment, maintenance spares and utilities). The future availability of all resources is secured. Key service providers are recognised and treated as business partners. Performance is reviewed as part of the management and control system.Control Operations
Performance (OEE OTIF, costs, service provider performance, etc.) is continually monitored against the plan, and corrective action taken, to ensure that plans are delivered. Operating Data is captured and analysed in a timely manner to confirm product conformance. Tools and techniques (e.g. RCA, FMEA, FMECA, etc.) are applied in a consistent manner by effectively trained personnel when problems occur. Plant and equipment inspections guarantee the integrity of the assets.
In addition, emergency and non-conformance processes are in place to effectively manage all operational incidents to safely re-establish control and alert the appropriate people. Operate and Maintain Assets
And finally, we get to the added value part! This is where all the hard work comes together to allow the operations plan to be executed in a safe and effective manner.
Appropriate business systems, policies, standards, work management processes and standard operating procedures are applied to allow safe efficient operations within the operating envelope. Maintaining the assets is integral to operations. Customers are satisfied with On Time, In Full (OTIF) delivery.Mobilise Operations Knowledge
How many times have I heard, “I don’t know what we’ll do when so and so retires” or “our shift runs it differently”? Excellent operations have an explicit knowledge mobilisation policy that effectively identifies knowledge critical for business success. The knowledge is collected, maintained, packaged, delivered and distributed to ensure that the right people have the right knowledge at the right time in order to make the right decisions. Knowledge is effectively applied to drive improvement.Improve Operations
The purpose of the Improve Operations process is to develop and implement solutions that advance the Operations and reduce non-value adding activity. Excellent businesses know their current operating baselines (and that of their competitors). Waste and time lost is identified by loss accounting and the use of relevant tools, techniques and suitable methodologies (lean, six sigma etc). Solutions and improvements are developed, tested and implemented by cross functional teams deployed at the appropriate level. Everyone in the business has an improvement story.Mobilise People Capability
This practice ensures that the Company has the right number of competent and fully performing people. They are developed and evaluated on a continuous basis in a learning environment that rewards performance. There is a comprehensive people planning system for current and future skill requirements, critical positions are identified and succession plans are in place. Training needs analysis and personal development plans support the business goals and people needs. There is a system to measure and assess demonstrated competency.
Perhaps not surprisingly none of these practices are earth shatteringly new, they have evolved and the excellent operations have recognised the benefits that they bring. Whilst technology moves on relentlessly, and completely changes the method of delivery of many of these practices (e.g. data, collection, knowledge management, communication) nevertheless it is only a means to an end. The fundamentals, working toward a common goal, teamworking, communications, people feeling valued, organising resources, plan-do-review and working safely are all absolutely relevant for OpEx.
Sounds like a Utopian Organisation? – it probably is. Remember that your business does not need to be the best at all of the practices. What’s important is recognising and agreeing the levers that can be pulled in your environment to improve your practices and therefore performance. I hope that during your conversations about Operational Excellence, these “Practices Precis” will help to set a relevant agenda for discussion.
I trust that this has been a worthwhile investment of your time. If you’re interested in understanding more about what representative performance metrics are, to kick off your conversations or add to this one, please leave a comment and next week I’ll go into some more detail.
Or give me a call on 0788 5524 208.Mike Johnson