Operational Excellence
Definition
is a business philosophy focused on consistently achieving high performance across all areas of an organization by optimizing processes, reducing waste, and fostering a culture of continuous improvement. It aims to deliver maximum value to customers while enhancing efficiency and adaptability, supporting long-term growth and competitiveness.
Where did the idea of operational excellence come from?
The concept of operational excellence was introduced by Dr. Joseph Juran in the 1970s as he advised Japanese business leaders on building stronger, more competitive companies. Initially focused on manufacturing, Juran’s ideas later formed the foundation for the Shingo Model—a widely recognized framework for achieving operational excellence.
What are the 4 pillars of operational excellence?
The four pillars of operational excellence are:
- Customer Satisfaction
- Employee Engagement
- Commercial Impact
- Efficient Resource Usage.
Together, these pillars provide a framework for maximizing value, driving growth, and enhancing overall organizational performance.
Why is operational excellence important?
Operational excellence is important because it drives customer satisfaction, which strengthens revenue through repeat business and positive feedback. It enables cost savings by streamlining processes and reducing waste, while enhancing employee engagement leads to higher satisfaction and retention. Operational excellence also fosters sustainable growth and better risk management, positioning companies for long-term success in competitive markets.
What Does Operational Excellence Look Like?
Operational excellence can be seen in companies like Toyota, which pioneered the Toyota Production System (TPS). Through TPS, Toyota optimized its manufacturing by eliminating waste, improving process efficiency, and focusing on continuous improvement. This approach allowed Toyota to consistently deliver high-quality vehicles, reduce production costs, and respond swiftly to market demands. As a result, Toyota became known for reliability and customer satisfaction, demonstrating the tangible impact of operational excellence on both performance and reputation.
Operational Excellence is also known as:
- OpEx
- Lean manufacturing
- Six Sigma
- Continuous Improvement