How to digitalize your operational excellence strategy
Manufacturing organizations are no longer asking if or when to digitalize their operations. The key question for most manufacturers today is how to digitalize their operational excellence strategy.
This was highlighted in our recent “Digital Transformation in Manufacturing” survey, with 42% of respondents indicating that they need help digitalizing processes and daily tasks. These results clearly indicate that manufacturers are currently concentrating on the nuts and bolts of digital transformation – while trying to keep operational disruptions to a minimum.
This blog discusses how manufacturers can digitalize their operational excellence strategy. It outlines the benefits of a well-orchestrated digital transformation, and the role this plays in a wider, sustainable business excellence strategy.
What is operational excellence strategy?
An operational excellence strategy maps how lean and continuous improvement principles should be applied to deliver a company-wide cultural evolution. Operational excellence is realized when all employees are engaged, accountable and united in their efforts to execute and deliver enhanced efficiency. The strategy plots out that journey.
Why is a digitalized strategy for operational excellence important?
The key difference between a traditional, functionally focused operational culture and a digitalized, holistic one is that the latter is driven by the customer. A demand-driven value network (DDVN) is specifically tuned to meeting an organization’s customers’ needs. In other words, its internal energies (people, processes and practices) are united behind addressing and satisfying its external stakeholders – namely, customers (customer excellence strategy).
Only through successful digital transformation can an organization embed a holistic company culture of continuous improvement that is key to operational excellence. A digitally enabled and tech savvy organization is able to work together seamlessly and respond to ever-changing customer needs with responsive agility.
Digitalizing your operational excellence strategy model
When it comes to choosing and implementing the best technology to execute a company’s digitalized operational excellence strategy map, manufacturers need to adopt the following approach.
|1. Assess existing digital maturity levels||Before embarking on its digital transformation journey, an organization needs to clearly identify and understand its digital strengths and weaknesses. Why? Because an organization’s baseline maturity will inform its digital business transformation plan which, in turn, supports its operational excellence strategy.|
|2. Design an implementation plan||An implementation plan is based on each organization’s unique digital maturity assessment and thus, no two companies will have the same advanced technology implementation plan. A standard feature of all implementation plans is that they must avoid any piece-meal or siloed attempts at change – digitalization will only be successful if it is rolled out holistically.|
|3. Deliver and sustain improvement initiatives||A high-quality technology implementation plan is one that enables all employees to execute continuous improvement initiatives. To ensure a sustainable impact that results in world-class operational excellence, the plan needs to:
An organization’s people are integral to achieving operational excellence – hence the need for a well-designed and clearly communicated business strategy.
|Three steps to get all employees on board|
|1. Consistent communication||Inclusive buy-in is only achieved when all employees are up to speed and on the same page. As the organization’s operational excellence strategy unfolds, people need to understand how their roles contribute to achieving the strategy’s objectives. Regular updates and even daily reviews are incredibly valuable as they highlight successes and help guide collaborative action for positive change.|
|2. Training||It is hard for people to accept change – even when its impact is beneficial. Insecurity plays a role here as employees often worry that they are not equipped to meet new company expectations. Regular and relevant training and upskilling sessions are vital interventions that boost confidence and skills as well as foster loyalty and commitment.|
|3. Motivation||Successful achievements need to be lauded and even rewarded. Acknowledging and motivating employees’ contributions across the company is a crucial component of a successful excellence model.|
The value of committed leadership
Employee buy-in also requires a committed leadership and management system to steer, encourage and demonstrate positive change in action. The responsibility for driving the organization’s operational strategy rests with everyone at all levels of the company.
|Three steps to creating a committed leadership:|
|1. Break down functional silos||Operational excellence is realized when an organization dismantles its traditional silos and works together as one. Leadership plays an important role here; team leaders need to cross the departmental divide and establish and streamline interdepartmental relationships. This fosters a holistic cultural shift that is endorsed and demonstrated by upper management.|
|2. Allocate work sequentially||An operational excellence strategy takes time and planning – pushing for an overnight win will not create an organizational culture of enduring, positive change. By assigning tasks to teams in an orderly and realistic manner, while simultaneously encouraging full accountability, leaders are able to encourage a mature workforce that is committed to continuously improving practices and processes for the benefit of the entire company.|
|3. Drive digitalization||A modern operational excellence strategy is unquestionably supported by digitalization. To that end, leaders need to determine their organizations’ current levels of digital maturity through proficiency assessments. The goal being to determine what digital tools, technologies and skills are necessary to achieve world-class operational excellence.|
The link between digitalized operational excellence and integrative, continuous improvement
Many manufacturers are familiar with continuous improvement (CI) processes. The list of well-known continuous improvement methodologies includes Six Sigma, the Toyota Production System (TPS) and Kaizen. While somewhat different in application, these CI methodologies all assist organizations achieve operational excellence through improved production efficiencies.
That said, in their traditional formats, these CI methodologies are better suited to function-focused organizations, i.e., those that still operate in silos and thus, are behind in their digital transformation journeys.
A process excellence strategy applied to digitalized or digitally transforming workplaces requires an updated approach to CI. Instead of focusing on specific functions, CI initiatives need to be integrated. Collaboration, integration, holism – these are all key watchwords of a digitally enabled, world-class organization.
The integrative approach to continuous improvement is underpinned by these eight principles.
|1. Set an operational benchmark as a standard of measurement from which to compare and review improvements.|
|2. Conduct a self-assessment once the benchmark has been set to chart improvements correctly.|
|3. Promote digital maturity through relevant investments in tools, training and technologies.|
|4. Emphasise customer-focused processes and functional integration rather than internally focused and siloed functions.|
|5. Endorse a cultural-based shift that embeds integrative improvement into the organization’s DNA.|
|6. Dismantle silos to move away from a traditional supply chain to a digitalized end-to-end value chain.|
|7. Build a culture of knowledge-sharing and best practice collaboration to unite employees in the pursuit of integrative improvement.|
|8. Think holistically. An organization will only achieve sustainable, world-class operational excellence through company-wide adoption of digitalized processes.|
An operationally sound organization that excels along these eight guiding principles is well placed to achieve its commercial excellence strategy.
The benefits of a successful operational excellence strategy
A maturity-based and integrative approach to operational excellence enables manufacturers to:
- Implement and adapt to advanced technologies at a pace best suited to them
- Ensure that all employees are engaged and committed to working together to drive sustainable improvements. This people-led cultural shift from a siloed organization to an integrated, customer-focused organization will embed operational excellence into the company’s core
- Weather economic volatility. Built-in agility, enhanced by advanced tools and technologies that provide real-time intelligence for better decision-making, empowers them to keep up with customers’ rapidly changing demands.
- React faster in identifying and capitalizing on relevant opportunities
Ultimately, improved operational efficiencies reduce costs and waste, boost productivity and increase revenue. An effective operational strategy is a cornerstone in enabling companies to achieve product, customer and commercial excellence. This is how today’s organizations are gaining real competitive advantage and effectively optimizing their profitability and bottom line.