Operational Excellence, or OpEx, is the goal of improved business performance. It usually means using lean manufacturing techniques, made popular by Toyota with their Toyota Production System or TPS. For many organizations, OpEx is the set of TPS “tools” that assist in the identification and steady elimination of waste, or ‘Muda’ in Japanese terminology, and the improvement of quality in production time and costs. The eight wastes as defined by Shigeo Shingo of Toyota are:
- Long wait times
- Excess transportation
- Variable processing methods
- Excess inventory
- Too much motion
- Too many defects
- Unused human creativity
Origins of OpEx
In the early 1970s, Dr. Joseph M. Juran was one of the few experts at the time that was teaching Japanese leaders how to improve quality. As more and more companies began to adopt the methods of Juran, Deming and others Toyota’s OpEx movement grew. Today, many manufacturing companies use OpEx as its sole purpose to create lean operations.
OpEx began in the early 1980s as a United State response to the quality crisis. It was created by Japanese organizations which enabled their products to outperform many US and European products, causing many organizations to lose market share and even go out of business.
Core Principles of OpEx
The basis of OpEx is best articulated by principles in the Juran and Shingo Models.
The Juran Model Guiding Principles:
- Grasp Juran’s universal principles that form the basis to answer the question, “what do we need to do differently than we are doing today?”
- Move your culture from thinking about quality as a product attribute (little q) to quality as a great customer experience (Big Q).
- Understand when and how to engage leadership & the workforce to drive performance.
- Build an effective and efficient change infrastructure complete with a set of methods
- Drive business process effectiveness and agility.
The Shingo Model
- Focus on process, and all outcomes are the consequence of a process.
- Embrace scientific thinking. Innovation and improvement are the consequence of repeated cycles of experimentation and learning.
- Flow and pull value. Value for customers is maximized when it is created in response to real demand and a continuous and uninterrupted flow. Anything that disrupts the continuous flow of value is waste.
- Ensure quality at the source. Perfect quality can only be achieved when every element of work is performed perfectly the first time and every time. When and if errors occur, they must be detected and corrected at the point and time of their creation.
- Seek perfection. Perfection is an aspirational goal that is not likely to be achieved, but the pursuit of which creates a mindset and culture of both continuous and radical improvement.
Operational Excellence is an effective means to change a culture (typically in production organizations.) OpEx programs have a common set of principles but may have different set of methods and tools based on organizational maturity and need.
Author: Dr. Joseph A DeFeo
Dr. Joseph A. DeFeo, Chairman and CEO of Juran, is recognized as one of the world’s leading experts on transformational change and breakthrough quality management.
For 28 years, Dr. DeFeo has worked as a trusted adviser helping business leaders increase sales, reduce costs and improve its customer experience through the deployment of performance excellence programs. These include Business Process Quality Management, Lean, Six Sigma, Strategy Deployment and Change Management. His recent publication, Juran’s Quality Essentials for Leaders, provides a concise message delivered for leaders to teach them how to embrace quality, not fight it, to be a globally competitive enterprise. Dr. DeFeo has co-authored three other popular texts.
DeFeo’s belief that a relentless customer focus and integrity drives business results was recently noted by Steve Denning of Forbes.com. A frequent motivational guest speaker at international conferences, Dr. DeFeo has presented in over 30 countries.