The Operational Excellence Model: The Complete Guide

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The Operational Excellence Model: The Complete Guide
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Table of Content

1.   What is Operational Excellence, The OpEx Model?

        1.1   What is the Operational Excellence definition?

2.   The OpEx Model

        2.1.   Working ON the business

        2.2.   Pillars

        2.3.   Kaizen Teams

        2.4.   Transformation

        2.5.   OpEx in everyday life

        2.6.   Working IN the business

3.   Conclusion

1. What is Operational Excellence, The OpEx Model?

What is the meaning of Operational Excellence? How can I get a better understanding of the OpEx system process and how do I get the correct learning of OpEx? You have probably heard about the OpEx Model and the OpEx Tools but what are they and how and when are they used? There are some Operational Excellence Core Principles to keep in mind and how important is it to fully understand them? There are many questions and areas of new learning needed and, in this article, we will answer them and open the door to the world of Operational Excellence.

1.1   What is the Operational Excellence definition?

What is world-class manufacturing? What is lean thinking? What's the system of lean manufacturing? These are examples of questions caused by the fact that the Operational Excellence system doesn’t have a standard. There is no absolute correct way of executing it or even the structure of it; all the different continuous improvement processes are a subset of Operational Excellence. The core of this system is Plan, Do, Check, Act. People may say "No, it's DMAIC, 8D or A3" but it doesn't have to be that complicated. If you're going to train people in your company and you have the PDCA knowledge, then you're going to be in good shape. You could also argue that all the other systems are linked to PDCA. The key is that Opex is a mindset of following a process, which is far more effective than arguing which process to follow. We call all these different continuous improvement systems, Operational Excellence.

Operational Excellence, or OpEx for short, is a way of constantly driving the development of your specific business. It’s a model that includes the people in organizations in three key activities, how to achieve Operational Excellence:

·       Loss intelligence, finding, sorting, and prioritizing what to work on and in which order.

·       Loss eradication, activities to eradicate the problems you have found, often using various forms of Kaizen activities/events.

·       Loss prevention, preventing losses you have eradicated to come back and ensuring new processes, equipment, people, and products don’t generate the same losses again.

The word loss means breakdown, quality defect, shortstop, etc., that hinders you from performing in an ideal way. A loss is everything outside of the ideal.

The Three Loss Processes in The OpEx System, Loss Intelligence, Loss Eradication and Loss Prevention
The Three Loss Processes in The OpEx System, Loss Intelligence, Loss Eradication and Loss Prevention


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To make Operational Excellence an ideal system for your business, you need three distinct areas built and have them come together to build this system.

There are no perfect models, but some are useful, and we've found this way of thinking to be very useful in the interaction and explanation of the Operational Excellence system. The areas you need to build are:

·       Working On the business

·       Transformation

·       Working IN the business

Designing these areas correctly will help you build a complete and effective Operational Excellence System and when it’s done it’s an OpEx system process that will develop your organization, its people, processes, and products.

2. The OpEx Model

The Operational Excellence Model: The Complete Guide
Operational excellence complete model showing the three crucial aspects of the OpEx model


A System of Operational Excellence can be described as a triangle. As you can see in the drawing, there are three sides to the model.

The system starts at the top of the triangle, with a management team or a steering committee, and they need to set a clear direction where they want to go. When you know where you are going you will build your Operational Excellence Strategy. The Strategy is guiding you in how the Vision will be realized. Typically, it explains how the implementation should be done and how to hold the gains.

2.1 Working ON the Business

The OpEx model has on the right-hand side what we call “working ON the business”. It's about disassociating yourself from the content of the work, to be able to look at the processes and see if they are meeting your requirements or not. You need to back away and watch the people in your company working so that you understand what is really going on. That is “working ON the business”.

2.2 Pillars

In an Operational Excellence System, there is something called Pillars supporting the system. A pillar is basically a team who takes time out to focus on one topic and one set of losses. They might concentrate only on quality, maintenance-related issues, industrial engineering issues, production flow issues, etc.

2.3 Kaizen Teams

What is a Kaizen team? Kaizen teams are what run Kaizen events or activities in businesses based on the loss intelligence conclusions. A Kaizen team is an improvement team or continuous improvement team of people who will work together to eradicate a defined loss/problem. They work during a short time period based on a method that helps them eradicate the loss/problem.

See Examples for Kaizen:

1) Using Kaizen in Food Production:

We are a $25 billion food business company and our plant produces dried products for industrial and food service applications.
Throughput on machine #3 has slowly reduced from 13,500 lbs. / hr. to 12,000 lbs. / hr. over a period of 3 yrs… 

Using a Kaizen process, my team (Practitioner Certified) facilitated a team of Operators, Mechanics, Engineers and Supervisors to utilize problem-solving tools and techniques to restore machine #3 throughput back to 13,500 lbs./hr.  The start of the next pack season was only 3 months away, so corrective actions needed to be implemented immediately.

 The Team members used the Kaizen approach with documented Kaizen sheet. The appropriate root cause analysis tools were used to attack this problem. A detailed execution plan was finalized with sign-off by the Management Team. Read More

2) Using Kaizen in Automotive Production:

We are a $90 million Automotive product business. We make components for cars. 

In one of our production cells we found that our OEE (Overall Equipment Effectiveness) was just over 50% and we struggled to deliver. The OEE was varying a great deal and we found it stressful to try to meet the demands…

Using a Kaizen approach and PDCA thinking, we gathered the data and found that operators where asked to do several activities away from the machines, such as first piece inspection, moving material, data logging, SPC, etc. We locked at the countermeasure ladder and as a team we developed an idea to add a water spider. The reasoning we had was that the activities outside of the machine has to happen, so we have to find a way to do that without losing production time. A cost and benefit calculation showed that if we could add one person, we could eradicate close to 100% of the short stops. Read More

3) Using Kaizen in Medical Equipment Production

We are a $400 million medical equipment business company and our plant that produces products for the USA market.

The production line was losing parts that dropped on the floor. Our conveyor belts develop static electricity that makes the parts tick and not drop. Where they should. Various activities had been taking place to try to reduce the static, but it wasn’t given the desired result. We lost approx. $2000/week of products. 

Using a Kaizen process, the team started to gather data to see where we had the biggest loss and we added video to the data collection to see what actually happened when they didn’t drop as they should. We tasked a couple of team members to read up on static electricity and ways to reduce or eradicate it. We studied the process for 4 days 24 hours per day and counted all parts in all defined areas. We made a graphical way of organizing the data. First the data was hard to understand since we didn’t know enough of static electricity. The two members who studied it came back with some knowledge and we learned about a type of equipment that is call ionizer and the effect they could have. Read More

Learn more about Kaizen meaning through our "Tackle Unplanned Losses" online course:

2.4 Transformation

Change leadership or change management is guided by the Operational Excellence Core Value.  It is present at the bottom of this triangle and what we call “the ownership transformation”. It is a key component to a successful implementation and sustainability of Operational Excellence. Change leadership or change Management handles the transformation, in general, to change the culture, knowledge, and capabilities of the people to build processes, create value, and bring results. It's also about supporting the output from Kaizen teams and ensuring that it is embraced by the line organization. These activities ensure sustainability.

2.5 OpEx in Every-Day Life

In your everyday working life, you can use the thought process of OpEx while performing your daily tasks. In  practice, Lean thinking or operational excellence thinking means that there are only two things you can focus on to improve your output:

●        First, you can add time. For example, if you want to have more output, you can work overtime. In the short term, it can be helpful and help you earn more money. However, in the long term, you're also sacrificing home life. Also, there may be health implications for some people so it’s not sustainable.

●        The second thing you can do is you can reduce/eradicate your losses. Your target should be to get down to zero loss. It might not always be achievable, however, the target is to push your thinking to understand if it is possible. What's the fastest you can go? The right amount of time, no losses, maximum output, if you don’t know, then set your aim to push yourself. If you don't know your losses, you don't know your business.

2.6 Working IN the Business

Working IN the business means working with your normal day-to-day tasks. While doing that you can, if you are trained, keep your losses in control. Operational Excellence Systems of Performance control can be explained like this as an example: Imagine a bunch of candles on a table. The candles are burning, and you put your hand on top of one. It hurts, although some people like that, most don’t. Imagine that you burn yourself every day on the same candle and then on Friday, you think "Guess what's going to happen on Monday? I'm going to burn myself again." How do you live with that? It’s exhausting just to think about it. The next week there is going to be another candle you're going to burn yourself on.

In the performance control system world, “working IN the business” is all about understanding what losses you have and attacking them to create the output. It's not focusing on the output, because you can’t change the result without focusing on the losses that are stopping you from performing. It's like focusing on the gross profit of the United States to change it, that will not make any difference. You have to be focused on something that you can actually do something about. For example, operators on shift are meeting together at the end of the shift, summarizing the days, seeing trends, and seeing where they’re going. They know if they’re getting better or worse, and what they need to do differently. What is it that is affecting the performance negatively in their shifts every day? It’s losses, that what Operational Excellence thinking will bring you.

The Operational Excellence Model: The Complete Guide
Operational excellence complete model, on the left side of the diagram, is Working In the Business as the third step of OpEx model

3. Conclusion:

Companies that are successful in implementing an effective Operational Excellence System, build a strong Operational Excellence Strategy. They know how to execute the different OpEx tools and how to Train in OpEx. Slowly they involve the whole organization using Kaizen events/activities to eradicate the losses. The point here is that it's a system, Operational Excellence is not a toolbox, it's a way of thinking, living, and acting together in a business.
To learn more about the Operational Excellence system you can enroll in our online training that spans from a Foundational course, Calle Operational Excellence Experience, to our official Certification programs to be a practitioner, specialist, or master of operational excellence. After achieving your diplomas and certifications you can add the acronyms P-OpEx, S-OpEx, and M-OpEx after your name and use your certifications in your career development.

Comments

Great explanation of the Operational Excellence model. Very informative and valuable.

Reply

The Triangle image is very informative, I have never seen it explained this way before!

Reply

The bottom part, Transformation, is what I think has been missing everywhere I worked.

Reply

I love this triangle picture. It's a very good way of explaining the whole system without complicating it.

Reply

If you need to improve your business, knowing how to do it in the most effective way is key to any professional.

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