How to Introduce Operational Excellence in your Organisation?

Operational Excellence

A Winning Edge !

<Company Name>

@: Acquaint - Accelerate - Accomplish

2

Executive Summary

• In our turbulent and uncertain times it is tempting for companies to wonder whether they do actually require a strategy. They do.

Principles of strategy:

• The First Principle: The need to make difficult choices based on what information you have at the time. You take stock, gather information based on that, and then take action. The worst thing is to stay still

• The Second Principle: The need to stop analyzing and start doing, even if you are not entirely sure that what you are doing is going to turn out to be the right thing

• The Third Principle: The need to learn as you go along and modify your strategy through trial and error

“Strategy is all about making difficult choices in the face of uncertainty and then learning as you go along and adjusting your original choices”.


3

The search for difference !

If strategy is necessary, the next question is how to come up with a differentiated

strategy ?

• In any industry competing companies have the same suppliers, are structured in much the same way, receive their information from the same sources, use similar ways of delighting customers, offer similar products. And yet ! Some pursue genuinely different strategies

• Indeed this is what differentiates the innovators from other companies

• Playing two games: The question is, How can a company play two games simultaneously? Harvard Business School’s Michael Porter suggests that doing this is so difficult that most companies that attempt it will fail it. His colleague Clay Christensen suggests that a company can play two games at the same time, but that the new game needs to be separate from the main business.

“Challenging the status quo has to be the starting point for anything that goes under the label of strategy.” - Gary Hamel


4

Cases in Point

• Look at what happened to Gillette back in the 1970s when it came under attack by Bic. The strategy adopted by Bic was certainly different from Gillette. But Gillette didn’t respond by adopting the Bic strategy. Instead, it invested $1 billion in its existing strategy to develop a superior product – the Mach 3 – which was then used to destroy Bic and the disposable razor threat. Who buys disposable razors now?

• Consider also the case of Swatch. In the 1970s the Swiss watchmakers competed on the basis of their craftsmanship. Then Japanese companies (like Seiko) attacked by offering better prices, the latest technology, more features. Everybody thought that this was the end of Swiss watch industry. Instead, Swatch hit back at the Japanese. But rather than trying to compete with them on their terms (that is, price and features), Swatch introduced a new competitive dimension – Style and Design – as the basis for competition and the rest is history !

“The demands for new knowledge and skills will be constant, no longer a value added element, but the essential factor in determining organizational survival.” - Meg Wheatley


5 Welcome to Business and Operational Excellence

• Market Leadership Triangle

► In The Discipline of Market Leaders (Wiersma 1995), the authors created a compelling argument that is to be recognized in your industry, you will want to be known for innovation (e.g., Intel), customer intimacy (e.g., Nordstrom), or operational efficiency (e.g., Wal-Mart). These form the legs of a triangle. They recommend that to create a recognizable brand, you will want to maximize one of these three and optimize the other two

TECH

PROCESS

PEOPLE

OPERATIONAL EFFICIENCY

CUSTOMER

SATISFACTION

INNOVATION


6

What is B&OE ?

Business and Operational Excellence is an integrated management system that drivesbusiness productivity by applying proven practices and procedures in three “foundationblocks” :

• Capital Effectiveness: which involves Process Re-engineering, Project Process Methodology, Project Management Training, Quality tools, techniques and methodology training, Business Planning, Project Implementation, Start up and Initial Operations, Value-Improving Practices, Vendor effectiveness, Shutdown/Turnaround Practices

• Asset Productivity: which involves Business Level Analysis, Assessment, Consensus/Implementation Planning, Implementation, Sustaining/Control Plan, Maintenance and Reliability Systems, Capacity utilization, Resources Optimization, Product and Process Quality assessment and review

• Operations Risk and Change Management : which involves Process Safety Management, environmental, distribution and occupational health, adherence to regulatory requirements while implementing changes, slowly and steadily implementing change, managing change sensitively within an organisation,


7

Why Operational Excellence?

“However numerous your products, the company won’t succeed unless each of them is treated with concentrated care.” - Robert Heller

An integrated B&OE management system can be applied to existing and new companies and any organization which plans for expansion, mergers and acquisitions

Operational Excellence can help give our organization these advantages:

Strategic clarity about our mission, objectives, and organizational expectations;

A culture of operational excellence;

Best practices in process architecture;

A well-orchestrated improvement journey and;

Superior organizational alignment and execution


8Six Sigma – Your Resource for Strategic Management

• Six Sigma is a fact-based, data-driven philosophy of improvement that values defect prevention over defect detection

• By using Six Sigma Methodologies – DMAIC, DMADV, and Lean we can ensure the following qualitative and quantitative benefits for the organization in terms of:

► Major Financial benefits for the organization► Defect reduction► Productivity enhancement► Yield improvement► Higher net income► Continual improvement► Improved Customer Satisfaction

“The customer isn’t king anymore. The customer is dictator.” - Fran Lebowitz


9Some Examples of successful implementationof 6 Sigma

• Reputed companies Motorola, Allied Signal, General Electric, 3M/ Philips, Sony, Samsung, LG, Bharti, American Express, Citigroup, ONGC, Toshiba, NTPC and many other stronger companies believed in the Six Sigma Philosophy and proven results

• Motorola adopted Six Sigma in 1987 – The company saved $16 billion in 10 years

• The May 3, 2004 Business Week reported Xerox’s savings from using Lean Six Sigma by $240,000 through reduction in loss of toner during production. Also Xerox helped Bank of America save $800,000 by consolidating document centres

• Toyota worked with one supplier to reduce lead time by 46%, work-in-process inventory by 83%, finished goods inventory by 91%, overtime by 50%. All this increased productivity with 83%.

“The customer isn’t king anymore. The customer is dictator.” - Fran Lebowitz


10Connecting the dots … Six Sigma and Operational Excellence ……

Investment or Cost?

• Our focus will be on delivering services to help the organization by:

1. Maintaining focus on return on investment (ROI) and productivity while reducing costs

2. Get greater re-use from technology investments to increase operational effectiveness 3. Align operating model to support growth

• Connect the DotsWe can help the organization incorporate strategy throughout the enterprise with global cost, process and technology decisions that can:

Deliver measurable improvements — Our solution links operations to strategy, and establishes performance metrics to help us stay on track with goals

Add capability and flexibility to our operating model — We can help improve quality and identify potential savings while still promoting growth and innovation

Build effective support organizations — We focus on organizational and service delivery model changes that drive results, with emphasis on Marketing, Finance, Human Resources, Process Management, Global Resource Allocation and Information Technology


11

How will we measure our success ?

“ Watch the costs and the profits will take care of themselves.” - Andrew Carnegie

Leadership is the largest single factor for success in B&OE Leaders are accountable not only for achieving results, but achieving them in the right way by behaving in accordance with our values Leaders direct the Management to drive improvement displayed by OE results

The Measurement System Process will consist of the following five steps:1. Vision and Objectives - Developing an OE vision, world-class objectives, metrics

and targets based on corporate objectives, benchmarking data and other applicable critical business drivers

2. Assessment - Completing a comprehensive evaluation to identify priority areas in OE processes and performance against established objectives

3. Planning - Developing one-year plan to manage priorities and incorporating those plans into business plans and assigning accountabilities

4. Implementation - Implementing planned actions and monitoring plan progress and OE performance

5. Review – Monthly / Quarterly evaluating progress on performance and identifying necessary adjustments to plans that result in the goal of achieving world-class results


12

How do we initiate this?

• We set up a team of 2 team members to identify pain- areas who will be responsible for driving the results – No cost implication as we can utilise the existing capable resources by rolling out an IJP

• Role and responsibilities of the team members will be as defined below:

• Team members – 1 agent and 1 Ops manager preferably selected through IJP

• Team members trained on Six-Sigma Yellow-belt curriculum – no extra cost

Microsoft Word Document


13

• Value – stream mapping will be done for <Company> <Function> existing processes to identify areas of opportunity

• Analysis of the same will help the team with a SMART goal statement and a project charter will be submitted to the Champion (preferably a person in the top managerial position)

• The timelines of the project completion will be mentioned in the project charter. A typical project may run for a period of 3 – 9 months depending on the complexity of the project and other external / internal circumstances

• A monthly report on the progress of the project will be issued to the stakeholders

• On successful completion of the project, the team members will be Yellow-belt certified

How do we initiate this?... contd


14

• The completion of the project also to clearly bring out the benefits discussed, promised and delivered to the top management

• There will be times when Lean strategy will be used which may or may not require project implementation but will be discussed with the Champion and Stakeholders to ensure immediate change implementation – A white paper in this case will be issued with details of recommendation and proposed benefits

• An SOP will be defined for the Business and Operational Excellence team and all the operational and functional aspects will be listed herein with changes implemented and projects completion details. Champion will be the owner of this SOP

“Sometimes your best investments are the ones you dont make.” - Donald J.Trump

How do we initiate this?.... contd


15

Our Mission Statement

1. Acquaint ourselves with tremendous existing improvement opportunities around us

2. Accelerate our efforts in exploring and analyzing these opportunities and capitalizing on them

3. Accomplish our goal by delivering hard and soft saves for the organization in line with the business objectives and the mission of the organization


16

“Built to last now means built to change.” - Blur

Taking the journey toward achieving operational excellence in a company typically begins with making an initial step-change improvement, followed by a continuum of incremental enhancements

Instilling a culture of operational excellence can result in significant and sustained competitive advantage for our business

In its truest sense, Operational Excellence is about delivering value-added, best-in-class integrated solutions to elevate your competitive advantage

It’s not only good business; it’s the right thing to do

We believe……


17

Appendix

“Difficulties, opposition, criticism – these things are meant to be overcome, and there is a special joy in facing them and coming out on the top.” - Vijaya Lakshmi Pandit


Companies who are a part of the game


18

Appendix

“Never sing in chorus if you want to be heard.” - Jules Archibald

A write-up by CEO of Impulsesoft Pvt Ltd, a company which grew from a boot-strapped organisation of two people to a global leader in Bluetooth wireless stereo music


We cannot afford six sigma due to downturn – A write-up !



19

“A company surrenders tomorrow’s businesses when it gets better without getting different.” - Peter F. Drucker

Thank you for your time