Definition of operational excellence in business

Definition and origin of operational excellence

How to understand the concept of operational excellence?

Operational excellence is a concept whose contours are variable in geometry. But if it were necessary to give a generic and synthetic definition, we would offer you the explanation of the Ministry of the Economy: “a systematic and methodical approach carried out in the company to maximize performance in terms of productivity, product quality and cost reduction, and more generally performance”. It is therefore a lever for improving competitiveness that each company is free to appropriate and adapt to its challenges and constraints. Operational excellence is used in particular in highly competitive sectors, with the aim of rationalizing and optimizing production, and offering the most attractive price to consumers.

How was operational excellence born?

At the origin of operational excellence, there is “Lean management”: to achieve this operational excellence, it is first necessary to initiate the company in a process of management of organization and production, a method essentially aimed to reduce production costs, the source of which can be found in Japan in the 1950s. A little backtracking is in order. At the end of the Second World War, Japan lacked financial resources. Raw materials are difficult to access and its market is very limited. Toyota must innovate to turn its industry around; the Japanese company then sought to optimize its production chain and adapt to the local market. It builds a car that meets the needs of its customers at a reduced price. To achieve this, its teams track down waste and embark on a process of continuous improvement. Result, in 1986, Toyota is ahead of General Motors both in terms of speed and quality of production: 18 hours to build a car with 4.5 defects on average, against 40 hours and 13 defects for GM. Ford and GM then import Toyota’s processes into their industry, a process they call “Lean management”. It is this simplified and, in fact, less costly method that gives rise to operational excellence.

What are the main principles of operational excellence?

Operational excellence is based on several fundamental principles, starting with a permanent quest for added value. Identifying the needs of potential customers is the first step in ultimately offering them a product that perfectly meets their expectations. It will also involve adapting the product to changes in society, such as the reduction in salt or sugar content in the food industry. Furthermore, operational excellence can only be achievedby paying the greatest attention to employees in order to ensure their involvement. No operational perfection either without seeking continuous improvement of its manufacturing processes. Finally, it is impossible not to mention this famous “waste hunt”. Reducing costs while improving the quality of products and their lead times is how operational excellence is summed up.

Why should a company do operational excellence?

3 good reasons to apply the concept of operational excellence

The implementation of more virtuous practices within the company is a natural improvement. First, by meeting the specific needs of its customers, the company satisfies consumers and builds loyalty. the principle of “Lean management” also aims to enhance its staffresulting in the development of well-being at work, team spirit, strong employee involvement, easier recruitment, lower turnover, etc. Then, lower the costsalso means reducing its environmental impact. By sourcing closer to its place of manufacture, minimizing the loss of raw materials, shortening its production times, the company optimizes its profits and limits its energy consumption, the use of raw materials and hydrocarbons. A greener “supply chain” which is precisely part of the new expectations of consumers.

Proof by example

Examples of operational excellence application success do not miss. We can cite the SNCF, which operated a real change management with a new paradigm. Since 2010, it has in particular developed its field management standards. New tools, team training… The group has placed operational excellence at the heart of its corporate strategy. And in 2019, during the Participatory Innovation Trophies, SNCF was awarded the Gold trophy in the “Operational Excellence Innovation” category for its participatory innovation approach.

Same causes, same effects at Vinci Airports. After embarking on a process of operational excellence, two airports of the Vinci group (Lyon and London Gatwick) were recognized for the performance of their industrial model in terms of passenger experience at the ACI Best Airports Awards.

How to achieve operational excellence?

Some tools to achieve operational excellence

IT tool optimization can significantly improve a company’s processes. These include electronic document management, the setting up of a collaborative intranet, and the provision of a mobile order-taking platform. Today, any company with the slightest ambition offers high-performance CRM software to enable sales forces to strive for the desired operational perfection. Deploying connected maintenance tools will also be a considerable plus in reducing costs and manufacturing times.

Implement operational excellence in your company

Such an approach, given its scale, cannot be improvised. Several solutions exist for the company. Calling on a consulting firm whose consultants benefit from expertise in operational excellence in the sector concerned makes it possible to develop its organization and its industrial processes to ultimately achieve this objective. The company can also create positions and professions for a sustainable and continuous improvement of its operations. Logistics Operational Excellence Director, Operational Excellence Manager, Operational Excellence Project Manager… these are all future engineering positions to be filled, the objectives of which will be to plan the deployment of the strategy, to define the methods of continuous improvement, to steer the teams and to monitor, for example, the implementation of innovative solutions.

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