Industries used to focus on three main areas for excellence and growth: creating and developing their products in bigger, faster and cheaper ways. Expanding an organisation simply by gaining more contracts was the only way; volume was more important than anything else. This is what spurned the industrial revolution and what continues to enable industries and companies to grow. However, companies who are choosing to work smarter are turning their focus to their internal excellence in a bid to experience exponential growth at rates (and in ways) never before seen. In this week’s blog post, we review how and why operational excellence is the driving force behind 21st century organisational growth and how you can be part of the action.
Why worry about operational excellence?
Success factor.Every CEO knows that operations are at the heart of every organisation, whether oil and gas, manufacturing or retail. This is exactly why Richard Branson of the Virgin Group ensures his senior staff (including himself) within Virgin Atlantic Airways spend regular time on the ground with airport baggage handlers – if something isn’t working, they can spot it and work out ways of improving it immediately. Would the same issue be raised and addressed in monthly management meetings? Probably not.
Competitive advantage.Inefficient operational processes cannot be hidden forever – sooner or later they will surface, often when it is too late and to the detriment of the organisation. Forward thinking companies know that operational excellence is a competitive advantage which cannot be underestimated.
Global thinking.Cohesive global operations and shared services divisions can only function successfully when they are based on operational and business process excellence. Siloed processes will only last so long.
Risk management.Increased outsourcing activities increases risk for businesses not following an operational excellence strategy.
How can operational excellence be achieved?
Where operational excellence used to mean optimising a business process to improve quality levels or customer satisfaction, today’s market looks more deeply at aligning an organisation’s overall strategy with its baseline operations and working from the ground up to achieve the strategic goals set out. Process improvement activities have now been supplemented by process automation and process reengineering efforts.
According to research by SAP, business operational excellence is based on 3 components:
1) A strategy (and team) in place to competently identify the areas which can be included in operational excellence and improvement activities
2) The successful and continuous execution of the strategy across all functions and divisions with buy in at all levels
3) Commitment to continuous improvement of all processes
Leveraging your IT resources
Historically, resources for operational excellence have been based on desktop applications and tools such as spreadsheets, operations manuals and various financial and logistics systems. Whilst these tools aid companies in their infancy, they are often quickly outgrown, particularly by those companies who are following an operational expansion process. Data analysis, process improvement and strategic growth activities are impeded when a critical mass is reached in terms of technology and tools and it soon becomes a necessity for such companies to invest in an integrated IT system.
Companies that benefit the most from an integrated ERP system are those who have already undergone some process improvement review activities. Part of the ERP implementation followed by SAP Business Partners such as Blue Ocean Systems requires that a company review their end to end business processes and are prepared to make the changes required. Operational excellence is an integral part of this review and it stands to reason that post implementation improvements will be seen across the platform [read our implementation success blog post]. The benefits of end-to-end enterprise visibility can be far reaching and can include increased customer service, improved decision making across the organisation, reduced costs and streamlined procedures.
With the pending launch of SAP Version 9.0, now is a better time than ever to get your processes into shape!
Is your organisation ready to become operationally excellent?