Instilling Operational Excellence In Your Company

Probably like many of you, along my career, I have become very passionate and a proud advocate of Operational Excellence. My name is Luc Roesems and am currently employed by Samsonite as Vice President Manufacturing. Age 49, I have held several positions working for multinational companies and different industries; from Demand and Supply Manager, to Head of Supply Chain and S&OP, Director Global Operations and PMO, Divisional Plant Operations Director.

Little did I know, when I graduated from University, I would also gradually become certified in CPIM, CSCP, Lean Six Sigma Black Belt, Scor-P. Back in 2017, I have also founded my own consultancy company PerfectOps.

Where do you start and how do you drive Operational Excellence? In this article I will share with you around my vision, talk about theory versus real-life practice and foremost how you drive and sustain results.

STEP BY STEP – STAY PRAGMATIC – AVOID OVERCOMPLICATION

Firstly, it is a mindset to constantly challenge the existing, look for the improved, how things can be done differently and better. This is perhaps the most difficult aspect to instill in people, it being a cultural given and state of mind. The key is that you can only lead the organization and teams by example, you need to bring the structure as well and set the necessary expectations. A nice working recipe is per below, next to creating specific objectives for the year, or creating a functional job lead etc.

• Identify a number of projects in the area of productivity, call it your biggest opportunities (you may involve your Production Managers, Team Leads in the idea generation)

• List them value-add top down, select projects and assign clear ownership and expectations

• Do regular meeting reviews (weekly or 2-weekly at first). It helps to engage the Teams, and you need to stay close to steer and guide them

• At first there is no harm to be cost driven versus later more quality bound or process bound for instance. As a matter of fact, you want to see these quick successes and get the enthusiasm going. It really works addictively and this way you can build on it and expand.

It is a mathematical fact that a 10% product cost improvement contributes more to the bottom line than a 10% sales increase.

This sounds all easy enough you would say, however, there is also the underlying question though around whether you have the necessary competencies in house to put this on the map in your company. From my experience the APICS courses and Lean Six Sigma BlackBelt certification have greatly contributed to my know-how, next to interesting literature I can recommend to name a few like The Toyota Way Fieldbook from Jeffrey K. Liker and David Meier, QRM Its about Time from Rajan Suri, and many more of course

I would like to summarize with following tips. Avoid becoming overwhelming, remember “analysis is paralysis”, do not focus your attention on organizational structures but above all keep it result driven and don’t forget weekly project and program follow up is an absolute must.

ASSESSING THE BUILDING BLOCKS TO OPERATIONAL EXCELLENCE

I have developed below schematic where some key areas of opportunities are or reversely areas you are challenged with. This model is not meant to be exhaustive, but it gives a good starting platform to work from.

DEEPER INTO THE BLOCKS

The opportunity foundation is made up of Operational Expense, Manufacturing Throughput and Inventory.

What is Operational Expense exactly? In a nutshell it is the cost of material, labor, indirect and fixed cost. This on itself works as an eye-opener when properly looked at. What do I mean with this? Well it is critical to understand how your product cost is built up % wise across these. What is the Pareto breakdown of these categories and within each of these categories. By the way Pareto (also known as ABC) is my all-time favorite how to look at things separating the trivial many from the important few. Then deeper investigate the possibilities and opportunities. What other operational expense can be scrutinized by monitoring actuals versus budget by example, what are the material variances or performance variances versus standard hours of work, target utilities and so on … What is value-add versus non-value add activities or cost in your operations?

"It is a mindset to constantly challenge the existing, look for the improved, how things can be done differently and better"

Increasing Manufacturing Throughput is a matter of process flow across your production floor or rather on a broader scale of your Operations. Value Stream Mapping (VSM) is a powerful LEAN tool to get a grip and overview on things, identify gaps and to use as a basis for optimization.

We are always measured through the eyes of the customer or at least we should be mindful we are. How good is your customer service level really from the customer perspective and expectations? How strong are you versus your competitors?

More technically we get into the domain of OEE (Overall Equipment Effectiveness) where we often focus on machine breakdowns but don’t forget to definitely look as well at overall stoppages and their reasons (for instance material shortages, product process issues, waiting for QC, …). Are there opportunities around improving cycle times? A lean organization cannot function without stabilizing your capacity and output. Your production system needs to be a true reliable apparatus.

Inventories have a direct impact on cash-flow and which is why companies are always looking for improvements around it. Have you done an ABC portfolio analysis (50% of items contribute to 5% of profit)? Think about it what is the best driver to work down inventories, is it A or C items? Well, actually, it is A items that have more frequent deliveries in and yet often have the same number of safety stock days than any other item on a far more important volume. Needles to say C items need to be worked on as well but more with regards to sanitizing the tail end of your business. Work with your A suppliers on lead times, who caries the stocks, call of agreements, JIT deliveries … And finally there is SLOB (Slow Moving and Obsolete) the one category that everybody wants to forget about instead of having quarterly review and true action meetings on it.