Many companies are looking for a “silver bullet” to improve their overall business and drive profitability while meeting customers’ expectations. As volumes climb with the return of manufacturing after the recession, many are searching for that one thing that will drive their business to the next level and free up needed capacity. However, there is no one thing that a company can do to be the best. It is a series of elements that make up the recipe for success.
That said, it is not nearly as complicated as companies make it sound. In order to achieve operational excellence, it takes a combination of three key elements: data driven decisions, technology focus and organizational health. Each of these gets their foundation from the strategic plan and involves a series of tactical steps to reach success. But when combined and led by a strong leadership team, companies can achieve the desired results.
Data Driven Decisions: Companies need data in order to make the right decisions in their business on a daily, weekly and monthly basis. Having the right data does not necessarily mean that companies have to invest in an ERP system that may be a significant investment, although many companies have done that and are using them well. The key to any ERP system is to ensure that companies define the specifications necessary prior to implementation and adapt the system to their needs. No one system will fix any companies’ problems, but if the specification is written correctly, and if implementation is done right, many companies will see the true benefit of a system of this type.
Companies determine what is critical to measure for their business, and then use the data to make data-based decisions that drive improvement and results. They need to gather the data daily and use it to respond to the needs of the business by putting in sustainable improvement actions. Companies should develop daily, weekly and monthly metrics, and then determine the review process necessary to respond to the information. Companies who have implemented this approach are driving long-term improvement and taking their companies to the next level of performance.
Technology Driven: The best companies are using technology to drive their business, whether or not that is information technology or the equipment they use to produce product. Technology is driving their efficiency and quality. The right technology for your industry needs to be invested in to build consistent quality product in the time necessary for the customer and at the cost that allows the appropriate amount of profitability. Many companies struggle with technology implementation, but it should be used where appropriate with the data gathered for the company to drive sustainable results.
Organizational Health: It is a proven fact that companies that focus on their organizational health are the ones that have the highest profitability, largest growth and significant improvement in value of their business as compared with other companies. Organizational health involves the focus on development of a continuous improvement and problem solving culture throughout every function of an operation. The best companies have defined the vision of the organization and have developed a detailed set of objectives and metrics for each area of their business. Then, these organizations provide the support culture necessary for people—development and problem solving—to grow the business and take it to the next level.
When all three of these elements—gathering and responding to data, using technology to drive performance and focusing on improving organization health and the people that work in the company—are combined and improved, companies can see significant growth in overall profitability. These elements will drive companies to be more operational and will allow them to tackle key elements of the operations such as quality improvement, continuous improvement and problem solving in new and sustainable ways.
Once alignment is achieved, a company can focus on the tactics and see improvement move quickly toward operational excellence and ultimately, profitability. Many companies tend to over complicate the process of improvement, but the silver bullet comes from the simplicity of gathering data, using technology and focusing on organizational health.