By Ben Hershey, President & Coach, 4Ward Consulting Group, LLC
We all aspire to have a state of operational excellence in our organizations, but it is often much easier said than done. Although it’s often conceptualized as merely tweaking the current way of doing things, operational excellence is about much more than that. For component manufacturers, LBMs, and millwork companies, operational excellence is about setting up a systematic operational structure to identify and capitalize on improvement opportunities, and it is equally reliant on harnessing non-technical elements, such as organizational culture, advanced processes, or automation.
My previous articles have talked how about waste reduction and close monitoring of key metrics are the traditional purview of operational excellence. However, I’ve worked with several companies in our industry that want to push the boundaries of continuous improvement while seeking to become more collaborative and encouraging engagement from all areas of the business. These additional steps take a company even closer to the ideal of operational excellence. At its heart, operational excellence is a discipline which aims to balance the triad between people, process, and technology, thereby generating benefits to both the top and bottom lines for your business, and enhancing the overall experience our customers receive from the improved processes. For its practitioners, the good news is that the process of operational excellence is repeatable, and the tools and techniques to automate and optimize it are mature. But the challenge is to ensure the people, process, and technology pieces of the puzzle are assembled in the best way to achieve optimal performance.
For our industry to realize the benefits of operational excellence, a more holistic and transparent approach to the creation of the system is required. Keep in mind, we can never, nor should we, really achieve a final position called excellence, because a vibrant company should always be focused on continuous improvements towards excellence—but it can and should still be an ultimate goal. The following are some structural paths to provide clear, actionable steps and tips for leaders to follow.
7 Steps to Operational Excellence
Although there can be more than 7 Steps and these are not written in stone, the following form a general roadmap that our industry can follow toward the goal of operational excellence.
Step 1: Discover & Solicit Ideas
Discovery can be undertaken in a number of ways using varying techniques. For example, if information is buried in our systems (software/tracking information), you will need to mine these systems to gather information. In other situations, the information may only exist in someone’s head, in which case tools to quickly capture and document the process can be used. In collecting this knowledge, you should also be listening to and soliciting ideas for change; it can be amazing how many great ideas already exist within your company. When I am working with a component manufacturer, a lumber dealer, or others, I may have a good idea of how to change a process, but mine is not the only voice out there, and it is disadvantageous to force a concept or change on a team, particularly if you are a consultant. The goals, objectives, and customer perspectives on improvement or transformation serve as great inputs to shape discovery and ideation.
What Success at this Step Looks Like: You’re gaining a real understanding how things currently are working, getting insight into what the people using the process or system think is not working well and why, and listening to how they might improve it. A good Next Practice here is to have a Smart Lean Communication Board where ideas are placed on the board, discussed, prioritized, etc.
Step 2: Benchmark & Validate
Given that you’re seeking to improve the way you work, it’s crucial to test and validate that what you’re seeing is in fact what’s really happening. How many times have we thought we were achieving a given productivity measure only to find we have fallen short? Benchmarking can be addressed in several ways. In the first instance, where the process or activity is similar to others in the industry, you can benchmark around similar companies in your industry. But don’t forget what I wrote in my June 2018 article, Moving From Best to Next Practices, what is considered as “Best Practices” can sometimes be misleading—the reality may be that we are only as bad as everybody else! Another way you might benchmark is by comparing the way top performers in assembly, sawyers, framers, order pickers, etc. work versus those who perform at a lower level, ensuring that you don’t just standardize on the easiest or expert versions of the process, but leverage what your best people do, even if and when it seems illogical. The third way you should consider benchmarking is with those outside your industry who are known to be excellent at a similar process. For example, benchmarking lumber dealers on how fast a truck is loaded and returned to the road would be a comparable measure to other distribution-type companies.
What Success at this Step Looks Like: As you identify and generate opportunities, and issues, you can validate your findings and suggestions with the appropriate stakeholders in your business, generating advance buy-in for change and ensuring that what you are about to undertake is going to be appreciated and valued. This validation phase is often neglected in many change programs, but to miss it is a costly mistake. As an example, I have worked with many companies who tried to implement a new industrial engineered process that was presented as the only way you should do something only to find they wasted their money and the change was never fully implemented. You are enacting change on a moving target, so this step of validating, generating buy-in, and incorporating other ideas will help ensure that priorities have not changed, and that the work you are about to undertake will still be relevant. This is also a great point to set the baseline measures and understand and validate the metrics by which success will be gauged.
Step 3: Evaluate & Quantify
Benchmarking and reviewing is necessary and valuable; however, this can also generate lots of interesting ideas and opportunities that may not be right to focus on at this time. If you have these ideas on a board as discussed in Step 1, at least they are identified so your team recognizes they are a vital part of the continuous improvement success of the business. Fixing issues with monthly financial reporting may look like low hanging fruit and get people excited, but, if the overall driver of your project or program was productivity improvement or new revenue generation, then these are the areas you need to work on. Therefore, you need to take time to evaluate potential ideas and prioritize them. In reality you will rarely have enough time to act upon as many ideas you’d like to, so making sure the best ones receive the most effort is vitally important.
Of course, prioritization also means that you need to quantify the time, cost, and effort to implement the revised practices or processes. I have seen businesses go off on a quest to improve, only to have spent tens of thousands of dollars and not have much to show for it. Quantification, combined with an understanding of the metrics from Step 2, enables us to understand how compelling our business case is. It is amazing the number of times management agrees with the importance as per Step 2, but, after being presented with a business case, start walking backwards from their original thoughts. In these situations, it is often useful to quantify not just the costs and benefits but also the cost of doing nothing.
What Success at this Step Looks Like: Now you have identified opportunities that have been validated, evaluated, and quantified with the appropriate leaders in your business to confirm buy-in and ensure that what you are about to undertake is going to meet business needs.
These are the first 3 of 7 steps for us to take on this journey to operational excellence, and we’ll cover the next 4 steps in October. As you consider what has been discussed so far, remember that these steps are meant to serve as a practical guide for any operational excellence initiative. Although they’re broad, they’re applicable to every industry and sector because you can adapt the principles to fit the needs specific to your current situation. And the journey is well worth the effort!
Ben Hershey is CEO of 4Ward Consulting Group, LLC. When the industry needs an actual expert, they turn to 4Ward Consulting Group. 4Ward Consulting Group isthe leading provider of Management and Manufacturing Consulting to the Structural Component and Lumber Industry. A Past President of SBCA, Ben has owned and managed several manufacturing and distribution companies and is Six Sigma Black Belt Certified. Ben has provided consulting to hundreds of Component Manufacturers, Lumber Dealers, and Millwork Operations in the past seven years. You can reach Ben at ben@4WardConsult.com or 623-512-6770.
© 2018 4Ward Consulting Group, LLC