Operational Excellence is widely defined phrase in business today. Scanning current literature, you can find many definitions of operational excellence. In its broadest conceptions, Operational Excellence is a set of principles that leads an organization to “outstanding” or extremely good operations. Purveyors of operational excellence consulting might tell us, quite hyperbolically, that it leads to “best in the world” or “best in class.” An altruistic and perhaps academic view is that it leads to “true north,” that elusive state of perfection popularized by Toyota: never achieved but always sought after.
We contend that operational excellence is a system that knits an organization’s human and operational systems together using a continuous improvement system. The continuous improvement system is centered entirely on a simple problem-solving method and the management system to support solving customer problems (internally and externally).
Some argue that what Toyota is doing – it’s production system and management system – is operational excellence. What Toyota is surely doing is evolving. In their words, it is difficult to define and box up the Toyota Way. Toyota says, “The TPS has evolved through many years of trial and error to improve efficiency based on the Just-in-Time concept developed by Kiichiro Toyoda, the founder (and second president) of Toyota Motor Corporation.” We, Westerners, have a general dislike for the abstract. This management system we are patterning after – operational excellence – is, unfortunately, quite abstract. It is not without design, but is, indeed, difficult to limit into a neat and tidy package. It has a common core of philosophies, but how those philosophies are expressed are as different and varying as those trying to express them.
I would offer that one timeless facet of operational excellence is the pursuit of world-class performance: defect free. I am deliberately using the term “performance” as I defined it earlier. We are seeking world-class system performance. What we mean by world class is variable. I have clients that consistently beat their industry-best benchmarks in safety. But they remain dissatisfied because they know that problems remain. They know that defects in their safety systems will cause injuries. They continue relentlessly in pursuit of defect free.
Operational excellence is a system of components, that we know of today, which is bound together with principles and philosophies that have evolved over the past 240 years in this country. Our system for operational excellence respects the influences of Deming and the ever-evolving, intense and deliberate application of his principles to operations by eastern organizations, not the least of which is Toyota.
Is Toyota the benchmark for operational excellence?0