In order for businesses to achieve operational excellence, it’s important to start by finding ways to improve operational efficiency. By focusing on a number of high-priority goals — from optimizing resources to streamlining operations — organizations can unlock significant cost reductions, build rapport with customers, and drive sustainable growth. And, that’s just the start of it.
But, achieving operational excellence is a lot easier said than done.
So, what are the steps to get there, and how do you know when exactly your business has reached that point (or, is it at least on the right track towards getting there?) And, is improving operational efficiency something you can do on your own, or is it something you should seek the support of a business consultant to manage?
In this article, we will explore effective strategies and practical steps to achieve operational excellence and increase operational efficiency. We’ll cover:
- What is Operational Excellence?
- What is Operational Efficiency?
- The Difference Between Operational Efficiency Vs. Operational Excellence
- What Does Operational Excellence Look Like
- The Most Well-Known Operational Excellence Models
- How To Achieve Operational Excellence
- How a Business Consultant Can Help You Improve Operational Efficiency
What is Operational Excellence?
Operational excellence is an overarching approach that aims to maximize business performance for the long-haul. In order to accomplish this, there are several models and strategies that businesses can incorporate (which we’ll cover later in this article). These models — though, obviously different in their approach — aim to align people, processes, and technology to create a lean and efficient organization from the ground up.
To get to a point where your business is considered “operationally excellent”, it means that it must embrace improvement at the root of everything your business does. Though operational excellence will look different depending on the industry, business, size of the organization, short and long-term goals, etc., the goals are still the same. And, it all starts with knowing how to successfully improve operational efficiency.
Ultimately, businesses who achieve operational excellence are those who have enhanced productivity while reducing costs and improving quality control, all while consistently delivering value to customers with innovative products and solutions. To do this timely and successfully, some businesses choose to work with a business consultant and/or strategic advisor to see the areas where improvements can be made.
What is Operational Efficiency?
Operational efficiency is primarily a metric that measures the efficiency of profit earned as a function of operating costs. And, it’s generally one of the aspects of businesses that leaders tend to seek out a business consultant to help with. This is because organizations who have higher operational efficiency tend to see more profits on each investment. It demonstrates the organization’s ability to optimize its use of resources and streamline processes to reach this goal.
By improving operational performance, organizations can enhance their competitiveness, deliver products or services more effectively, and achieve higher levels of customer satisfaction. This can allow them to more easily allocate other resources to improve — and, strive for efficacy — across the entire organization’s processes, or rather, attain operational excellence.
The Difference Between Operational Efficiency Vs. Operational Excellence
The terms “operational efficiency” and “operational excellence” are often used interchangeably, but they have their distinctions.
Operational excellence encompasses a comprehensive philosophy and approach that aims to continuously enhance and optimize an organization’s operations to achieve outstanding performance. It involves a strategic and holistic focus on aligning all the different aspects of the business to deliver exceptional results to customers while satisfying stakeholders.
Operational efficiency is an integral part of operational excellence, but it’s also one that can be easily measured, analyzed, and improved by a business consultant. On the other hand, operational excellence is a broader concept that emphasizes the continuous improvement of processes and the reduction of inefficiencies overtime, from employee engagement and customer experience, to embracing innovation and sustainability.
Though the two are different, it’s clear why they go hand-in-hand.
What Does Operational Excellence Look Like?
Operational excellence can manifest in various ways depending on the industry and specific organization. What a retail business focuses on in order to improve operational efficiency may look different than, say, a medical start-up company.
Here’s what operational excellence can look like in all those different factors of the organization:
Operational Excellence in Operating Costs
As mentioned, first and foremost businesses who want to achieve operational excellence must start with improving their operational efficiency. This involves identifying areas of waste or inefficiency, streamlining processes, and implementing cost-effective solutions. By effectively managing expenses, organizations can maximize their financial resources and improve their output while increasing profits.
Operational Excellence in Customer Service
For any organization, operational excellence in customer service should focus on delivering exceptional customer experiences. This is one that can be adapted to all businesses across the board. It involves efficient and effective handling of customer inquiries, prompt issue resolution, and personalized support. It ensures that customers have a good experience when they interact with your business, feeling comfortable to come back again and/or refer the business to people they know.
Operational excellence in customer service can be reached through well-designed customer service processes, the utilization of advanced customer relationship management (CRM) systems, and valuing customer support staff to reduce turnover.
Operational Excellence in Quality Management
Operational excellence in quality management revolves around consistently delivering high-quality products or services. This involves implementing rigorous quality control measures, continuously monitoring and improving product/service quality, and responding proactively to customer feedback. It aims to minimize defects, reduce rework, and enhance customer satisfaction.
Operational Excellence in Innovation of Products, Solutions, and Services
Organizations that foster an environment of creativity and encourage employees to suggest and implement process improvements are more likely to achieve operational excellence. This can include using innovative technologies, adopting agile methodologies, and promoting a mindset of experimentation and learning.
These are just a few examples of operational excellence in different areas. But, each organization needs to define its own specific goals and metrics based on its industry, business model, and strategic priorities. A business consultant can be a great resource in this aspect, because they are able to see your strengths and areas of improvement from an outside — and experienced — perspective.
The Most Well-Known Operational Excellence Models
Achieving operational excellence doesn’t happen in a vacuum, so to speak. There are models out there that provide structured approaches that support businesses in making those improvements. These models are widely used by business consultants to guide and advise their clients on achieving operational excellence. Here’s a closer look:
- Lean Manufacturing/Toyota Production System (TPS): This model focuses on eliminating waste and optimizing the flow of work. It emphasizes continuous improvement, just-in-time production, and the reduction of non-value-added activities.
- Six Sigma: Six Sigma is a data-driven approach that aims to reduce defects and variations in processes. It uses statistical analysis to identify and eliminate root causes of problems, thereby improving performance and achieving near-perfect quality levels.
- Total Quality Management (TQM): TQM is a management approach that emphasizes the involvement of all employees in continuous improvement efforts. It focuses on meeting customer expectations, reducing the likelihood of errors through training and education, and enhancing overall quality throughout the organization.
- Theory of Constraints (TOC): TOC identifies the most critical limiting factor (constraint) that restricts the overall performance of a system. Then, it provides a framework to manage and optimize it. By addressing the constraint, organizations can improve operational efficiency and achieve better results.
- Business Process Reengineering (BPR): BPR involves a radical redesign of business processes to achieve significant improvements in performance, cost, quality, and speed. It often involves questioning existing practices and implementing innovative solutions to optimize processes.
- Kaizen: Kaizen is a Japanese term that means “continuous improvement.” It focuses on small, incremental changes made by all employees to improve processes, eliminate waste, and enhance productivity over time.
- Agile/Scrum: Originally developed for software development, Agile and Scrum methodologies have gained popularity across various industries. They promote iterative and collaborative work by providing frequent feedback and encouraging adaptability, leading to improved operational efficiency and faster delivery of products or services.
How to Achieve Operational Excellence
Because the needs of each organization is different, so would be their pathway to achieving operational excellence. Whether it’s using one of the models mentioned in the last section, working with a business consultant, or emulating what other companies have done successfully, no two journeys are the same.
But, here’s a general outline of what that process would look like, step-by-step.
Step 1: Prioritize Operational Efficiency
Depending on the needs of the business, the steps to reaching operational excellence almost always focus on improving operational efficiency first. To do this, the business — again, usually with the support of a consultant — need to start by using data and analytics to gain measurable insights into operations and identity trends. This information can then be used to make data-driven decisions by defining KPIs that that are aligned with operational goals. Going forward, the business can regularly track and monitor performance to identify areas for improvement and ensure accountability.
Depending on the business model, this may involve Implementing lean manufacturing principles and optimizing production processes to increase productivity. Whether it’s streamlining workflows, addressing inventory concerns, and adopting advanced technology/automation tools in order to enhance efficiency, it’s all about using data and solutions to address any issues that have been holding you back.
Once it’s clear that you’ve become more efficient, it’s necessary to establish standardized procedures and best practices to ensure consistency and smooth operations across the organization, which can be repeatedly analyzed and improved on if need be. In
Stage 2: Cultivating a Continuous Improvement Culture
The second stage of achieving operational excellence revolves around fostering a culture of continuous improvement. In conjunction with improving operational efficiency, organizations should encourage employees to identify pain points, suggest ideas, and participate in problem-solving initiatives.
Additionally, investing in training programs equips employees with the necessary skills and knowledge to perform their tasks efficiently. Part of this also requires implementing effective communication channels and collaboration among teams and departments to streamline information and processes throughout.
Stage 3: Embracing Technology and Innovation
Once an organization has improved operations from the inside out, organizations who want to stay competitive must embrace technology and innovation to further enhance operational excellence. To start, this could be simply implementing technology solutions that help automate repetitive tasks, collect important data, and ultimately, allow for faster decision-making and the ability to scale. At this point, businesses can also talk about finding innovative ways to more quickly push out high-quality products, solutions, and/or services in order to grow without impacting customer satisfaction.
Stage 4: Sustaining and Evolving Operational Excellence
The final stage involves sustaining and evolving operational excellence. Just as you would lock-in those processes and best practices after improving operational efficiency, organizations need to continuously monitor performance, reassess goals and KPIs, and adapt their strategies as needed.
And, though the goal is to make things easier, businesses should never get too comfortable. Operational excellence is all about encouraging a mindset of ongoing improvement and innovation to stay ahead of the competition. This can be done by embracing a culture of learning, in which organizations can foster a dynamic environment where new ideas are encouraged, tested, and implemented. Meanwhile, regularly reviewing and updating processes, technologies, and practices ensures that operational excellence is maintained and continuously evolves to meet changing business demands.
How a Business Consultant Can Help You Improve Operational Efficiency
Implementing steps to get to operational efficiency is typically challenging for businesses who need it. The good news is that by partnering with a business consultant, you can get the support and expertise to get your organization to where it needs to be.
Here’s how NYC Advisors can help you achieve operational excellence:
We evaluate your existing processes.
As business consultants, we can conduct a thorough assessment of your existing processes, identifying areas for improvement and implementing strategies to optimize them. Business consultants are able to bring a fresh perspective and deep knowledge of industry best practices, which allows us to recommend process enhancements that align with your business goals.
We know how to improve and optimize your processes.
Business consultants are skilled in process optimization and reengineering methodologies. We can help you streamline workflows, eliminate bottlenecks, and reduce waste in your operations. By analyzing your current processes and identifying opportunities for improvement, we can recommend changes that will increase efficiency, reduce costs, and enhance productivity.
We know how to use data to drive your business goals.
Part of optimizing those processes to improve operational efficiency and other aspects of the business going forward, starts by establishing key performance indicators (KPIs) that align with your operational goals. Business consultants help design measurement systems and dashboards to track performance and identify areas of improvement, wile providing actionable insights to get there. We can also guide you in setting realistic targets and implementing strategies to continuously monitor and improve operations.
We offer sound advice and provide support on organizational changes.
Achieving operational excellence often requires organizational change. As business consultants, we can guide you through the change management process, helping you communicate the benefits of the changes to employees, addressing concerns, and fostering employee engagement. We can facilitate training programs and workshops to empower your workforce and ensure successful adoption of new processes or technologies.
We provide benchmarking and industry insights.
We as business consultants can provide valuable benchmarking data and industry insights that can help you compare your operational efficiency against competitors or industry standards. By analyzing this data, we can identify areas where you may be falling behind or excelling, allowing you to make informed decisions which we can guide you on.
We are up-to-date on the latest technology tools.
Business consultants can help you select and implement technology solutions that align with your operational objectives. We’re able to assess your current technology infrastructure, identify gaps or inefficiencies, and recommend the appropriate tools to help you in the right areas of your organization. We can also provide training and support during the implementation process, ensuring a smooth transition.
Start Your Journey to Operational Excellence Today
Improving operational efficiency is the first step in achieving operational excellence in your organization. A continuous journey that requires commitment, dedication, and a focus on constant improving, organizations can stay agile, competitive, and well-positioned for sustainable growth in today’s dynamic business environment.
But, getting to operational excellence is not always easy. By working with a business consultant, you can get the support you need from an expert, so you can see the results of these efforts — and, more importantly your investment — sooner than later, and with professional support.
For example, here at NYC Advisors, we helped a medical-device company which manufactured and sold endoscopes to improve their operational efficiency and excellence, raising their productivity by 224% in 5 months. To do this, we first established KPIs to monitor their production process. Once we had enough data, we used that to understand how to streamline their production process. Additionally, we upgraded ERP system, resulting in improved efficiencies in operations, finance, and accounting.
Are you ready to learn how we can help you with your operational excellence journey? Let’s talk!
