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Operational Excellence (OE/OpEx)
It is a mindset that uses certain principles and tools to create sustainable
improvements within organization.
OE is not just about reducing cost or increasing productivity within
organization, its about creating the organization culture that will allow you to
improve valuable products and services for your customers and achieve long
term sustainable growth.
OE is an integrated management system developed to drive business
productivity by applying proven practices and procedures.
Operational excellence is achieved when every member of an organization
can see the flow of value to the customer.
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OpEx: Principles (The Shingo Model)
1. Respect Every Individual
2. Lead with Humility
3. Seek perfection
4. Embrace Scientific Thinking
5. Focus on the Process
6. Assure Quality at the Source
7. Flow and Pull Value
8. Think Systematically
9. Create Constancy of Purpose
10. Create Value for the Customer
The concept of operational
excellence was first
introduced in the early
1970s by Dr. Joseph M.
Juran while teaching
Japanese business leaders
how to improve quality.
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Take Away (Learnings)
Continuous improvement is the ongoing effort to improve an organization’s
a. Process
b. Product
c. Services
Benefits
a. Lower Product Cost
b. Increased Efficiency
c. Maximum Returns
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Lean Manufacturing
Lean manufacturing is a continuous way of producing what the customer
wants, when they want it, at a price they are prepared to pay and using the
least amount of resources. The core idea behind lean is minimising waste.
A company can reduce costs and keep prices low without adversely affecting
profits or quality by controlling the amount of waste generated during
production.
Lean is one of the most dynamic methodologies that aim at always looking at
improvements in all business processes. In Lean, all business processes are
critically examined to identify waste and non-value added activities and taking
steps to eliminate them.
Waste in lean is considered to be like poison which has to be eliminated at all
costs. Business activities in Lean are divided into two broad categories –
Value Added and Non-Value Added.
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Lean Manufacturing
Value Added activities:
These activities are those which adds value to a business process or product
and for which customer is willing to pay.
Value Added activities help in converting a product from a state of raw
material to a finished product in the least possible time, at minimum costs.
It aims at completing a business activity correctly the very first time, and
helping the business to deliver the product or service while fully conforming to
customer requirements or specifications.
Non-Value Added activities:
These are those activities which do not add any value to the product or
service but are an inherent part of the process.
Customers are not willing to pay for such services. These activities prove to
be a burden on the organization and affect its efficiency.
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Traditional vs Lean Sigma
Traditional : reduce resource - try to do the same things with less people,
cheaper materials, poorer quality
•EASY……....NOT SUSTAINABLE……...PAINFUL!!
Lean Sigma: attack the cost of doing things wrong- reduce waste to reduce
cost and increase profits
•DIFFICULT…….LONG TERM GROWTH…..Less Pain?
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Six Sigma
Six Sigma is a process that makes use of statistics and data analysis to analyze and
reduce errors or defects. In this process, the purpose is to improve cycle times while
reducing manufacturing defects to no more than 3.4 defects per million units or
events.
Six Sigma is a tool to improve the customer experience by identifying and
elimination of variation from process. In other words:- Reducing the defects by
solving problems.
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Six Sigma Methodology
DMAIC
D – Define (Define the Problem)
M – Measure ( Quantify the Problem)
A – Analyze (Identify the cause of Problem)
I – Improve (Implement and Verify the solution)
C – Control (Maintain the Solution, Evaluation, Harmonize, Monitoring & Validate)
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Tools used in DMAIC Methodology
D – Define:- Project Charter, Stakeholder Analysis, VOC, CTQ, Flow Chart, Gantt Chart
& SIPOC Diagram.
M – Measure:- Control charts, Histograms, Pareto charts, Scatter Plot & Check sheet.
A – Analyze:- Gemba, Fish Bone, Hypothesis, 5 Whys, Process Capability & Statistical
Tools
I – Improve:- FMEA, Poka Yoke, Brainstorming, & Action Plan
C – Control:- Process Sigma Calculation, Control Charts (Variable and Attribute), Cost
Savings Calculations & Control Plan
