Operational Excellence

Breakthrough Strategies for Improving Customer Experience and Productivity

James Martin

• Publisher: Productivity Press
• Year: 2021
• ISBN:
  9781000330618
• Edition: 2
• Topic: Business
• Subtopic: Business General
• Index: Business

Operational Excellence, Second Edition – Breakthrough Strategies for Improving Customer Experience and Productivity brings together leading-edge tools, methods, and concepts to provide process improvement experts a reference to improve their organization's quality, productivity, and customer service operations. Its major topics include alignment of strategy to the design of supporting systems to meet customer expectations, manage capacity, and improve performance. It provides a concise and practical reference for operational excellence. Its fourteen chapters lead a reader through the latest tools, methods, and concepts currently used to capture "voice of" customers, partners, and other stakeholders, new strategies for the application of Lean, Six Sigma, as well as product and service design across diverse industries, including manufacturing to financial services. This book operates from three premises:

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• Organizations can increase competitiveness in an era of globalization through the application of "voice-of" applications, Design Thinking, the integration of the Information Technology Ecosystem's new tools and methods integrated with proven Lean and Six Sigma applications

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• Operational performance correlates to an organization's financial, operational, and resultant productivity, as well as with shareholder economic value add (EVA) metrics and can be measured and improved using the methods in this book

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• Value-adding activities and disciplines discussed are global and applicable to every organization

A PRACTICAL TOOL FOR REAL-WORLD APPLICATION

New topics are introduced in the second edition. These include Design Thinking, the "voice-of" Information Technology Ecosystems, Big Data applications, and Robotic Process Automation. Key topics from the first edition remain. These include Design-for-Six-Sigma (DFSS), Lean and Six Sigma methods, productivity analysis, operational assessments, project management, and other supporting topics. Each chapter contains tools and methods that will help readers identify areas for operational improvements. It contains ~300 figures, tables, and checklists to help increase organizational productivity. Practical examples are integrated through the book.

1

Operational Excellence

Overview

In the last few decades, several accelerating trends changed the way in which we view the management of production. Digitization has been a large transformational force connecting information technology (IT) systems and devices across the world. Work is done virtually for most supporting back-end operations. Work products are to a large extent more informational than material in form. Teams collaborate globally though video conferencing of various types. Productivity and quality are higher. Expectation around customer experience are becoming increasingly personal and seamless. Enhanced operational capabilities support these disruptive changes. The expansion of the Internet in increasingly large bandwidths makes information readily available to much of the world. Operations are focused on enabling innovative ways to do work and offer highly customized products and services globally to customers. These trends contribute to the creation of new production systems that enable organizations to dominate not necessarily by virtual of their size, but on core competencies in niche or newly created markets.

There are definitive steps that organizations take to become more competitive. Our focus is on operational capability that is aligned to strategy. One goal of this book is to integrate customer experience, design, process, and important initiatives such as Lean and Six Sigma into a logical approach for increasing productivity and customer experience. Organizations increase their relative competitive positions by successfully applying and integrating tools, methods, and concepts with available technology as well as human systems. Part of this application is developing competitive strategies by carefully considering customer expectations for how they value products and services. Value is relative to customer expectations around the dimensions of cost, time, availability, and how customers use the things they buy. Different customer segments value things differently. Operational excellence is evolving through breakthroughs in technology such as digitalization, automation, RPA, virtualization, big data, and other disruptive technologies as well as ways to manage people and resources to provide an exceptional customer experience. New trends evolve and old paradigms disappear.

Worker demographics are also changing. This trend directly impacts operational design. Some workers prefer to be on-site to interact with other employees, whereas remote working is preferred by other workers. There are several generations of workers in many organizations, and each has different working preferences, beliefs, and approaches for working. Developing a flexible, diverse, and easily trainable workforce is a strategic imperative. Customers are global, and therefore supporting services must also be global from perspectives of culture, language, and availability at any time and place. The new strategic focus is leveraging worker knowledge and skills to match new operational designs as work changes. The degree of social interaction, both in person and via social media platforms, is also influencing work. This experience is facilitating the ability of workers and customers to customize products and services. Virtual teams are globally enabled as technology provides remote information sharing. Cultural assimilation, training, diversity enablement, and virtualization are key factors for promoting effective teams in multicultural workplaces.

New technologies require continual worker training to support operations across global supply chains. Some technologies are disruptive, and others evolve from changing customer expectations for buying and using products and services. Skilled workers are needed to provide a seamless and exceptional customer experience, whether it be purchasing industrial equipment, receiving materials, or receiving services of various types. Products and services have supporting processes that should be aligned with customer expectations but also have high productivity. In addition, skills change with expectations and technology that influence operational design. Continual worker training of various types is always needed. To complicate matters, it is difficult to find and retain talent. Internal virtual learning universities are being created by organizations to enable workers to train themselves using self-paced virtual learning paths. This enables workers to develop their skills and to match them with available work, which is constantly evolving. But it also requires workers who can be trained and retrained as conditions change. Adaptable and educated workers are always in demand. To be successful, global supply chains must onboard talent around the world.

Virtualization enables employees to work from anywhere and anytime. This is advantageous for both workers and employers from perspectives of convenience, low cost, and high skills availability. As an example, one organization located their customer support center in Egypt because the population is multilingual. This makes it easier to answer questions and provide services to their European customers, who speak many different languages. Virtualization provides organizations with expanded options for how best to manage their workforce. Strategies vary from offshoring to training local workers or a combination of approaches, such as retraining current employees and hiring new ones. Regardless of the choice, if properly executed, productivity is favorably impacted because of stronger and more adaptable skills.

A potentially negative impact from global operations and virtualization is worker burnout. Causes include working on different schedules, continual changes in the types of work and how it is done, as well as team formation. It is not unusual to work with several teams in a short time. To counteract these negative impacts, organizations create wellness programs to promote exercise, good eating habits, and other ways to maintain physical and mental health. Teams are facilitated using technology and provided with tools, policies, and process to do work in standardized ways to reduce stress. Organizational benefits are greater worker satisfaction and longer retention compared to organizations that do not support teams in these ways. There are also laws and regulations implemented especially in the European Union to restrict access to employees when not at work.

Operational excellence integrates customer experience, product, and service design with processes to increase customer satisfaction and worker productivity. Highly competitive global supply chains produce materials and information more efficiently than competitors if the organizational strategy is aligned to operational strategy and executed using the right measurements, initiatives, and projects. Highly innovative solutions become more apparent when operations are defined from a customer experience perspective. Innovation influences operational design to make it competitive. One useful approach is considering the customer experience from purchase and use over the useful life of a product or service (i.e., its life cycle). The proliferation of IT platforms and applications enables a single source of truth for operational control and reporting. They also provide deep insights from data extraction to apply analytics to create and report relationships. Big data provides new capabilities for global supply chains to understand customer and operational transactions in complicated and interactive processes. Operational excellence is focused on adapting to changing customer preferences while maintaining productive operations.

Automation is also being introduced through the IoT and other applications to increase productivity. The IoT is composed of smart devices and sensors that are interconnected. These can be accessed to aid information exchange and support operational management. Operations are also being positively impacted by the use of artificial intelligence (AI) to aid decision making and reduce mundane work tasks, such as building reports or searching for information. In addition to AI, RPA is a growing field that automates routine work. The robots are virtual people efficiently doing repetitive work without error. In contrast with AI, which uses intelligent algorithms to build and use models to recommend decisions based on changing inputs, RPA provides advanced analytics to support people or to supplant people with chat bots and other automation, depending on the application.

Competitive Operations

Understanding the voice of the customer helps design and production teams focus product development efforts, deploy technology to align operations, and improve productivity through the efficient use of labor, materials, and capital. Product and service designs determine the operational design, including its supporting processes. Operational design should be considered from a global perspective but with customization at a local or regional level to satisfy cultural preferences as well as economic, political, and other constraints. Aligning with customer experience expectations improves designs of any kind. As an example, when customers want a product faster, this encourages a supplier to think of ways to meet this customer's need. Once a viable solution is found, other customers benefit and the supplier becomes relatively more competitive. Similarly, if customers request new features and functions to a current a product or service, opportunities arise to make designs less costly or more reliable and to incorporate other improvements for competitive differentiation. Differentiation is also created if suppliers work directly with customers and at their locations. Observing how customers use or don't use products and services affords views for creating additional solutions. Customers do not always know what will help them until they are offered a unique solution.

Operational strategy for most industries was relatively simple prior to digitalization and globalization, which disrupted competitive ecosystems. Competitiveness was determined by available technology, design, and operational systems at a regional or at most a national level. Customer preferences and the technology used to design, produce, and mange products and services changed very slowly for most industries. The product life cycle in consumer appliances used to be measured in years or decades, although there were updates and modest increases in performance every few years. Today, many product and services life cycles are measured in years or months. As an example, consumer appliance features and functions proliferate because of both innovation in understanding customer preferences and experiences as well as the evolution in software application, sensor technology, and other digitalization capabilities. Proliferation of products and services is supported by flexible design, production, and fulfillment systems. Also, whereas several decades ago operational strategy changed infrequently, in some industries today it changes more frequently to match global customer preferences that are differentiated at a local level. Disruptions require effectively translating business and operational strategy to match changing customer preferences and expectations.

As an example, the operational strategies of Burger King and McDonald's fast food restaurants are different by design, based on marketing strategies designed to service specific types of customers. An operational comparison shows Burger King uses a customization strategy based on its marketing promise of “You can have it your way.” Its operational design enables customers to customize their orders. Burger King also processes burger patties through a “flame broiler,” which is its second marketing promise. The process for customer orders is a classic “batch and queue,” and the flame broiler constrains the throughput batch by batch. When customers arrive at a Burger King restaurant, they expect (based on the marketing promise) to wait for customized food for a longer period than when they order at a McDonald's restaurant. There is also more wait time variation in Burger King's batch and queue system compared to a more standardized system like that used at McDonald's restaurants. Several of the Burger King supporting processes, like fries and drinks, are standardized. The key concept is that marketing promises influence op...