Operational Excellence

Operational excellence is one of the value strategies according to Treacy and Wiersema. They argue that an organization should master all 3 disciplines but at least be distinctive in 1 of these facets.   

These are: 

  • Operational excellence 
  • Product leadership (product innovation) 
  • Customer intimacy 

WHAT IS OPERATIONAL EXCELLENCE? 

Operational excellence is an organization’s conviction to focus on efficiency, streamlined operations and Suply Chain Management. Operational excellence used to be seen as a way of selling standard products or services at the lowest possible price, but this concept has since broadened. These days the focus is more on reliability, product or service development and realizing and delivering the right products at a competitive price. In short, operational excellence works on 2 sides: 

  • Cost side (efficient and effectiveness) 
  • Revenue side (effective and efficiency) 

THE CUSTOMER FIRST 

The customer is the focus of the operational excellence process. To add value for the customer, the right product must be delivered, on time and for a good price. Most organizations that focus on creating value for the customer are more successful in operational excellence than organizations that focus on cost savings. This is because organizations that focus on cost savings often lose sight of customer needs. 

OPERATIONAL EXCELLENCE AND LEAN SIX SIGMA 

Operational excellence is not a method but more of a mindset and belief. To realize this mindset and conviction, organizations choose methodologies that support it. Lean Six Sigma is a popular methodology that supports this. This offers organizations a structured way to continuously improve. By focusing on what is really important for the customer and by reducing errors. This reduces the number of process steps (Lean) and makes the outcome of the processes predictable (Six Sigma).  

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