Operational Excellence, what does it mean?

Companies today face a volatile economy due to intense competition, rising energy costs, the fluctuation of raw material and market uncertainty. Improvement of operations for the purposes of margin is where the road to the “Loss Reduction”, but also to the long-term success. Optimizing costs, improving quality and productivity has become key to gaining a competitive advantage factors. Operational excellence is the pursuit of conducting business in a way that continuously improve the quality of goods and services; is reduced to achieve competitive superiority from the point of view of the core of the company “PROCESS-PEOPLE-TECHNOLOGY-NETWORKS” but these factors are four pillars of operational excellence, which are:

Figure 1. Core of the company on operational excellence

According to my experience in the industry and research from technology transfer centers in Europe, companies require close coordination between the cores of the organization and the three pillars to achieve operational excellence. What is my vision? Global competitiveness is putting enormous pressure on the price, quality and responsiveness to customer demand. Some of the major challenges in the industry are the lack of visibility and control of manufacturing processes. The Asset Managers “asset managers” and production staff can not measure, monitor and control the performance of the assets and their people, so they have a hidden plant “I’m winning but at what cost?”, Not controlling losses .

Figure 2. Availability at what cost “Plant Hidden”

To succeed, it is important to understand how to exploit the “PROCESSES-PEOPLE-TECHNOLOGY-NETWORKS” to provide operational visibility and high profitability.

During my tour of the industry and research during these 35 years I have observed a very high percentage of companies that see the need to optimize their operating costs and productivity. These costs are increasing due to a number of factors, including the following process:

The lack of operational visibility of companies, which leads to decrease the response time deviations, resulting in quality problems, rejection, rework, etc.
The loss of the targets due to unplanned actions and the implementation of “urgent” orders.
Low productivity and management practices ineffective, outdated and clumsy use of methods to accomplish their desired goals and disgruntled employees are generally unproductive, while happy employees are passionate about their job and do it effectively
excessive cost of adherence to quality standards and overall compliance.
Too much time lost in gathering information and reports on multiple systems, leading to low productivity.
Disparate systems in the company and production plant lead to data redundancy, entering the same data into multiple systems in order to keep up with the production cycle. In addition, these information silos lead to localized decision making, which negatively impacts overall operations.
To overcome these challenges is essential to initiate programs with a holistic approach to allow continuous improvements along the three pillars of operational excellence.

Figure 3. Three pillars of operational excellence

PLANNING AND CONTROL OF PRODUCTION: Monitoring of demand Monitoring Inventory, Purchasing of materials, Production Planning, Alignment manufacturing processes, quality delivery of products, manufacturing according to standards production & maintenance, customer satisfaction, market penetration and brand image.

MANUFACTURING PROCESSES: Production organization, management of purchase orders and execution, work processes, Management Indicators, history record economic management processes and operations.

OPERATIONAL EFFECTIVENESS OF PEOPLE, PROCESSES AND PHYSICAL ASSET MANAGEMENT: Management and monitoring of processes, Overall Equipment Effectiveness, Leadership, Training and Best Practices.

How to operationalize the strategy through the three pillars of operational excellence?


In the phase of production planning, production plans and schedules are demand-driven capture – prediction. Production planning takes into account business objectives and manufacturing and supply constraints in order to maintain the required levels of inventory and certain predefined service levels. The production program executed at the plant level need to keep the plan in line with the plan of the supply chain, ensuring optimum utilization of assets. At this stage, often you need to manage supplier quality and deviations between forecasts and scheduled deliveries. In addition, one has to know what has executed so that you can modify production plans in the planning stage. This would require real-time visibility into operations, resources and assets.


The ability to generate executable programs viable and production that take into account the formation of bottlenecks in the production plant in real time. They should have adequate quality controls incorporated in the inspection process and finished products. They must be able to adapt to schedule changes and react to unplanned idle times. Additionally, a mechanism is required to minimize deviations of quality and appearance of downtimes during the process; maximize performance and have means for analyzing the causes of failures (RCA) “Root Cause Analysis” in order to avoid repetition in the process. In addition to the production execution capabilities, the ability to meet regulatory requirements and corporate needs to be put in place. Full traceability in the process must be enabled when products move through the value chain in the manufacturing process. It is important to control the details of execution, such as consumption, production, diversion, etc. All this information should be in information systems ERP – EAM “Enterprise Resource Planning” “Computerized Asset Management System” of the company in order to close the cycle of production plans and asset maintenance.


In addition to planning and implementation, the effectiveness of people, processes and assets play an important role in the overall operational excellence. The overall equipment effectiveness (OEE) of the assets must be monitored at the plant level. The OEE consists of availability, performance and quality. Availability reflects the uptime of equipment and processes; performance reports measure the production rate compared to standards of design, quality and process performance indicates through that team.

These elements constitute the reference asset efficiency in manufacturing. Similarly, processes must become more agile and adaptable to change without loss or no value-added activities. Finally, people have to be trained, trained and equipped with the necessary amount of data to successfully perform their job functions within the organization.

Figure 4. Model Integration operational excellence (Amendola.L, 2015)


Very often, we find that these three pillars work in functional silos with little or no coordination. Different processes with the support of information technology are not enough to achieve operational excellence. Since they are disparate solutions are needed to address critical functionality related to planning, asset management, quality and performance, but without interoperability and integration is extremely difficult, if not impossible, to drive operational excellence continuous manner. My recommendation is to seek a holistic approach that has a unified view of the systems; as shown in Figure 3, it is essential on the road to continuous improvement of overall performance.

A study by Board of Manufacturing and Engineering Design (formerly the Manufacturing Studies Board) of the US National Research Councilmuestra that world-class companies that have implemented processes EO (Operational Excellence) in manufacturing systems, with implementation of good practices have made great improvements in productivity & performance in its assets.

Increased product quality 100-400%
Increased manufacturing productivity 40-70%
Increased manufacturing capacity of 15 to 25%
WIP reduction from 30 to 60%
Reduction of the total time of the introduction of products 30 – 60%

Operational Excellence, what does it mean?

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