How can you measure the impact of an operational excellence program?

Is very simple: more Economic Value Added such as: +NOPAT, ++EBITDA, Optimus AISC and +++FCF. if not the operational excellence should be understood like a domestic initiative.

During my journey as OpeEx Mngr you need to be direct, so to measure the impact of an operational excellence program, start by clearly defining objectives and establishing specific, results-oriented KPIs. Conduct a baseline assessment before implementation and regularly monitor chosen KPIs to track progress. Collect feedback from employees to gauge day-to-day impact, and emphasize financial analysis to quantify cost savings and return on investment. Prioritize quality metrics, customer satisfaction, and employee engagement for tangible results. Benchmark against industry standards to provide a comprehensive view of the program's effectiveness. This focused approach ensures a measurable and impactful assessment of OpEx results.

"It depends on the business philosophy of the organization. A traditional organization that subscribes to mass production will favor tangible ROI, OEE, and other short-term financial measures such as EBITDA, often at the expense of cash flow. A less transactional organization will keep an eye on financial performance without favoring one at the expense of the other, while incorporating qualitative metrics because of their known positive effects. For example, reducing changeover time from one product variety to another is often hard to achieve and justify financially in the short term. Likewise, investing in people development can be hard to justify in a mobile workforce. What to measure depends on the organization’s business philosophy."

Define your current and future states, then start to develop a set of success metrics - quantitative KPIs (adoption/usage of tools/documents/websites/ products; AHT, CSAT/NPS, customer growth; decreased attrition, more productivity) & qualitative measures (customer & user feedback). Make sure you can measure these things (dashboards, reports, tracking tools). If you don't have a baseline, you are going to have to make some assumptions with caveats OR maybe your first year is your baseline year. Set these targets over a 3-year period to show progress over time. Then, you have a good story to tell in numbers, pictures, & words. Think about what effect these changes had on customers/ users/ company. Numbers are a guide to tell the story.

Thankyou Operational excellence to be practised as a culture of continuos improvement and involving all the people in the organization to always sustain quality and exceed customer satisfaction externally and internally .Tools ,methodologies ,approaches to be customized based on the organization and market needs.operational excellence not to be forcefully followed rather than mindfully adopted .few basic practices will result to great results.

Set one primary and one secondary (optional) KPI against each of the following: - Safety Quality Delivery Cost People These should be at a maximum of three tiers/levels

Measuring the impact of an operational excellence program is crucial in determining its effectiveness and identifying areas of improvement. Key Performance Indicators (KPIs) play a pivotal role in this evaluation process. KPIs are quantifiable metrics that indicate the performance level of an organization or specific processes within it. To measure the impact of an operational excellence program, it is essential to establish relevant KPIs that align with the program's objectives. For example, KPIs could include metrics such as cost reduction, cycle time improvement, defect rate reduction, customer satisfaction levels, or employee productivity. These KPIs should be specific, measurable, achievable, relevant, and time-bound.

Start with internal benchmarking and then progress to external, where possible. Ensure that you are going to be comparing apples with apples (like with like)

VSM provides a good representation of value from a customer's perspective. As a Lean 6σ Master Black Belt I’ve used it to identify waste, understand current business needs, map future states, and create a “silver thread” of ownership between functional groups. When using it to measure operational exellence/continuous improvement efforts, you can quickly compare the current and future states to see gained efficiencies. It requires time and collaboration to complete. Here are some tips to consider when building one. -Identify process/products within scope. -Map the current state. -Brainstorm ideas to improve the current state. -Validate recommended solutions. -Map the future state. -Draft a plan to meet future state needs.

In an IT company (global giant), I saw 'food waste' being measured in the cafeteria/ kitchen. This is good. But this is not enough. I have not seen equally effective or efficient bio waste and e-waste measuring and disposal in light of increased generation of such waste due to Covid-19 Pandemic. A big question is to manufacturers (EPR is applicable to them), users (large corporates at least), city councils etc. - whether they increased their capacities to handle, and manage increased quantities of such waste).

Measure the impact of an operational excellence program based on 1. Chose the area which has to improve. 2. Find out the Obstacle & Opportunity in impacted area by Gemba. 3. Select base line & target 4. Select the KPI align with target. 5. Find out Gap Analysis. 6. Problem Solving 7. Find out Root cause by RCA. 8. Prepare CAPA. 9. Follow up CAPA effectiveness. 10. Day to Day trend analysis 11. if Positive impact are not found ,then follow up the from step 2 to step 10 12. Daily follow up shop floor, performance management 13. Value steam mapping 14. Benchmarking 15. Productivity improvement by Kaizen, 5S 16. Impact analysis on business benefit.

I would strongly recommend using NPS also - an easy and simple but effective way to measure customer (internal as well as external) satisfaction. Leading measure is your investment (time, money, effort) in the Operational Excellence Program; lagging measures are needle movement (upwards) on NPS, revenue, profit etc. and needle movement (downwards) in waste generated, energy consumption, customer complaints (numbers), repeat offenders etc.

One more perspective is to keep a regular pulse check for the OPEX programs from all relevant stakeholders. Constantly review, update and change program scope if required that would make it more appealing for stakeholders and keep their interest in it as they will getting benefit for what program intention is strategized to deliver.

Enhancing performance in isolation doesn't always translate to global progress. Numerous Operational Excellence programs uplift a department or process, yet fall short at a company-wide scale. You can avoid this trap by using a Principal's lens and pointing out the firm-wide bottlenecks (R&D, sales, operations, customer service, etc.). Addressing these choke points elevates global performance, whereas enhancing other areas creates potential.

I don’t see any mention of the only measure that counts, profitability. It’s not instant, but if over time productivity is not rising and profits aren’t improving it’s just lots of really neat acronyms and projects that amount to nothing. The idea is not to try to measure each projects profitability improvement target, but collectively profitability better increase.

It depends what you want to measure! There are operational excellence programs with very good results, but the stakeholders not happy and operational excellence not so successfully, but the stakeholders are happy. Besides what is written into the books, in the end it depends who is assessing. In order to be all people happy, should be established and communicated how it is measured what can be measured and how " it is measured" what it can't be measured.

Ask the customers if the operational excellence program in your organization has improved their experience! Anything short of that will lead to short term localized improvements.