According to Collins Dictionary, tuning means "adjustment?of control?parameters?so that a system operates in the best?possible?way". We know about tuning musical instruments, radio, electronic equipment, and so on. The goal of tuning is to improve the performance of the system and to ensure that it is working optimally so that it can achieve its goals and objectives more effectively and efficiently. Anything that is out of tune is a noise, unpleasant and unwanted.
When it comes to operations, there are a number of metrics that are used to measure performance, which include efficiency, speed, quality, compliance, etc. If these metrics are not tuned to an equivalent of "sheet music" used by orchestra, it would end up in a chaos i.e. each metric doing well but customers are unhappy, profitability going down and so on. So, the question is how to achieve a good tuning of performance metrics. Here are some thoughts:
- Clarity of Goals and Objectives (True North
) : It is a hard fact, that employees at the execution levels have little clarity of the overarching goals & objectives at the business level. For example, the business may want to reduce time to market for new products by launching them before the competitors. But the logistics manager at the warehouse level would have an objective of lowering cost and therefore, will wait for optimal volume for shipping to the customers. The first step towards tuning the performance is to set and communicate well-defined and properly aligned operational objectives, all pointing to same direction (the true north) of the overall business strategy. This clarity helps the organization focus its efforts and resources on the most important operational activities and initiatives. The goals should be specific, measurable, and achievable, and they should be regularly reviewed and updated as the organization's needs and priorities change. The KPIs should be selected based on the organization's objectives and goals, and they should provide a clear picture of the performance of the operations.
- Cadence of Performance Reviews: Implementing and ensuring a discipline of conducting performance reviews goes a long way in tuning performance. This is a major area of gap in many companies. Most of the performance reviews happen at the beginning of the month. Throughout the month, the focus is on fighting fire, addressing material shortages, sending rush orders, meeting sales targets and so on. Structured and pre-defined reviews have to be carried out at a daily, weekly, monthly and quarterly basis to proactively identify and address potential issues. The daily and weekly reviews are extremely important as these allow organizations to quickly identify and address any issues that may arise and make course corrections as needed. A quick daily stand-up meeting to review previous day's performance is one of the proven best practices.
- Data-Driven Decision Making: Data plays a crucial role in operational performance management, as it provides valuable insights into the efficiency and effectiveness of operations. Many a times, due to lack of access to relevant and accurate data or paucity of time required for analysis, half-baked conclusions are drawn for decision making. By investing into data analysis technologies, organizations can quickly and accurately identify areas of improvement, prioritize initiatives, and make informed decisions that drive results.
- Collaboration and Communication: Effective collaboration and communication between departments and individuals are crucial for tuning the operational performance. Collaboration helps ensure that everyone is working towards common goals, and it enables the sharing of knowledge and best practices. Visibility, accountability, feedback loops, consistency and discipline are the 5 pillars of collaboration. Effective communication, on the other hand, helps keep everyone informed and on the same page, reducing the risk of misunderstandings and miscommunication. However, it is easier said than done. We know that departments have misaligned priorities and conflicting objectives. Processes like Sales and Operations Planning help to break barriers and improve communication. Similarly, instituting cross-functional teams to address key performance gaps, make the improvements sustainable.
- Process Improvement: Continuous process improvement is essential for operational performance management excellence. This can involve streamlining workflows, automating manual tasks, and implementing new technologies and tools. However, the improvement projects that are taken up should be relevant and make a visible impact on the business. Some organizations have hundreds of CI projects going on with limited governance and little impact on the business drivers.
- Periodic Operational Audits: While operational metrics and KPIs have a key role in improving performance, these may not point to the root cause of the gaps. Periodic audits of the operations allow you to unearth the underlying gaps & problems that may not be visible but may lead to major risks of safety, quality, compliances etc. it is possible to make the KPIs look good in the short term while causing damage in the long term. Periodic audits help to prevent gaming of the KPIs by presenting the true picture on the ground. Audits are considered as a necessary evil, because it entails a lot of manual work. But no more. With advanced tools like SIMSA
, it is possible to cut down all manual activities so that the energies and time is used productively on addressing the gaps.
- Continuous Learning and Development: Learning and development are essential for operational performance management excellence, as they enable organizations to keep pace with changes in their industry, stay ahead of the competition, and continuously improve their operations. Organizations should provide their employees with opportunities for learning and professional development, such as training, workshops, and conferences, and they should encourage a culture of continuous improvement. By fostering a learning culture, organizations can ensure that their employees have the skills and knowledge they need to drive results.
In conclusion, operational performance management excellence requires the implementation of best practices and processes that enable an organization to consistently achieve its operational goals and objectives. By having clear objectives and goals, leveraging data, continuously improving processes, collaborating and communicating effectively.
