Businesses Excellence is Attained, Resulting in a Competitive Advantage through Operational Excellence
Businesses have an opportunity to increase margins, decrease fat, and achieve Operational Excellence, a competitive advantage. It’s possible to increase process velocity, decrease process cost, and increase process quality all at once. That’s what Toyota does.
Business Systems Explained
Achieving business excellence subsequently requires understanding the makeup of a business system. The business system has four levels. Business Systems starts with Value Streams. If you’re not familiar with Value Streams a Value Stream cuts across all business departments and starts with the customer order and ends with the product or service delivery. The Value Stream includes all it’s Processes, and Processes are comprised of Activities. It sounds simple, but it’s not. Review the video below for more detail:
Businesses are Run With Knobs (5 min)
We look at a system as something that is controlled by knobs. Knobs have size and range. Size is analogous to importance and range is analogous to capability to influence. This video gives more detail:
Treacy and Wiersema wrote a wonderful book titled “The Discipline of Market Leaders” which showed that great businesses focused either on Customer Intimacy, Operational Excellence, or Innovation. Of those, every business should at least focus on Operational Excellence. As an aside, the very best businesses focused in more than one area.
Businesses should not be static, they should increase performance year-over-year. One way to do this is to continually improve. This is how Toyota has attained their exulted status. Take a look at the following to view Toyota’s Continuous Improvement process:
Business Excellence is Operational Excellence
Operational Excellence is created by having Profound Knowledge of your Processes. Toyota has Profound Knowledge of ALL it’s Processes.
Business Excellence, Execute Like the Toyota Production System
Toyota operates a Six Sigma System, maybe you should also:
Toyota is able to assemble 30,000 parts to a car and not have it fail. That is business excellence. That is what Six Sigma will do for you. Achieving Operational Excellence is neither fast nor easy but the sooner you start, the sooner you get there.