Operational excellence is a mindset
Operational excellence is a popular buzzword, but like many buzzwords, its meaning and value can be misunderstood.
Above and beyond anything else, operational excellence is a mindset that seeks to constantly improve efficiency and strive towards the best. It rests on, and evolved through, methodologies like Six Sigma, lean working, and continuous improvement, and it borrows best practices and ideas from all of these and more.
In the words of operational excellence expert Andrew Miller, “Operational excellence is a mindset, not a methodology. It is the relentless pursuit of finding ways to improve performance and profitability.”
As the name indicates, operational excellence is focused on making operations more efficient and valuable, rather than on business strategy. Deloitte describes operational excellence as spanning 3 connected pillars:
Improved efficiency by revealing hidden, unnecessary costs, which is vital for highly competitive process industries.
Sustainable cost reduction which targets only unnecessary costs rather than slashing them in a reactive way that ends up costing more money to correct.
Workforce stability by supporting the transfer of skills to the next generation, in order to avoid losing skills and knowledge when a mature labor force retires.
How to achieve operational excellence?
There are a few routes to operational excellence.
Shift your mindset
Operational excellence begins with a culture shift from troubleshooting and chasing fires to cultivating curiosity and a desire for continuous improvement that motivates you to investigate small issues and learn what is behind them. It’s a mindset that isn’t satisfied with “good enough” and instead strives for excellence.
2. Make your value stream visible
You’ll need to help each employee to visualize the entire value stream, from the beginning of production till it reaches the customer. Building efficient processes help make it obvious whether or not the systems are running smoothly. Analytical monitoring centers can be highly valuable in service of this goal.
3. Highlight disruptions to the value stream
Once your value stream is visible, you also need to make it possible for employees to spot a bottleneck or disruption to the value stream early on, and feel empowered to step in quickly to resolve it. SAM GUARD alerts do the job of making these potential disruptions viewable to process engineers before they become major issues, to bring operational excellence to a reality.
4. Learning to trust your tools
As an operator, you can’t go through each alert and check everything in the plant, but machine learning (ML) can do it for you. The hurdle that employees first need to overcome is to learn to trust that ML alerts are meaningful and valid. Many ML solutions produce hundreds of anomalies that may be nothing serious, but SAM GUARD uses plant context to cluster anomalies so that it can identify and flag the serious problems.
For example, one of our customers saw repeated alerts from SAM GUARD about an unexpected rise in the pump temperature.
At first, the process engineer thought the SAM GUARD alert had been triggered by a rise in the ambient temperature, but when she drilled down into the cluster of anomalies represented by the alert, she realized the issue was something potentially more serious, since the sealant liquid pressure was also fluctuating. She hypothesized that the sealing fluid was leaking, so she sent a team out to the field to investigate the pump, and they discovered that this was, indeed, the case. This use case demonstrates just one way in which SAM GUARD’s alerts can quickly guide process engineers to the relevant issue, which can avert major damage.
Uncovering the value of operational excellence
Operational excellence elevates the operation of the entire plant, improving productivity, revenue, and growth. Research published in the Harvard Business Review found that companies with peak operational excellence have 25% higher growth and 75% higher productivity than laggards. Operational excellence practices make maintenance more efficient, reducing maintenance costs and revenue lost due to shutdown. Production too becomes more consistent, with the assurance that product will reach the customer at the right time.
Ultimately, it makes the plant more competitive, boosts revenue, and improves profitability.
Operational excellence sets the plant up for success in the long term as well as the short term by improving resilience. Research by McKinsey found that over 70% of transformations fail, such as digital transformation, operational transformation, etc. But the majority of those that succeed are in plants that have embraced a mindset of operational excellence that encourages everyone to regularly seek better ways to work, a mindset that doubles their chances of successfully sustaining improvements after the transformation.
Operational excellence is a key habit of successful process plants
Operational excellence is a key approach to increase value and profitability for process plants and other industries alike. By embracing a mindset shift towards operational excellence that makes the value stream visible and increases trust in alerts, process plant operators can unlock the value of operational excellence and improve their bottom line.
Would you like to learn how to apply operational excellence in your organization?