Operational Excellence has a strong connection to your brand. A great brand delivers consistent customer experiences at scale. Operational Excellence is about consistently delivering high volume of processes with high quality. It will be felt by your customers, your suppliers and your channel partners invariably.
Like Love and fragrance, you cannot hide Operational Excellence!
The three dimensions of Operational Excellence are Planning, Execution and Continuous Improvement.
Operations deliver the necessary volume and variety to the organization’s processes – be in manufacturing, supply chain or customer service.
The key element here is the right plan for the scale of operations. Three aspects of planning are:
1. Scale: We have to clearly identify the volume of operations and work backwards in terms of planning the resources.
2. Investment: The investments are in fixed resources like plant, machinery, equipment, IT etc. These need to be planned for full scale, being one-time investments. This aspect of planning has to be executed in a single move. This can be your longest lead time activity.
However, in today’s world, one could look at creating an XAAS (X As A Service) model to mitigate the high investment required and scale up using opex models.
3. Variable components: These revolve around labor, variable input components, software licenses, which have a low lead time for induction. They should be planned and incurred gradually over a period of time as you scale up the operations.
When we were building up the CRM program for India’s largest automobile company, it was a green field operation. We had to reach 600 dealers scale starting from 4.
We planned one-time investments in hardware, office space and major supplier contracts with this scale and the resultant pricing leverages. However, our hiring plans, network additions, support staff, etc. were ramped up gradually as the operations scaled up.
Execution is the most important aspect of Operational Excellence. It consists of:
1. Leaning the process: A process is always running in some form or other in the organization. To scale up, you first have to lean the process, i.e., analyze the process with the lens of available technology, and the wastage in the process.
For example, in an inbound calling process, an agent receives the call and searches for customer records. With the induction of a Computer Telephony Integration (CTI), the customer record is brought up to the agent as soon as the call is picked up by him/ her. This removes the waste of time from operations, improving agent productivity.
We have to always keep an eye out for available technology which can help lean the process further driving up efficiencies and excellence.
2. SOPs: An operation is about a set of repetitive operations. The quality and consistency of these repetitive operations is ensured by Standard Operating Processes (SOPs). SOPs are one of the most important but sometimes ignored, facets of operations.
As your operations becomes larger and more complex, your process scenarios will have more and more variants. Your SOPs will have to be continuously updated to reflect this increasing complexity.
3. People and Culture: Your culture and people come into play when SOPs are not available – e.g., in crisis situations, unique scenarios, or when the right skilled personnel are not available. The culture needs to be shaped to empower people to make decisions and take responsibility.
You need to consciously build the right culture so that your people grow in the operations in the best possible way.
Ø People Management: The heart of every operation is people. Their morale will decide the quality and scale of your output. Things that you can do to manage the morale are
Rewards and Recognition: They have to be tied with your Operations KPIs and the best performance needs to be rewarded and celebrated, whether it is by an individual or a team. This motivates everyone to do better and better and be recognized as part of our team.
Employee engagement activities (Teamwork beyond your work-team): Your employees are holistic human beings with other aspirations and interests. Set up hobby clubs, conduct CSR activities and recognizing their efforts outside their workspace.
Culture: Culture is the collective behavior of your people. A great culture is imperative for OE. Do you want your people to push issues under the carpet, or do you want them to be the flag-bearers of excellence? The choice of building culture depends on the leaders. People will follow you so be careful of the examples you set.
Be self-aware of what attitudes and behaviors you bring to the table as a leader. These will form the operations’ culture.
4. Knowledge Base
Every operation will generate a certain amount of knowledge through experiences of people in handling new problems and scenarios every day. You require knowledge management to continuously update your SOPs, knowledge articles, FAQs in a digital fashion and make these easily searchable.
Building knowledge in your operations and making it referenceable will help you execute your operations speedily and improve continuously.
C. Continuous Improvement and Transformation
A business is an ever-evolving entity. So are operations. Therefore, you need a strong culture of continuous improvement.
Feedback Loop: Continuously improving the operations requires building feedback mechanisms.
You need a PDCA culture for this.
A PDCA cycle starts with in-process KPIs. In-process KPIs are the leading indicators which predict the quality of the eventual output.
For example, in an automobile workshop, the in-process measures will be like time of entry versus time of making a job card, difference between actual delivery time and estimated delivery time, repeat count of complaints – these are leading indicators which predict whether you will meet your ultimate KPI which is, customer satisfaction and repeat customer visits.
Embed in-process KPIs into your operational systems, correlate them with your outcome KPIs like customer satisfaction, product quality etc.
Process Re-engineering (Transformation): Every process is built for a certain scale, after which it becomes either inefficient or bureaucratic. It is important to review your processes on an annual basis to keep them contemporary, to assess them with respect to your competition or benchmark them with the best and if required, to overhaul the entire process in itself.
We scaled up our CRM from four dealers’ pilot to 5000 dealers. The most crucial process was the Technical Support process which kept bursting at its seams, almost on an annual basis as more and more dealers came aboard.
We reviewed our support process on an annual basis. We used Pareto Analysis to continuously identify top ten complaints. We converted their resolutions to SOPs which could be run in a BPO style operation. As soon as any new high volume support request surfaced, it was converted to an SOP. Special developments were done and it was moved to the BPO arm. It reduced the involvement of the technical team and reduced the support cost.
Using this continuous process of ‘left- shift’ - shifting high volume requests to lower and lower cost model, we achieved 90% of our support calls being handled without involvement of the technical team i.e., the BPO operations.
Over a period of ten years, we transformed our support process five times.
Benchmarking: The world is always running faster than you are! You need to look outside your organization, and sometimes outside your industry, to identify those who are running faster than you.
The best way to keep up with the world is by continuously benchmarking and identifying best practices. If you are the industry-best, don’t rest easy; look out at the other industries which have processes running at a bigger scale or a faster pace.
While setting up customer facing operation of SMS communication, we benchmarked ourselves to banks which were sending millions of SMSs per day. We sought out solution providers for banks. The technology that we implemented then, is still running. It’s probably sending SMSs at a rate at which banks were sending their SMS’s 10 years back.
Benchmarking will keep you up-to-date and will provide longevity to your initiatives when you are looking at operations operating at a much bigger scale than you are.
You can also hire people from industries or organizations operating at a higher level of operational excellence, to induct the leadership required to build operational excellence.
An organization delivers business results and its growth objectives via operations. Operations excellence has direct impact on your brand. Operations has to be looked at as a dynamic and vibrant entity.
Therefore a good amount of your time as a leader should be invested in planning and improving your operations.
We hope this article provides you the different dimensions to consider while improving your operational excellence.
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