Pursuing performance excellence in any industry, whether in manufacturing, service or office-based knowledge work, requires a combination of techniques that cover individual and group activity, analysis and improvement of processes, and quality of output. It can be overwhelming sometimes to keep track of the philosophies and acronyms that support these activities, and in a world of increasing change, it is easy to wonder whether they still have relevance.
The answer is yes, they still do. Even though the context might have shifted somewhat in a globalized and networked economy, these are practices that every manager should be familiar with and should teach to their teams.
It becomes easier to understand these “terms of excellence” once you parse them into their separate areas. For example, Operational Excellence is a term used to define best practices in processes and procedures, while Performance Management sets metrics and measurements to track excellence and defines leadership techniques needed to attain and sustain them.
Much of this management philosophy comes from studies made in large-scale industrial manufacturing in the post-World War 2 period. You will see many case studies focusing on quality control from Toyota in Japan, as well as infrastructure building by companies like DuPont. These philosophies are the products of companies and organizations from all over the world, blending into a formalised school of study throughout the latter decades of the 20th century.
Performance Management involves four key steps:
- Identifying and prioritizing goals, setting a vision for the short-term future (3-5 years) and determining a direction and measurement strategy. This is known as Policy Alignment.
- Identifying how this policy alignment will impact/benefit individual departments and teams and determining how these teams can contribute to the plan. This is known as Policy Deployment
- Establishing a day-by-day management system to keep track of progress and identify/resolve problems.
- Regular review and evaluation of progress, including finetuning specific activities and celebrating successes.
There are three bright stars in the area of operational excellence, which overlap to some degree, but which establish an easy-to-follow structure for ideal productivity with minimized waste and a strong numerical approach to tracking.
1. Total Productive Maintenance (TPM) addresses safety, loss analysis, and plans for training, maintenance and improvement. One of its key products is the 5-S Method for Workplace Organization and Standardization. It incorporates five sets of activities. All of which start with the letter “S.” These are: sorting the needed and unneeded items in a workplace, setting the workplace in order, shining – being proud – of quality work, standardizing work, and sustaining good habits.
2. Lean Management/Manufacturing focuses on eliminating the “seven wastes” from a process. These seven wasteful activity areas have been given the name-acronym “TIM WOOD” after the first letter of each wasteful area: Transport, Inventory, Motion, Waiting, Overproduction, Overprocessing, Defects.
Lean manufacturing has much more than just the seven wastes to offer. It is a school of thought that seeks to analyse and integrate a range of procedures that together focus on maximized efficiency. In brief these include:
- Just in Time production
- Value stream mapping and 5S workplace organization and standardization
- One-piece flow
- KANBAN – a card based delineation of roles and responsibilities
- Line integration and balancing
3. Kaizen is a Japanese term meaning establishing and maintaining a policy of continuous improvement. It is a staple of business process improvement since it formalises the idea of seeking better ways to do things and makes their deployment culturally acceptable by empowering line workers to implement improvement, while encouraging managers to openly recognize and support these efforts.
Lean 6 Sigma
Six Sigma seeks to identify and eliminate defects or variations by seeking and eliminating its root cause. Using statistical analysis, Six Sigma seeks perfection to the 6th decimal place, as in 99.999999% of products manufactured. It was originally designed by companies like Motorola, which manufactured identical chipsets in the millions and had the luxury of analysing how the slightest variation in a manufacturing technique could impact output that could then be statistically analysed. Six Sigma was then converted into a management philosophy for people and productivity.
When this is combined with lean approaches for identifying wasteful habits and doing more with less, lean Six Sigma becomes a powerful strategy for business process improvement.
Together, these techniques – performance management, operational excellence and Lean Six Sigma – seek to establish and standardize the approaches to getting things done as best as possible. There are overlaps, but in general, the universality and applicability of the procedures makes it possible for organizations of any size and in any industry to apply a set range of analyses and strategies to their goals.
They allow for easier communication between organizations. Much like ISO standards, they help companies to speak a common language in terms of process and quality management.
A famous quote, attributed at different times to both Peter Drucker and Edward Deming, says “you can’t manage what you can’t measure. The numerous techniques built into Performance Management, Operational Excellence, and Lean Six Sigma give you and your team the tools to do both.