Five Stratragies for Operational Excellence

Apr 26, 2007 12:00 AM  By

Is operational excellence an illusive dream? I think not, but it is a definite commitment of time and talent every day. Below are five steps that will help you achieve this goal.

Communicate
As in every part of your life, communication is essential. Supply chain communication across your network can make the difference on whether you achieve a good result or bad. For instance; below is a high level example and a low level example:

Suppose merchandising takes advantage of an opportunity and purchases two truck loads of a supposedly hot toy for the fall. Merchandising forgets to communicate the delivery of this SKU six months in advance. This particular SKU requires substantial space in the distribution center. The result? A last-minute reaction by operations requiring substantial overtime. This lack of communication added cost and turbulence in the day-to-day operation that could have been avoided.

You are probably all thinking at this point about your own communication mishaps. This is a common problem. Today, there are many times operational silos that promote lack of communication and avoid efficient processes.

In another example, say IT is working on a project in the distribution center adding a new feature but operations is unaware of this work. Therefore, operations needing this area fixed purchases a solution or manufactures a work around. Whose fingers are pointing at whom? This is a common instance that increases cost when the left hand is unaware of the right hand’s actions. Proper communication assist in breaking down silos.

Training
Another common problem is quality training or the lack of training. The typical large distribution center has 40% turnover rate per year. Depending on geographic location it could be more. A good training program is essential and could increase productivity 10%-20%. Why? Training and validation of training assures that all associates understand the “steps for success.” If people don’t know the proper processes, they create inefficient steps gradually chipping away at productivity numbers.

Training and training aids are critical and should be done by a person that understands the process. Not by a human resource person that would flunk a validation because they just read out of the manual and truly don’t understand the process.

Training materials are sometimes furnished by the software vendor or material handling equipment vendor. Be aware that often these are not sufficient. A customized training program should blend your operational process with the vendor generic features. This training should be done at least every six months and a validation of learning given to each participant to insure that the main points are learned. Remember that different people learn different ways and typically you need to be an average of six repititions for training to be enhanced.

Know your operation.
A beneficial step is to go through a process flow mapping. Initially this is labor intensive, but it’s a great tool for the future and should be maintained on going with any changes occurred over time.

Once you have your process map flow, the next step is to audit the process. Are these steps actually occurring in the warehouse? Has the associates created a work-around? If so, is the new process better and should your current process be changed? Now look at each component, is there a new and efficient way of accomplishing this task. How can you reduce walk time or touches out of each component? Would an investment in new material handling equipment or software reap big returns in any step? Then map the process to key performance indicators. Evaluate your metrics compared to others in like industries. What gets measured gets noticed!

Looking into the future how would you need to re-engineer to double volumes, double productivity, etc.

Understand that you are in the people business
Whether you like it or not, you are in the people business which is sometimes the most challenging aspect. If you hire well and you create a culture of passionate teams your company will not only excel but will be the envy of all. People spend a good portion of their lives in their jobs. They are either engaged and enjoy what they do or they hate going to work everyday. Treat your associates fairly and with respect. Affirm positive actions and you will reap big results. Affirmation is low-hanging fruit and should be a process that is spread among the entire management team. It doesn’t cost much but unfortunately most companies don’t understand the inherent value. Sam Walton was a person that understood passion. Before each shift he led a cheer. His goal was to create a team of passionate individuals that had a common goal. Know the associates names and reward good performance. Celebrate success!

Realize that your people are responsible for your success or failure and will often times support a great leader in the toughest times. Be a servant leader with a horizontal team that supports and defends each other.

When you get those A players in any level of your organization develop a plan to keep them and grow them for a succession of all stars.

Assure you have clarity of expectations. Failure is not always an individuals fault but the failure of a manager to clearly state the expectations and the reason for the expectation.

Customer service is essential.
Many think when we talk about customer service we are talking about external customers. Every department needs to know who their customer is and communicate with them. Survey them and find out how to better service them and from these support teams you can improve productivity. For instance, IT, maintenance, and human resources are suppliers to operations. If IT doesn’t support with good systems or a fault tolerance plan, operations will fail. If maintenance doesn’t maintain a sorter and it goes down, operations fails.

Order fillers support shipping. If order fillers do not finish a wave on time, shipping is back-logged. You get the picture. Develop a team of customer service professionals and you will increase productivity without adding cost.

Susan Rider is president of Upton, KY-based operations consultancy Rider & Associates.