Author: Ashish Mendiratta

In a recent webinar on Reimagining Operational Excellence in a VUCA world, there were panelists across different industries. Everybody agreed that the business leaders are losing interest in OE initiatives. Despite so much time & effort being spent on lean, six sigma and many blackbelt projects, they don’t see a real impact on the business outcome. It was felt that OE needs a new Avtar in the world that is changing at a very fast pace.

Many companies bet upon their continuous improvement program and often brand it as operational excellence. However, there is a vast difference between the two in many aspects. The goal of continuous improvement is to eliminate wastes, cut cost, reduce lead times etc. The most common techniques used for the continuous improvement are Kaizen, Lean, Six Sigma. Continuous improvements are based on small changes rather than paradigm shift or breakthroughs. Operational Excellence, on the other hand, is focused on delivering the performance to make an organization or business better than the competition. Operational excellence starts with leadership setting the strategic direction, which percolates through every process and decision making.

Standalone, Continuous Improvement initiatives do not Sustain

The continuous improvement follows a continuous cycle of Improve, Sustain, Measure & Monitor. The gains realized at the beginning of implementing a continuous improvement program are significant. But over a period of time, the law of diminishing return sets in and the spiral of improvement become smaller and smaller.

After a few years, the continuous improvement program becomes a ritual, focus shifts to the quantity of projects than the quality, and little impact on the company’s top line and bottom line. It has also been found that the continuous improvement projects keep running in isolation, essentially being driven by a group of employees in their specific area and mostly focused on manufacturing operations.

The idea is not to belittle the importance of continuous improvement but without an umbrella of operational excellence, it may lose direction & significance.

Operational Excellence is an Organizational Compass

Operational Excellence is much more than the improvement program. The term Excellence means superiority or better than others. When applied in the business sense, excellence means delivering value to your customers superior to your competitors. It involves setting the organization up for growth by understanding what the market wants and creating an uninterrupted value stream aligned to the customer needs.

Considering the fact that we live in an increasingly dynamic world, the customers, markets and business models change frequently. Operational excellence acts like a compass, always pointing and aligning to the customers’ needs, provides a new strategic direction to the entire organization.

When ingrained into the organization culture, it works in auto mode and continuously aligns the internal journeys to the customer journeys. It provides the agility in decision making, execution as well as resilience by minimizing the time to recover in case of any shocks.

How does the Operational Excellence Compass work?

It begins with understanding what the company would want to excel at to gain competitive advantage or the customer value proposition. Is the value proposition the low price, high speed of response, flexibility or variety offered, superior customer service or anything else?

It is also a fact, that you cannot excel in every performance parameter. Therefore, all energies should be focused delivering a superior performance than your competitors on the parameters that are critical for the value proposition.

For example, for McDonald the value proposition is quick delivery. Therefore, for them the operational excellence means standardising the processes, making the operations agile to minimize customer waiting time. But if you are looking for variety of options or flexibility, then MacDonald is not the place to go.

Another example is Starbucks whose value proposition is superior quality products and comfortable ambience. For them the operational excellence means sourcing finest beans, retail outlet design, making the customers feel at home. If you are looking for a cheap coffee, then Starbucks is not the right place to go to.

Using Operational Excellence Compass

 1. Find True North:

Finding true north means identifying the Customer Value Proposition or what do you offer to the customers that will put your business in the leadership position. It could be superior quality, large variety, fastest delivery, or lowest prices etc.

 The challenge is that the true north is not stationary in a dynamic environment. For example, restaurants that offered dine-in had to shift to home delivery during Covid. Similarly, online grocery delivery companies are offering 10 minutes delivery. As the competition heats up, the true north may need to shift.

 It is the responsibility of the leadership to continuously watch, question, redefine & communicate the customer value proposition to stay ahead of competitors.

 2.    Plan Customer Wow Experiences:

 Customer wow experience or customer delight means exceeding (not just meeting) customers’ expectations. For example, if the value proposition of a grocery delivery company is the speed, then delivery within 10 min is a customer wow experience. Similarly providing a salon experience with all safety measures at home is a wow experience provided by Urban Company.

3. Align Customer Journeys:

 Customer journeys are the processes that create customer experiences which include how a customer enquires about the company’s products, how they place the orders, what communication they receive, and how the products are delivered etc.

 Amazon is one of the best examples of the excellence in the customer journey. Not only customer is able to search variety of products, but they can find technical details, reviews of buyers, alternative products, find many options for making payments, get rewards but also return the products if they are not satisfied.

 The customer journeys must be aligned to create the customer wow experiences. Many companies set-up customer experience centres so that they can experience the products before making a decision to buy.

4. Align Internal Journeys:

 The internal journeys are the internal operations and processes e.g., customer order to cash, supply chain, manufacturing and procure to pay processes. Getting an alignment and coordination between these processes is one of the most challenging tasks.

 This is because how different functions are incentivized and may end up having conflicting true north. For example, while supply chain department may be incentivised on the service, manufacturing may be incentivized on lowest cost. That is why using the right true north (value proposition) for the cross-functional alignment is very important.

 The role of the operational excellence is to facilitate the internal alignment of the objectives, targets to the customer journey. For example, to create the experience of 10-minute delivery the logistics must ensure the network that can cater to this requirement.

 5.  Implement Cultural Enablers

 Unless the excellence is embedded into the DNA of the organization, the operational excellence initiatives are not sustainable. Every employee needs to understand how their role fits in, see its impact and feel empowered to contribute towards creating customer wow experiences.

 Sensitizing the employees to customers’ needs, communicating the customer value proposition, training & skilling them, equipping with right tools, encouraging the cross-functional collaboration, creating transparent and visual systems for every employee to see the impact, are some to the measures for the cultural enablement.

 6.  Continuously Improve:

Once there is an understanding on the quantitative and qualitative aspects of the internal journeys, the continuous improvement programs should focus on those areas where there are significant gaps from the targets or expected outcomes.

 Sometimes, automation or complete transformation may be required before implementing the continuous improvement. Periodically conducting operational audits, checking if the improvements are sustained, ensuring corrective actions where gaps are found is an important piece of continuous program, which mostly is neglected.  The reason is use of spreadsheets based systems and manual workload involved in managing the entire workflow. Using technology e.g. SIMSA, for automation of workflow and use of advanced analytics to predict risks helps to ensure that the improvements stay on the right course.

7.    Re-assess True North & Realign

 As mentioned earlier, in an increasingly dynamic environment, the true north keeps shifting. Therefore, periodically re-assessing the true north and realigning the customer & internal journeys ensures that you continue to win in the game of competition.

Conclusion

Operational Excellence has been reinvented to overcome the challenges posed by the dynamic world. Its role has evolved from providing the tactical advantage to providing strategic competitive advantage.

The operational excellence compass automatically points to the shifting true north or the customer value proposition and realigns the customer & internal journeys. It ensures that the organization never lose the sight of the right direction and continuously win in the marketplace.

Operational audit software is a powerful tool that can help organizations improve their operations and ensure compliance with regulations. It allows companies to automate their audit processes and streamline their operations, which can save time and money while also improving the overall quality of their audits and ensuring timely closure of the gaps found.

Operational audit software can automate time consuming manual tasks such as data collection, data analysis, report generation, tracking and reporting corrective actions etc. By automating these tasks, organizations can reduce the time and resources required to complete an audit which can be especially beneficial for companies with complex operations or those that conduct multiple audits each year. Additionally, these software programs can also help organizations identify areas of improvement in their operations, which can be addressed as part of the audit process.

Another benefit of operational audit software is that it can help organizations ensure compliance with regulations. Many of these software programs include built-in compliance checks, which can help organizations ensure that they are meeting all of the requirements set out by regulatory bodies. Additionally, these software programs can also help organizations track their compliance efforts over time, which can be useful for reporting purposes. This can be especially beneficial for companies that operate in highly regulated industries, such as healthcare or finance, as compliance is of paramount importance to these organizations.

Operational audit software can also be used to improve the overall quality of audits. Many of these software programs include advanced analytics and reporting capabilities, which can help organizations identify patterns and trends in their operations. Additionally, these software programs can also be used to create detailed, actionable reports that can be shared with stakeholders, including management and regulatory bodies.

Operational audit software can also be used for real-time monitoring and control of operations, which can help organizations to quickly identify and address issues as they arise. This can be especially beneficial for companies that operate in industries such as logistics pharma, chemicals, healthcare, where the ability to identify and address issues quickly can have a significant impact on the bottom line. Additionally, many of these software programs also offer the ability to automate corrective actions, which can help organizations to address issues more quickly and efficiently.

Operational audit software also allows organizations to store and organize data in a centralized location. This can include information on audit findings, compliance data, and other relevant information. This can make it easier for organizations to access and analyze data, and can also help to ensure that data is accurate and up-to-date. Additionally, this data can be easily shared with stakeholders, such as management or regulatory bodies, as needed.

SIMSA is one of the best operational audit softwares with unique features e.g:

1. Scheduling Recurring Audits at any frequency in one shot e.g. daily, weekly, monthly, quarterly
2. Gamification of audit performance scores by awarding Diamond, Gold, Silver, Bronze ratings to the sites
3. Conducting surprise audits
4. Providing the standards & guidelines for assessment to the auditors on the go
5. Off-line mode for conducting audits on mobile in case of poor or no data connectivity.

SIMSA can save up to 70% of time as compared to using spreadsheets or any other manual systems. It allows people to focus on the value added part of audits as all non-value added activities are taken over by the software.

In conclusion, operational audit software is an essential tool for organizations looking to improve their operations and ensure compliance with regulations. These software programs allow companies to automate their audit processes and streamline their operations, which can save time and money while also improving the overall quality of their audits. Additionally, these software programs can also help organizations ensure compliance with regulations, improve the overall quality of their audits, and monitor and control operations in real-time. By adopting operational audit software, organizations can improve their operations, ensure compliance with regulations, and reduce costs, which can have a significant impact on their bottom line.

Operational Audit Software is increasingly used by companies that have significant risk exposure to the operational failures. The purpose of the software is to standardize & streamline the audit process and at the same time save people time in managing end-to end audit workflow by automating the manual activities. There are many solutions available in the market, but if you ask the users, they will have a long list of expected features. However, the top 10 features, required by most of the users are:

1️⃣ 𝙎𝙘𝙝𝙚𝙙𝙪𝙡𝙞𝙣𝙜 𝙍𝙚𝙘𝙪𝙧𝙧𝙞𝙣𝙜 𝘼𝙪𝙙𝙞𝙩𝙨: Operational audits should be done at a regular frequency or cycle. What if you can schedule recurring audit at any frequency required e.g. daily, weekly, monthly etc., like scheduling recurring meetings in calendar?

2️⃣ 𝘼𝙡𝙡𝙤𝙬𝙨 𝙗𝙧𝙚𝙖𝙠𝙞𝙣𝙜 𝙩𝙝𝙚 𝙨𝙞𝙩𝙚 𝙞𝙣𝙩𝙤 𝘼𝙧𝙚𝙖𝙨: A site has multiple areas e.g. a warehouse site may have security, parking, utility, docks, storage, packing, office areas. Shouldn’t the checkpoints be specific to each area? Does your audit software allow that and ensure no area is missed out by the auditor?

3️⃣ 𝙎𝙚𝙦𝙪𝙚𝙣𝙘𝙞𝙣𝙜 𝙩𝙝𝙚 𝘼𝙧𝙚𝙖𝙨 𝙞𝙣 𝙖 𝙇𝙤𝙜𝙞𝙘𝙖𝙡 𝙊𝙧𝙙𝙚𝙧: Imagine the auditor moving back & forth in different areas as the check points may be listed randomly. With sequencing of areas, the check points will be presented to the auditors in a logical order, saving time and avoiding any confusion.

4️⃣ 𝘾𝙤𝙣𝙩𝙧𝙤𝙡 𝙤𝙣 𝘾𝙝𝙚𝙘𝙠𝙡𝙞𝙨𝙩 & 𝙫𝙚𝙧𝙨𝙞𝙤𝙣𝙨: If you follow any QMS, you will know the importance of standardization and control of documents. Does your audit software ensure that all are using the latest version of the checklist and standards?

5️⃣ 𝘾𝙤𝙣𝙙𝙪𝙘𝙩𝙞𝙣𝙜 𝘼𝙪𝙙𝙞𝙩 𝙞𝙣 𝙈𝙤𝙗𝙞𝙡𝙚, 𝙚𝙫𝙚𝙣 𝙞𝙣 𝙊𝙛𝙛𝙡𝙞𝙣𝙚 𝙈𝙤𝙙𝙚: Many sites like warehouses, depots, fulfillment centers are located in remote areas with poor data connectivity. Also, in the cold room there may not be good data connectivity. If you don’t have an offline mode, you cannot use mobile device to conduct audits. Does your audit software work even without data or wi-fi connectivity?

6️⃣ 𝘼𝙘𝙘𝙚𝙨𝙨 𝙩𝙤 𝙎𝙩𝙖𝙣𝙙𝙖𝙧𝙙𝙨 𝙤𝙣 𝙩𝙝𝙚 𝙜𝙤 𝙬𝙝𝙞𝙡𝙚 𝘾𝙤𝙣𝙙𝙪𝙘𝙩𝙞𝙣𝙜 𝘼𝙪𝙙𝙞𝙩: What if auditors can access the relevant standard for each check point as they are conducting the audit, without going thru the pain of checking soft or hard copies?

7️⃣ 𝘼𝙪𝙩𝙤𝙢𝙖𝙩𝙚𝙙 𝙍𝙚𝙥𝙤𝙧𝙩𝙞𝙣𝙜: In the age of social media, people don’t want to read manually written long reports. Does your software provide automated report that includes all details but yet to the point?

8️⃣ 𝙎𝙡𝙞𝙘𝙞𝙣𝙜 & 𝘿𝙞𝙘𝙞𝙣𝙜 𝙤𝙛 𝙋𝙚𝙧𝙛𝙤𝙧𝙢𝙖𝙣𝙘𝙚: Does your software allow you the slice & dice the performance by Areas, Categories, Sub-Categories, Risks or a combination of that, so that you know where the problem is?

9️⃣ 𝘼𝙨𝙨𝙞𝙜𝙣𝙢𝙚𝙣𝙩 & 𝙏𝙧𝙖𝙘𝙠𝙞𝙣𝙜 𝙤𝙛 𝘾𝙤𝙧𝙧𝙚𝙘𝙩𝙞𝙫𝙚 𝘼𝙘𝙩𝙞𝙤𝙣𝙨: What is the point of conducting audit if it doesn’t lead to timely corrective actions? Does your software allow assigning actions with timeline and then track, sends auto reminders for follow-ups?

🔟 𝙂𝙖𝙢𝙞𝙛𝙞𝙘𝙖𝙩𝙞𝙤𝙣: What if your audit software gives coins or badges based on the scores & actions taken? Wouldn’t that motivate people to go for higher standards & ratings?

SIMSA Operational Audit Software is the only platform that has all the above features. SIMSA can help you save up to 70% of the time in managing the entire workflow. Then why settle for less?