One Pillar of Operational Excellence | Operational Excellence Quick Hits

Speaker 1: (00:05)
In this session on the House of Operational Excellence, we’re going to talk about the first pillar: creating a stable and capable delivery system. In the previous videos we spoke about customer focus and leadership, the foundation piece of operational excellence, and also root cause analysis and problem solving as one of the foundation pieces of operational excellence. This session, we’ll talk about a stable and capable delivery system and the elements to achieve that. So what is stable? What is capable? So if you’re not familiar with stability and capability of a system, let’s talk about what that is. So what is stable and what is capable? If I have any system or any process, and I can measure that process or measure that system, I can determine if that system is stable. And I can also determine if that system is capable. So if we have any system, in this case, we’re looking at sales order due date performance, and said, “Okay, what’s the sales order due date performance look like?” So if I take number of weeks and I plot that data on a chart, it might look something like this.

Speaker 1: (01:20)
So we see we have variation in the data, but if I can take that data and the first thing I can do is take the average of that data. So if I look at their due date performance, and I take the average, that tells me the normal tendency of the system performance. I can also take and calculate three standard deviations above and below the average to get the upper and lower control limits. So as long as nothing changes, then I can predict with high degree of accuracy, how the system is going to perform going into the future. So in this case, the company’s performance is going to range somewhere between 20% and about 58% in the future if they don’t change any way that they operate.

Speaker 1: (02:10)
So this system would be considered stable because I can predict with high degree of accuracy, what the outcome is going to be. The problem is it’s not capable because the customers aren’t looking for this type of delivery performance, they’re looking for a much higher delivery performance. So in order to get the system capable, the first thing I need to do is look at what is the customer requirements. In this case, the customer requirements are probably above 90%, depending on your market. Might be even higher than that. Maybe 95% or even higher.

Speaker 1: (02:43)
So in order to make this system capable, I need to reduce the variation in the process. Then I need to shift that average up, and I need to be operating within those limits between 90 and 100%. Now the system is stable and it’s capable. The first step is always to achieve stability. Second step is to achieve capability. So if I go back to the House of Operational Excellence, then this first pillar is to achieve that stable and capable delivery system. In the next session, we’ll talk about what is synchronous flow and how to achieve synchronous flow.