Operational Excellence: Journey to Creating Sustainable Value

P rovides the foundation and tools that are essential for an enterprise to bring Operational Excellence into their organizational culture; gain maximum results, benefits and value Operational Excellence is increasingly being embraced by organizations committed to achieving best results in their field and to gain and sustain safety and operational performance. It includes organizational leadership, structure and working culture imperatives. All are integrated with the application of vital principles, systems, and tools to gain sustainable improvement as demonstrated by key performance metrics. The book begins with a clear definition of Operational Excellence, principles and objectives. From there it details the process and procedures to develop, implement, refine and sustain an Operational Excellence program that successfully gains maximum results and benefits. Operational Excellence addresses and provides valuable information to people within enterprises at various levels of maturity in Operational Excellence. Included are those with programs already in place seeking to refine their knowledge to people who have only heard the term and want to learn how it might be applied. For both groups, and all in between, Operational Excellence provides essential organizing and implementing information to gain maximum value and success in today’s intense operating environment. Based on approximately twenty years worldwide experience, the book builds from the essential nature of safety, health, environmental excellence to gain greatest operations excellence and value. Operational Excellence : •     Directs how a company can achieve greatly improved operating performance, results and value •    Defines detailed processes and procedures that utilize familiar, mandatory requirements for safety, health and environmental excellence to achieve operations performance excellence •    Details program development from concept to sustainability satisfying knowledge requirements of all levels in the organization •    Develops methodology for defining program objectives; developing improvement strategy; identifying and prioritizing improvement opportunities; implementing improvement plans; and monitoring, refining and sustaining results This book provides a clear roadmap and detailed guidance to gain Operational Excellence. It covers the areas in which operating enterprises must achieve highest performance to gain maximum efficiency, effectiveness, value and results. Operational Excellence describes how the familiar imperatives of safety, health and environmental performance translate into essential organizing and implementing details that will take an operating enterprise to the highest levels of, efficiency, effectiveness and profitability. All greater than previously possible with function specific initiatives and essential for success in the intense operating environment that exists today and will exist into the future. John Mitchell has held a wide range of executive, managerial and technical positions over the course of his 40 year professional career. He has been a strong, visible advocate for the development and implementation of business, technical, and operating strategies for Operational Excellence, Physical Asset Management, Reliability and Maintenance improvement. He has delivered numerous presentations and workshops throughout the world stressing the necessity, financial and business benefits of optimizing organizational culture and work processes. In semi retirement he provides mentoring and coaching for organizations committed to improving the effectiveness and productivity of their operations.  

Acknowledgement 31 Preface: Journey to Operational Excellence 32 Evolution of Operational Excellence 32 Growing awareness of Operational Excellence 36 Introduction 39 Chapter 1 Operational Excellence—The Imperative 46 Definition of Operational Excellence 46 Operational Excellence embraces everyone in an enterprise 49 Operational Excellence improves efficiency 50 Efficiency and Effectiveness 51 A familiar program 52 Description 53 The journey 55 Reliability 56 Risk 57 Changes in the business/mission environment 57 Conventional operations management 58 Maintenance within an operating enterprise 60 Managing improvement initiatives 61 The solution 64 Effectiveness and value throughout the enterprise 68 The Operational Excellence initiative 69 Success — greater than the sum of the parts 72 Application 73 What You Should Take Away 74 Chapter 2 Application of Operational Excellence 76 Process characteristics 76 Operating / Market environment 79 Enterprise strategy 80 Changes in the operating environment 84 Value 85 Journey into the future 87 What you should take away 90 Chapter 3 Foundation Principles 92 Operational Excellence—a program equivalent to safety 92 Scope of Operational Excellence 94 Financial Considerations 96 Driven by Business/Mission Results 98 Foundation Principles 100 Eight elements of the Operational Excellence program 102 Implementing the Operational Excellence program 108 Benefits of Operational Excellence 109 What You Should Take Away 111 Chapter 4 The Operational Excellence Program—Overview 113 Initiation 113 The value principle 115 Use of proven practices, processes and technology 119 Operational Excellence program 121 Improvement processes 122 The Operational Excellence DIPICI process 124 Program elements 126 Essentials for success 126 Implementation 139 Where and how to begin? 141 What you should take away 145 Chapter 5 Business and Financial Elements 148 Connection to business results 148 The opportunity 150 Profit Center Mentality 151 Value imperative for Operational Excellence 155 The financial statement 157 Selecting financial measures of performance 158 Accurate lifetime cost tracking 160 The Business Value Model 161 Operating effectiveness 166 Leveraging mission/conversion effectiveness 170 What you should take away 172 Chapter 6 The Essential Evolution  to Real–Time Business Operational Excellence 174 Background 175 Necessity for real–time Operational Excellence 177 Integrated business and operations system 179 Developing real time business–driven Operational Excellence 183 What you should take away 190 Chapter 7 Leadership, Vision, Strategy 193 Executive Champion 193 Steering team 199 Leadership succession 205 Program Leader/Champion 206 Program Leadership Team 209 What you should take away 210 Chapter 8 Safety and Human Performance Excellence 212 Safety Performance Excellence 212 Human Performance Excellence 217 What you should take away 220 Chapter 9 Define the Program and Program Objectives 222 Executive leadership 223 Operating organization 224 Program plan 227 Formulate program operating plan 238 Appoint working level leaders—champions 243 Add/optimize supporting processes 247 Roll out Operational Excellence program 250 Maintain motivation and enthusiasm 251 What you should take away 252 Chapter 10 Optimize the Organization 253 Organizational requirements for successful Operational Excellence 254 Initiating organizational improvement 263 Skills management and training 268 Personnel reductions 271 Necessity for effective communications 273 What you should take away 285 Chapter 11 Conduct Initial Training Workshops 287 Establish team training, facilitation, and review process 288 Technical training 289 Workshop description 289 Review and refine program basis 295 What you should take away 295 Chapter 12 Identify and Value Prioritize Opportunities for Improvement 297 Validate scope of improvements 297 Opportunity identification process 299 Improvement methods 302 Identifying specific potential improvements 305 Quantify and prioritize opportunities — in business terms 308 Categories of performance 312 Methods for identifying opportunities 314 Risk 317 Financial normalization 325 Analyze to determine highest potential value opportunities 326 Final stage 329 Expand Leadership Team 330 What you should take away 332 Chapter 13 Process Reliability Techniques Help Make More Money 334 Introduction 334 Pareto distribution 335 Cause of deficiencies 336 Traditional Weibull plots 338 Process Weibull plot 339 Production Weibull analysis 342 Things you should take away 348 Chapter 14 Plan Opportunities for Improvement 350 Appoint Improvement Action Teams 351 Refine preliminary improvement plans 353 Select set of improvement opportunities for detailed plan development 358 Develop detailed improvement action plans for highest value improvements 361 Consider pilot implementation 370 Finalize and submit improvement action plans for approval 372 Following approval 373 What you should take away 374 Chapter 15 Measures of Performance—Metrics and KPI’s 376 Types of metrics 378 Establishing objectives 381 Use of metrics 383 Hierarchy of Operational Excellence metrics 393 Selection of metrics 399 Key Performance Indicators 402 Graphical displays 403 Benefits of metrics 405 What you should take away 405 Chapter 16 Implement—Improvement Action Plans 408 Refine the Organization 409 Deploy resources 410 Deploy practices and technology 413 Implement improvement action plans 414 Establish internal oversight and monitoring 416 Drive the improvement process 417 Overcome barriers 418 Communicate results and successes 419 What you should take away 419 Chapter 17 Performance Assessments 421 Overall description 422 Assessment methods 423 Assessment process 423 Assessment preparation 425 Perform the Assessment 429 Assessment Template 433 Conclusion, summary, recommendations and site wrap up 439 Prepare formal assessment report 440 Report submission 443 Actions required from assessed operating unit 443 Formal and informal employee satisfaction surveys 443 What you should take away 445 Chapter 18 Check—Measure and Manage Results 448 Begin with metrics 448 Conduct assessments and surveys 449 Confirm results and contribution to enterprise value and strategy 452 Continue checking until confident that improvement is fully sustained 453 What you should take away 453 Chapter 19 Improve—Institutionalize and Sustain Gains 455 Improve and sustain 455 Continuous improvement 456 Achieving sustainability 458 Some lessons learned 463 Final comment 464 What you should take away 465 Conclusion—now it is up to you! 467

John Mitchell has held a wide range of executive, managerial and technical positions over the course of his 40 year professional career. He has been a strong, visible advocate for the development and implementation of business, technical, and operating strategies for Operational Excellence, Physical Asset Management, Reliability and Maintenance improvement. He has delivered numerous presentations and workshops throughout the world stressing the necessity, financial and business benefits of optimizing organizational culture and work processes. In semi retirement he provides mentoring and coaching for organizations committed to improving the effectiveness and productivity of their operations.