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How to Measure Operational Excellence

By Brian Wilkins - October 12, 2017

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Many organizations have started to recognize the benefits of achieving operational excellence, which is the process of  building a sustainable competitive advantage through operations management. While leaders understand that operational excellence can have a positive effect on their organizations, there's still some confusion around measuring the success of their operational excellence programs.

How can they be sure that the program is worth the time and effort it takes to implement it, not to mention the trouble of getting everyone on board? Fortunately, your operational excellence program's success is measurable.  Here are a few points to consider as you determine your own program's progress. 

SEE ALSO: How to Jump Start Your Operational Excellence Today

External Benchmarks

One of the most imporant measurements of your operational excellence program's success is the external benchmarks. Is your organization outperforming its peers in specific key operational metrics? Is it winning or retaining business because of the internal changes made to implement operational excellence?  

That being said, when you compare your business to your competitors, it's important to recognize that the bar is constantly moving. Your competitors aren't frozen in time— their businesses are growing and changing, just as yours is. Rather than comparing your business to theirs, determine whether your not you're meeting or exceeding their current rate of growth. Can you sustain—or improve— this pace, enabling you to maintain a competitive advantage for the long-term?

Leading Internal Indicators

The best way to determine if your pace is sufficient to build or sustain that competitive edge is through careful assessment of your leading internal indicators. These are the questions that your organization should be able to answer with ease if it's truly serious about operational excellence: 

  • What's the addressable gap to perfect performance and the financial value of closing that gap? 
  • How many simultaneous distinct operational initiatives is the organization undertaking? What's the estimated value of these initiatives, and what's the status of each individual initiative? 
  • How much value has been captured over the last 12 months from driving operational improvements? 
  • What's the operational maturity profile of the organization when measured against a set of well-defined, industry-standard best practices? 

These questions will enable you to get a better grasp on your organization's commitment to operational excellence as a whole as well as their overall success in OpEx implementation. 

SEE ALSO: 3 Benefits of an Operational Excellence Platform

Goals to Measure Against

In order to measure operational excellence effectively, your organization must be fully committed to relevant and achievable goals against which your success can be measured. 

Your real-world results must be correlated with your goal setting, or you won't have an accurate picture of your actual achievements. If, for instance, your goal-setting platform shows that you've achieved 100% of the goals set, but the real-world numbers don't reflect that kind of growth, it's likely that the goals set weren't sufficiently ambitious.

Conversely, if the goal-setting platform exhibits low numbers, but your real-world growth is significant, the goals that were set are most likely too aspirational. 

It's important to constantly assess your organizational goals to ensure that they're challenging, but no so challenging that they're impossible to attain. 

If you're not sure how to create goals that will effectively measure yur organization's success in implementing operational excellence, or even how to start your organization on the path toward operational excellence, EON can help. 

If you want a deeper dive into the topic of Operational Excellence, and moreso, how to advance it in your business, download our free ebook.

how to advance operational excellence in your business get the ebook

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