Episode C.002 Operational Excellence or Price

The company value proposition or value discipline is how it provides superior value to gain competitive advantage. It provides a framework that segments the market into three value disciplines

• operational excellence or price
• product leadership or quality
• customer intimate or service

Operational Excellence is the execution of the business strategy more consistently and reliably than the competition. Operational Excellence is evidenced by results. Given two companies with the same strategy, the Operationally Excellent company will have lower operational risk, lower operating costs, and increased revenues relative to its competitors, and creating value for customers and shareholders.

Philosophically leaders and employees champion simplicity over complexity. In practice this should see this exhibited around errors and mistakes. The decision makers are rewarded, on the basis the lesson is learned and applied, leading to continuous improvement of day to day practice and end result.

Action Steps (Plan-Brief-Execute-Debrief)

1. Establish a long term strategy focused on a common purpose. Example: we will become and maintain the lowest cost producer position in our market.
2. Brief - Communicate the plan (morning team meetings) to the execution team. Example: clearly mapped processes with visible metrics in place.
3. Execute - Execute the plan and focus on objectives. Example: first line supervision tracking progress/results and posted in the production area real-time.
4. Debrief - Measure the result of daily execution vs the plan, conduct a root cause analysis and adapt the objectives. Example: production meeting at the end of a run or cycle to compare critical measures against plan.

Potential Metrics
Production (Lowest Cost Producer)

• Scheduling
  
• Execution
  
• Waste