OpEx via Mgmt-Ctrl
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Operational Excellence (OpEx) is a term utilized for an overarching business strategy that aims to continually improve the performance of an organization. Optimal operational performance cannot be achieved without the consideration of effective and efficient business operations.
“Effectiveness is doing the right thing. Efficiency is doing the right thing right.” – Peter Drucker
Success in business requires an operational structure, consisting of work process and people who execute that work, that’s both efficient and effective. There is an important difference between the meaning of the words effective and efficient:
- Effective involves "producing a result that is wanted."
- Efficient involves "producing desired results without wasting materials, time, or energy."
A business process can be considered effective if it produces a result even if it utilizes some unnecessary resources to do so. However, when a business process is additionally considered to be efficient, not only does it produce the requisite result(s), but it also does so while utilizing the minimal resources that are necessary to obtain the requisite result(s). Profit = Sales Revenue - Operational Expense.
The Predictive Quality Management (PQM) solution provides an operational framework to establish and sustain effectively efficient business operations results through the management of operational ‘quality’.
With an understanding that ‘quality’ is intrinsic to achieving ‘effectively efficient’ business operations, there is also and understanding that a culture of ‘quality’ won’t just materialize automagically, and/or without a strategic approach.
A company, any company, only succeeds in achieving a state of operational excellence when it creates the capability (or capabilities) to properly establish and manage the work that is necessary to create and deliver ‘value’ from marketed products and/or services. The business must be ‘efficiently effective’ in operational execution to ensure the sustainable creation of results that matter to the business, inclusive of the requisite ‘bottom-line’ profit that is necessary for business success. The PQM ‘quality’ management framework provides an opportunity to better manage the cost of poor ‘quality’, estimated[1] [2] to be between 7.2% to 9.4% of company sales.
“All work is Process” – W. Edwards Deming
A business succeeds when the work it operationally executes creates results that matter to the business. It does not matter what stage a company is in, or what industry, or what products and/or services they deliver, every company has an opportunity to responsibly establish and maintain the mechanisms of control over the ‘quality’ of their business operations, to create results that matter. A strategic approach to the management of operational ‘quality’ will ensure sustained success in regard to the ongoing capability of the business to deliver effective and efficient results from its operational execution of planned work, in support achieving the objectives that are necessary to fulfill the mission of the organization.
A strategic plan for establishing and managing operational ‘quality’ will ensure the enabling business processes are well designed, defined, proven to work, and implemented to be consistently executed by skilled, trained, and competent people to provide the results that matter to the organization. Additionally, this requires a leadership team within the business that has responsibly developed those business processes for efficacy and efficiency and has management control over them. Nothing happens automagically.
Business processes must be developed (plan) and organizationally staffed (do) to be executed in a way that enables each functional group to satisfy the ‘quality’ objectives that they are accountable for. Business processes results must be verified (check) to identify emerging issues and organizational constraint such that the organization can manage (act) upon those things that would inhibit the results that are required for organizational success.
[1] Fuhr, T., Silverman, S., Telpis, V., & Makarova, E. (2017, February). Capturing The Value of Good Quality in Medical Devices. Retrieved from http://www.mckinsey.com/industries/pharmaceuticals-and-medical-products/our-insights/capturing-the-value-of-good-quality-in-medical-devices.
[2] “The business case for quality: A topic for the medical products CEO agenda,” Quest for Excellence: Driving a step change in medical products operations, 2014, McKinsey.com.
