What is Operational Excellence in Manufacturing?

Written by: Emily Himes

Read Time: 3 min

Operational Excellence is a process that aligns people, processes, and capabilities to achieve steady growth and improvement. In short, implementing an Operational Excellence program streamlines organizations to maximize efficiency, allowing them to cut costs, improve product quality, and ensure consistency and cohesion in the manufacturing process. 

Three Components of Operational Excellence 

Process efficiency

Efficiency is one of the most significant aspects of Operational Excellence with core tenets being a reduction of errors and seamless processes. The ability to deliver value to the customer in a timely and organized manner is integral to operations. 

Creating customer value 

Gaining insights from data is a major challenge companies struggle with in the face of digital transformation. When organizations are able to utilize their data to successfully gain insights required to identify, prioritize, and concentrate resources on the most important production constraints, they unlock the ability to seamlessly provide valuable service to the customer. 

Growing the business 

Making a conscientious effort to achieve Operational Excellence is a strong growth strategy for manufacturers. Implementing best practices, such as investing in efficient operations and digital transformation, sets a high standard for team members and customers alike.   

Industry 4.0 and Operational Excellence in Manufacturing

Industry 4.0 is the application of IoT, automation and robotics, predictive maintenance, simulation, and additive manufacturing to transform the way manufacturing companies operate. The fourth industrial revolution is driven by a need for Operational Excellence – to boost efficiency, better handle uncertainty, improve quality, reduce downtime, and transform existing business models. 

Challenges Associated with Achieving Operational Excellence in Manufacturing

Operations are data-rich but insight poor 

Most companies struggle to utilize their data in ways that allow them to successfully unlock the insights required to identify, prioritize, and focus resources on acute production constraints. However, with a standardized performance management approach leveraging the Industrial Internet of Things (IIoT), manufacturers can automatically collect and analyze the takt and cycle times to identify evolving bottlenecks across their work centers, lines, and factories.

Disconnected operations between frontline workers and management 

While companies often collect lots of data, they lack the insight to know what it means – which problem to solve first, and subsequently, how to provide the most impactful solution. If there is an incomplete understanding of the scenarios related to the identified loss area, the chosen improvement might not deliver the desired results. When management and manufacturing teams don’t work in lockstep, a lack of visibility and cooperation can lead to equipment issues falling through the cracks – ultimately increasing downtime. Frontline workers and management must align to proactively analyze the data and boost productivity. 

High number of variables impacting production performance 

It is very difficult to uncover operational tendencies, as well as create corrective actions, without comprehensive, accurate insights. Outdated manufacturing systems lack coordination between management and manufacturing teams, opening the door for various disconnects and too many moving parts. These analog processes are largely incapable of handling more intricate issues like downtime, meaning systematic upgrades are needed to face the increased number of variables affecting production performance today. 

Difficulty with tracking and tracing corrective actions 

Lastly, it is difficult to follow the status of those corrective actions and measure their corresponding impact, whether it be functional or financial. 

How to Achieve Operational Excellence in Manufacturing 

The most advanced way to achieve Operational Excellence is to approach it alongside digital performance management (DPM), which is a systematic, closed-loop problem-solving approach empowered by four digital capabilities: prioritization, analysis, improvement, and validation. This allows manufacturers to identify, prioritize, analyze, and validate the absolute top opportunities for financial improvement more easily. By collecting data and delivering it to powerful and secure on-premise OR cloud-based platforms, a DPM solution is able to increase production efficiency by at least 5-20%.

Identify High Impact Opportunities with PTC’s DPM Solution

Learn how a Digital Performance Management (DPM) approach to Operational Excellence can normalize production data, identify bottlenecks, and more. Learn More
Tags: Industrial Internet of Things Thingworx Increase Manufacturing Productivity Increase Asset Efficiency Industry 4.0

About the Author

Emily Himes Emily is a Content Marketing Specialist on PTC’s Commercial Marketing team based in Boston, MA. Her writing supports a variety of PTC’s product and service offerings.