"Managing Operational Excellence: What World- Class Companies ...

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"Managing Operational Excellence: What World- Class Companies ...

"Managing OperationalExcellence: What World-Class Companies Look For"David J. McClaskeyPal’s Business Excellence Institute


Take Aways from this Session• Economics for Operational Excellence• 5 Observable Signs for OperationalExcellenceWhat Causes the Five ObservableSigns for Operational Excellence©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.2


Agenda• Economics of Operational Excellence• List Five Observable Signs of OperationalExcellence• Causes of the Five Observable Signs©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.2/16/103


Pal’s Sudden Service©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.4


The Economics of Execution• Create a high rate of return with relativelylittle capital investment• Adding new stores, technology, and servicesdoes little to add value if they are notexecuted properly• Customers usually distinguish by brand andnot the store©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.5


The Economics of Execution• High Rate of Return (Cost to Benefits)• Quick Rate of Return: Returns occur withinweeks or months• Low Risk: Small modifications of where youare• Affects the top line – customer count• Affects the bottom line – costs• Getting the customer to come back requiresboth great products and reliable execution©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.6


Delight the Customer• Key economic driver: Pal’srepeat business is 3 to 4 timesthe rate for the typical quickservice restaurant• The lifetime value of a Pal’scustomer is $25,000


Delight the CustomerRudy’s Country Store and BBQrestaurants in Austin, TX, (Owned andoperated by K&N Management) have 3times the sales and profits of other 23Rudy’s


In Your Opinion, What are the topobservable Signs of OperationalExcellence?1.2.3.4.5.©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.2/16/109


Observable Signs ofOperational Excellence1. Always busy doing productive tasks2. Supervisor does not have to issue manyorders3. Service flow is fast but not hectic (Not a lot ofrunning around; no wasted motions)4. Hard to find waste5. All employees focused on the customer andtheir experience©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.2/16/1010


Observable Signs ofOperational Excellence1. Always busy doing productive tasks• People never stop• Always doing productive work• Doing their work first; then help others• Don’t hear: “Not My Job”• People seem happy and engaged©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.2/16/1011


Observable Signs ofOperational Excellence2. Supervisor does not have to issue manyorders• Supervisor observes work but rarely has tointervene• Jobs are designed for each person to do theirjob right• Persons are trained to do the job 100% right;100% of the time; at 100% volume• Supervisors coach but do not have to tell aperson how to do the job©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.2/16/1012


Observable Signs ofOperational Excellence3. Service flow is fast but not hectic• Not a lot of running around (busier it gets; the calmer itgets)• No wasted motions• Little in-process inventory (not piled up at a station)• The service flow functions well at all volumes• Processes run within their capacity (don’t promise 30 min.delivery when will take 60 min.)• Not a lot of idle chatter• People intensely focused on their jobs• Standardized processes that are always followed©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.2/16/1013


Observable Signs ofOperational Excellence4. Hard to find waste• No rework• Defective products are not passed on• No excess inventory• Very limited customer complaints• People are not under-utilized (fully use theirtalents)• Don’t waste supervisors’ time with things thatshould not be happening• People on time and ready to work©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.2/16/1014


Observable Signs ofOperational Excellence5. All employees focused on the customer andtheir experience• Proactively anticipate customer needs• Sincerely apologize to customers when order wasnot right• Employees can see and observe customers andpick up on non-verbal signals• Employees care if the customer has a greatexperience and do whatever they can to make it agreat experience©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.2/16/1015


Observable Signs ofOperational Excellence1. Always busy doing productive tasks2. Supervisor does not have to issue manyorders3. Service flow is fast but not hectic (Not a lot ofrunning around; no wasted motions)4. Hard to find waste5. All employees focused on the customer andtheir experience©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.2/16/1016


Observable Signs of Operational Excellenceand Possible Causes1. Always busydoingproductivetasks•Look for ways to help theirfellow employee•Set high expectations andculture of full day’s work forfull day’s pay•Positive peer reinforcement•Not overstaffed©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.2/16/1017


Observable Signs of Operational Excellenceand Possible Causes2. Supervisordoes nothave toissue manyorders•Well trained staff•Well motivated staff•Good hiring process•Turnover much better thanaverage©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.2/16/1018


Observable Signs of Operational Excellenceand Possible Causes3. Service flowis fast butnot hectic(Not a lot ofrunning around;no wastedmotions;functions well atall volumelevels)•Well designed work processes thatare run within their capacity•Well designed jobs that require aperson’s full talents•Fully staffed•Standardized processes that arealways followed•System and environment staysorganized and well functioning•Good work process support(stocking, preventive maintenance,etc.)©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.2/16/1019


Observable Signs of Operational Excellenceand Possible Causes4. Hard tofindwaste(no rework;no excessinventory;very limitedcustomercomplaints)•Jobs designed with “Self Control” andaccountability•Don’t pass on defective work•Know external and internal customerrequirements•Well designed processes that are runwithin their capability•Standardized processes that are alwaysfollowed•Well trained staff©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.2/16/1020


Observable Signs of Operational Excellenceand Possible Causes5. Allemployeesfocused onthecustomerand theirexperience(positive peoplewith theirhead in thegame)•Hire for attitude•Culture of putting the customersfirst•Recover by handling complaintswell•Understand repeat business iscritical to business success andtheir jobs•Positive reinforcement forcustomer satisfaction©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.2/16/1021


Like to see all these concepts inaction?Attend one of our Pal’s BEI classes.They all include a store tour!Pal’s Business Excellence Institute• www.PalsBEI.com• 423-276-4901 (Clay Rolston)• Clay@palsweb.com• DavidQM@palsweb.com©2010 by Pal’s Business ExcellenceInstitute. All Rights Reserved.22

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