Achieving Operational Excellence: Five Elements of Success in the ...

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The chemicals industry has been hit by a steady stream of difficult events, centered on a set of market-changing discontinuities. Remaining unease across global markets, ongoing price pressures caused by new competition and decreasing demand, changing regulations, and an emphasis on “green” supply chains continue to add volatility and uncertainty to the global chemicals sector. 2
After a period of sustained growth in the early part of the last decade (15% CAGR between 2002-2008), the $2.6 trillion chemicals industry is looking to recapture its lost momentum—and lost profits. Where to turn? Given the “new normal” economic climate, we believe a razor-sharp focus on operations will, perhaps more than ever before, help to separate the winners from the losers. Operationally excellent companies historically have demonstrated an ability to emerge from a downturn in a stronger position. These companies achieve superior capital efficiency, operating margins and growth through a laser focus on leading industry KPIs. Regardless of a company’s market position, winners consistently deliver results by getting the five big operational calls right: First, they have a deep understanding of their “competitive essence,” which they have rigorously aligned with their operations and structures. Second, they build organizations that out-structure their competition. Third, they have the capabilities, processes, and skills to out-execute competitors. Fourth, they find a unique blend of structural and executional changes to drive operational excellence. And finally, they define the right “change journey” that will lead them to operational excellence and consistently high performance. “Profitable growth in a competitive global market can only be achieved through operational excellence,” says Dr. Jürgen Hambrecht, chairman of the board for BASF. “Only a long-term view creates sustainable value.” BASF has sustained its growth through a global operational excellence program intended to generate €1 billion in additional earnings annually. But not all companies can demonstrate such a track record of operational excellence. Accenture research shows that 95 percent of senior executives across industries doubt that their companies have the right operating model to support their international strategy. As discontinuities grow in consequence and in frequency, managers run ever greater risks of making poor decisions. They can no longer afford to do so. Still picking up the pieces from the global financial crisis, most executives are already on a journey to change their company’s operational models, whether they recognize it or not. How they make the journey will have a significant bearing on their company’s eventual positioning. It is imperative, therefore, to select the appropriate change journey with care, and to embark on it with wholehearted commitment and full preparation. 2
Page 1: Achieving Operational Excellence: F
Page 5 and 6: Volatility is another disruptive fo
Page 8 and 9: The Five Hallmarks of Operational E
Page 10 and 11: Operational Excellence: Leadership
Page 12 and 13: Frequent Measures of Structural Exc
Page 14: 6 Areas for Improving Executional E
Page 17 and 18: Exhibit 5: A range of factors influ
Page 19 and 20: Will the global economic crisis rew

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