Operational Excellence

John Mitchell has held a wide range of executive, managerial and technical positions over the course of his 40 year professional career. He has been a strong, visible advocate for the development and implementation of business, technical, and operating strategies for Operational Excellence, Physical Asset Management, Reliability and Maintenance improvement. He has delivered numerous presentations and workshops throughout the world stressing the necessity, financial and business benefits of optimizing organizational culture and work processes. In semi retirement he provides mentoring and coaching for organizations committed to improving the effectiveness and productivity of their operations.

• Biography of John S. Mitchell xvPreface Journey to Operational Excellence xviiAcknowledgments xxiIntroduction 11 Operational Excellence—The Imperative 7Definition of Operational Excellence 7Definitions from Leading Global Enterprises 8A Simpler Definition for Operational Excellence 9Operational Excellence Embraces Everyone in an Enterprise 9Operational Excellence Improves Efficiency 10Efficiency and Effectiveness 10A Familiar Program 11Description 12The Journey 13Roadmap to Operational Excellence 14Reliability 14Risk 15Changes in the Business/Mission Environment 15Conventional Operations Management 16Maintenance Within an Operating Enterprise 17Managing Improvement Initiatives 17The Solution 19Leadership 20Working Level Improvement Action Teams 20Operational Excellence Improvement Initiatives 21Sustainability 22Effectiveness and Value Throughout the Enterprise 22The Operational Excellence Initiative 23Operating Performance Excellence 24Asset Performance Excellence 24Success—Greater Than the Sum of the Parts 25Essentials for Success 25Application 26What You Should Take Away 262 Application of Operational Excellence 29Process Characteristics 29Operating/Market Environment 31Enterprise Strategy 32Strategic and Tactical Endeavors 33Growth Strategy 34Effectiveness 34Changes in the Operating Environment 34Value 35Journey into the Future 36What You Should Take Away 393 Foundation Principles 41Operational Excellence—A Program Equivalent to Safety 41Use of Proven Practices 42Scope of Operational Excellence 43Financial Considerations 44Driven by Business/Mission Results 45Foundation Principles 47Principles of Operational Excellence 47Six D’s of Operational Excellence 47Eight Elements of the Operational Excellence Program 48Results 49Leadership 49Requirements 50Program Definition 50Supporting Practices and Procedures 50Working Culture 51Information Management 51Follow-Up 52Implementing the Operational Excellence Program 52Benefits of Operational Excellence 52Improved SHE/EHS Performance 52Reduced Risk 53Improved Production/Mission Operational Effectiveness 53Improved Reliability 54Greater Predictability—Reduced Variation 54Improved Capital Effectiveness 54What You Should Take Away 544 The Operational Excellence Program—Overview 57Initiation 57The Value Principle 59Use of Proven Practices Processes and Technology 61Operational Excellence Program 63Improvement Processes 64The Operational Excellence DIPICI Process 65Implementing Sequence 66Program Elements 67Essentials for Success 67Results 67Leadership 68Requirements 68Program Definition 68Practices and Procedures 69Working Culture 72Information Management 74Follow-Up 74Implementation 75Where and How to Begin? 77Considerations for Commencing with a Pilot 79Third Party Facilitation Assistance 79What You Should Take Away 805 Business and Financial Elements 81Connection to Business Results 81Performance Measures 82The Opportunity 83Profit Center Mentality 83Justifying Improvements 84Value Prioritization 85Value Imperative for Operational Excellence 85Definition 85Financial Orientation 86The Financial Statement 86Selecting Financial Measures of Performance 87Accurate Lifetime Cost Tracking 88The Business Value Model 89Value Within an Operating Environment 92Value Within Operations and Maintenance 93Operating Effectiveness 93Overall Operational Effectiveness 93Real Compared to Normalized Values 95Leveraging Mission/Conversion Effectiveness 95What You Should Take Away 976 The Essential Evolution to Real-Time Business Operational Excellence 99Background 100Necessity for Real-Time Operational Excellence 101Integrated Business and Operations System 102Real-Time Business Focus 102Developing Real-Time Business-Driven Operational Excellence 105Segmenting a Complex Concept 107What You Should Take Away 1117 Leadership Vision Strategy 113Executive Champion 113Visibly Engaged 114Communicate Compelling Vision 115Define Overall Enterprise Business Strategy 116Translate Business/Mission Objectives into Program Requirements 116Select Appoint and Empower Operational Leaders 116Continuing Tasks 116Steering Team 117General Guidelines 118Appoint Operational Excellence Program Leader/Champion 119Define Program Charter 119Facilitate Teamwork 121Empowered Decisions 121Leadership Succession 122Program Leader/Champion 123Summarized Duties and Responsibilities 123Program Leadership Team 124What You Should Take Away 1258 Safety and Human Performance Excellence 127Safety Performance Excellence 127Risk Management 127Human Performance Excellence 130Automation Technologies 131Improvement Culture 132What You Should Take Away 1339 Define the Program and Program Objectives 135Executive Leadership 136Operating Organization 136Steering Team 136Program Leader/Champion 139Program Plan 139Program Objectives 140Mission Statement 140Charter 141Principles 142Values 142Program Strategy 143Organization: Management Control and Administrative Systems 144Organizational Objectives 146Business and Risk Models 147Formulate Program Operating Plan 147Appoint Working-Level Leaders—Champions 150Program Leadership Team 151Add/Optimize Supporting Processes 153Information Structure and System 153Activity-Based Management/Accounting 154Roll Out Operational Excellence Program 155Maintain Motivation and Enthusiasm 155Clear Acknowledgement that Sustainable Progress Requires Time 155What You Should Take Away 15610 Optimize the Organization 157Organizational Requirements for Successful Operational Excellence 158Inspiring People 158Consistency of Message and Action 159Necessity for Improvement Requirements and Overall Objectives 159Empowerment 160Establish the Basis for Organizational Improvement 161Initiating Organizational Improvement 163Improvement Management Process 163Identify Potential Structural and Organizational Improvements 164Move the Organization from Management Control to Team Partnership 164Work Culture 165Achieving Individual and Organizational Success 165Improving Behaviors 166Skills Management and Training 166Information as a Basis for Training 167Personnel Reductions 168Necessity for Effective Communications 169Communications Requirements 170Communication Groups 171Messaging 174Communications Program 175Communications Team 175Methods of Communication 176Address all Anticipated Concerns 177What You Should Take Away 17711 Conduct Initial Training Workshops 179Establish Team Training Facilitation and Review Process 180Technical Training 180Workshop Description 181Workshop Process 181Review and Refine Program Basis 184What You Should Take Away 18412 Identify and Value Prioritize Opportunities for Improvement 185Validate Scope of Improvements 185Opportunity Identification Process 187Primary Detractors from Business/Mission Effectiveness 188Performance Objectives 188Improvement Methods 190Step-Change Improvement 190Continuous Improvement 191Identifying Specific Potential Improvements 191Quantify and Prioritize Opportunities—In Business Terms 193Value Prioritization 194Necessity for Complete Accurate Data 194Identify Below-Average Performance and Performers 195History 195Categories of Performance 196Safety Health Environment 196Conformance to Business/Mission Objectives 196Multiple Objectives 197Methods for Identifying Opportunities 197Pareto Analysis 197Risk 201Risk Analysis 203Failure Modes and Effects Analysis 205Financial Normalization 207Analyze to Determine Highest Potential Value Opportunities 207Identify Value Potential Probability of Success 208Valuation Challenges 209Final Stage 209Construct Priority List for Improvement 210Expand Leadership Team 210What You Should Take Away 21113 Process Reliability Techniques Help Make More Money 213Introduction 213Pareto Distribution 214Cause of Deficiencies 215Traditional Weibull Plots 216Process Weibull Plot 216Waste and the Hidden Factory 218Production Weibull Analysis 219World-Class Performance 2194th Quartile Performance 221Weibull Probit Analysis 223First Compared to Fourth Quartile Performance 224What You Should Take Away 226References 22714 Plan Opportunities for Improvement 229Appoint Improvement Action Teams 230Responsibilities 230Refine Preliminary Improvement Plans 232Refine Improvement Opportunities 233Obtain Required Information 233Validate Value Delivered: Contribution to Enterprise Business/Mission Objectives 234Confirm Priority to Assure Greatest Return 235Select Set of Improvement Opportunities for Detailed Plan Development 235Prioritize Actions for Quick Results 236Under Promise Over Perform 236Compensate for Inadequate or Incomplete Information 236Develop Detailed Improvement Action Plans for Highest ValueImprovements 237Define Starting Point 237Identify Requirements for Success 237Detail Action Steps 238Define Investment and Resources 239Estimate Probability of Success: Potential Risk and Barriers 239Identify Responsibility 240Validate Contribution of Planned Results—Benefit/Cost—to Program and Enterprise Business/Mission Objectives 240Formulate Transition Plan 240Develop Continuous Improvement and Sustaining Plans 241Consider Pilot Implementation 242Finalize and Submit Improvement Action Plans for Approval 243Following Approval 244What You Should Take Away 24515 Measures of Performance—Metrics and KPIs 247Types of Metrics 248Activity Metrics 249Results Metrics 249Leading and Lagging Metrics 250Establishing Objectives 250Benchmarks 251Use of Metrics 252Requirements 253Characteristics 255Definitions 256Establish Magnitude of Value/Opportunity 257Hierarchy of Operational Excellence Metrics 259Operating Effectiveness 259Lost Opportunity 262Quality 262Other Metrics 262Selection of Metrics 263Applicability 263Best Measures 263Concentrate on Results and Success 265Key Performance Indicators 265Graphical Displays 266Benefits of Metrics 267What You Should Take Away 26816 Implement—Improvement Action Plans 269Refine the Organization 270Deploy Resources 272Purchase Capital Equipment 272Conduct Training 272Deploy Practices and Technology 273Implement Improvement Action Plans 274Establish Internal Oversight and Monitoring 275Drive the Improvement Process 276Overcome Barriers 276Communicate Results and Successes 277What You Should Take Away 27717 Performance Assessments 279Overall Description 280Assessment Methods 280Assessment Process 281Assessment Preparation 282Identify Operating/Functional Unit and Requirements 282Identify the Specific Program Program Element and Procedure to be Assessed 282Identify Stakeholders 282Select a Qualified Assessment Team and Team Leader 282Site Appoints Host and Establishes Timing Commencement and Completion 282Strategically Plan the Assessment 283Perform the Assessment 285Alignment Meeting 286Assessment Procedure 286Assessment Template 288Background 288Template Organization 289Evaluating Results 291Necessity for Additional Assessment 291Conclusion Summary Recommendations and Site Wrap Up 292Prepare Formal Assessment Report 292Executive Summary: Key Findings and Recommendations 292Introduction and Objectives 293Conclusions and Recommendations 293Narrative 293Appendices 293Report Submission 294Actions Required from Assessed Operating Unit 294Leadership 294Formal and Informal Employee Satisfaction Surveys 294What You Should Take Away 29518 Check—Measure and Manage Results 297Begin with Metrics 298Conduct Assessments and Surveys 298Formal Performance Assessments 299Confirm Results and Contribution to Enterprise Value and Strategy 300Continue Checking Until Confident that Improvement is Fully Sustained 301What You Should Take Away 30119 Improve—Institutionalize and Sustain Gains 303Improve and Sustain 303Continuous Improvement 304Continue Follow-Up: Adjust/Refine Improve and Extend ImprovementAction Plans 304Expand and Increase Ownership Responsibility Accountability andCommitment 304Continue Training 305Achieving Sustainability 305Institutionalize Success 306Communicate and Publicize Progress and Results 306Overcome Resistance 307Results-Based Compensation 308Some Lessons Learned 308Final Comment 310What You Should Take Away 31020 Conclusion—Now It Is Up To You! 311Index 313