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Practical guide · Lean leadership and employee engagement

What is operational excellence? Meaning, principles and how to start

Short answer

Operational excellence is a way of running a business where every person improves the work every day, so the plant delivers safety, quality, delivery and cost results reliably. It is not a single tool or a program with an end date. It rests on a few principles, such as respect for people, quality at the source, flow and standard work, and on leaders who go to the work and ask questions.

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What operational excellence means

Operational excellence is a way of running a business where every person improves the work every day, so the plant delivers safety, quality, delivery and cost results reliably. Excellence here does not mean a perfect score. It means the results hold from one week to the next because the way of working is steady, visible and always being improved.

The meaning comes down to three parts. People: everyone, from operator to plant manager, is expected to spot problems and help fix them. Process: the work is done to a standard, so a problem shows up against a known normal. Leadership: managers spend time where the work happens, ask questions and remove obstacles instead of only handing down targets. If one of the three is missing, the other two stop working.

Our operational excellence in manufacturing page covers the same idea for plants, and the operational excellence assessment is a free way to see where your site stands today.

How it differs from lean, Six Sigma and continuous improvement

The four terms overlap, and people use them loosely. The short version is that operational excellence is the whole way of running the business, and the other three are things it uses.

Operational excellence compared with related terms
TermWhat it isMain focusHow it relates
Operational excellenceA management system and cultureReliable results in safety, quality, delivery and cost, with everyone improvingThe wider whole. It uses the three below.
LeanA set of principles and toolsRemoving waste and improving flow of value to the customerThe main source of the tools: 5S, standard work, pull, visual management
Six SigmaA data-driven method (DMAIC)Cutting variation and defects in a processUsed when a problem needs statistics to solve
Continuous improvementA habit of small, steady changesMaking things a little better, again and againThe daily activity that keeps operational excellence moving

For more on how lean and Six Sigma split the work, see lean vs Six Sigma.

The principles behind operational excellence

Most models of operational excellence share the same ten ideas, listed here in the order of the Shingo guiding principles. Our blog post on the ten key principles of operational excellence explains each one in depth.

  • Respect every individual.
  • Lead with humility.
  • Seek perfection, which means always looking for the next improvement.
  • Embrace scientific thinking: form an idea, test it, write down what you learned.
  • Focus on process, because most problems come from how the work is set up, not from people.
  • Assure quality at the source, so a defect is stopped where it starts.
  • Improve flow and pull, so work moves without waiting and is made only when it is needed.
  • Think systematically, so one team's fix does not cause a problem for another.
  • Create consistency of purpose, so everyone is aiming at the same goals.
  • Create value for the customer.

How a plant starts: six steps

  1. 1

    Agree what results you want

    Pick a small set of measures for safety, quality, delivery and cost, and make them the same ones everyone looks at.

  2. 2

    Check where you are today

    Walk the floor and score the plant against the principles. The free operational excellence assessment does this with several people scoring on their own.

  3. 3

    Choose one area to start

    A single line or cell is enough. Learn there before you spread it, which is the idea behind a model area.

  4. 4

    Put a daily routine in place

    A short huddle at the board, with the numbers, the problems and who is acting on each. This is where improvement becomes a daily habit.

  5. 5

    Fix problems at the root

    Teach people a simple method, such as the 5 Whys or a fishbone, and write the standard down once the fix works.

  6. 6

    Share what works, then widen

    Spread the practices that helped to the next area, and review progress with the same assessment every six to twelve months.

An illustrative example

This example is made up. A snack packaging plant ships late orders most weeks. Leaders agree four measures and pick one packing line as the first area. Each morning the line team meets for ten minutes at a board, looks at yesterday's numbers and names the one biggest problem.

In the first weeks the problem is film jams. The team asks why until they find a worn roller that nobody had a schedule to check. They add the roller to a daily check, write it into the standard work and tell the other two lines. Late orders do not vanish, but the same jam stops returning, and the next problem on the board is smaller. No single tool did it. A daily routine, a standard and people free to fix the cause did.

Common mistakes

Mistakes that stall operational excellence
MistakeWhat goes wrongDo this instead
Treating it as a tool rolloutBoards and checklists appear, but behavior stays the sameStart with leader routines and daily problem solving
Leaders delegate itPeople read it as a project that will passLeaders go to the work and ask questions every week
Starting everywhere at onceEffort is thin and nothing finishesProve it in one area, then spread
Blaming people for problemsProblems get hiddenAsk what in the process made the error easy to make
No standard to hold the gainResults slide back after the first pushWrite the new way down and check it is followed

Go deeper

This page is the short version. These guides cover each part in full.

All our articles on this subject are in the lean leadership and employee engagement topic.

Free templates and tools

Key terms

Lean glossary

Doing this in LeanSuite

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FAQ

Questions about what is operational excellence

  1. Operational excellence is a way of running a business where every person improves the work every day, so the plant delivers safety, quality, delivery and cost results reliably. It combines a set of principles, daily routines and leaders who go to the work, rather than one tool or a one-off project.

  2. In a factory it means the line teams, supervisors and managers share a daily routine for finding and fixing problems, work to written standards, and watch the same few measures for safety, quality, delivery and cost. Improvement is part of everyone's normal day instead of a special project.

  3. They are respect every individual, lead with humility, seek perfection, embrace scientific thinking, focus on process, assure quality at the source, improve flow and pull, think systematically, create consistency of purpose and create value for the customer. They come from the Shingo guiding principles.

  4. Start small and keep it daily. Agree a few measures, check where you are against the principles, pick one area, run a short daily huddle there, fix problems at the root, write the new standard down and then spread what works. Leaders going to the work each week matters more than any single tool.

  5. It makes results steady instead of dependent on heroics. When problems are found early and fixed at the root, there is less rework, fewer late orders and fewer surprises, and people spend less time firefighting. It also builds a habit of improvement that carries on when conditions change.

  6. Examples are a daily huddle at a board where a line team names its biggest problem, a standard work sheet that is updated when a better way is found, a leader walking the floor to ask why a defect happened, and a practice that worked in one area being copied to the next. The example on this page is illustrative.

  7. Lean is a set of principles and tools for removing waste and improving flow. Operational excellence is the wider way of running the business that uses lean, and also Six Sigma and continuous improvement, together with leadership behaviors and culture. You can do lean tools without operational excellence, but not the reverse.

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