Operational Excellence: Journey to Creating Sustainable Value

CHAPTER 5BUSINESS AND FINANCIAL ELEMENTS

Today's operating, process, and manufacturing environment is characterized by increasing intensity, more restrictive constraints, and huge pressures to reduce costs. All necessitate more concise, value-oriented methods to identify opportunities for improvement, prioritize and align activities, and to measure and continuously improve results. Identifying value requires a model that provides an accurate and objective means of calculation for the specific business/mission and external environment of the operating enterprise. The business/financial model introduced in this chapter is primarily designed to provide a means to calculate the value of essential methodologies and potential improvements to prioritize opportunities, justify investments, and financially credit results gained by Operational Excellence. It is designed for profit-making enterprises; the principles can be adapted for mission-oriented enterprises.

CONNECTION TO BUSINESS RESULTS

Technology and practice have developed to a level capable of recognizing most anomalies and defects in time to prevent outright failure and minimize unscheduled operating interruptions. However, measures of effectiveness have tended to remain subjective and intangible: do processes, systems, and physical assets perform as required, when needed, at design efficiency? Are unexpected failures and operating interruptions few and far between? Are problems corrected promptly; are operations/manufacturing ...