Achieving Operational ExcellenceA better approach for a complex world

2Wilson Perumal & Company, Inc.Source: 1) 2010 Accenture Survey

Growing complexity has limited the effectiveness of traditional Operational Excellence methodologies

• The environment in which companies operate is increasingly complex, causing execution…and achieving great results…to become more difficult

• Traditional process improvement methodologies like Lean and Six Sigma are ill equipped for attacking complexity

– 58% of executives report their continuous improvement programs produced minimal financial impact1

– Lean and Six Sigma typically have a narrow scope and are focused on improving individual processes. Complexity, however, results from the numerous interactions between processes, organization and products

Increased complexity

Poor execution

Loss of process control

Poor business results

Processes & people are added to improve

Vicious Complexity Cycle

• Are you in the vicious complexity cycle?– Do you make plans to improve but find yourself unable to execute

them because you are firefighting?– Have you invested substantial resources in your process improvement

initiatives but feel like you aren’t getting the results you expected?

• Wilson Perumal & Company has a simple, repeatable, systematic process to achieve Operational Excellence and break free of that vicious cycle

– Achieves a performance step change in a much shorter timeframe– Requires significantly fewer resources than traditional methods– Is customized to fit your organization

3Wilson Perumal & Company, Inc.

The Operational Excellence Management System (OEMS) provides a simple, systematic process to achieve OE

Key Value Drivers

Four Sources of

Risk

Common Causes of

Failure

Specific Key Controls

OEMS Elements

OE is defined by measurable business performance across specific value drivers

There are only four sources of risk for failure to perform against the

value drivers

The four sources of risk tend to fail for the same

reasons regardless of the type of operation

Specific key controls exist to prevent these causes

of failures

Key controls are organized into

Elements to facilitate implementation and

management Examples

Vision/Procedures

Training/Certification

Performance Mgmt

Engineering Disciplines

Planning/Scheduling

Design for Six Sigma

MOC Process

Culture

Organization Structure

Process Control Plan

FMEA

Examples

Expectations don’t exist

Lack of knowledge

Wrong incentives

Equipment not capable

Personnel not allocated

Process not capable

MOC inadequate

Leadership

Employee Ownership

Risk ID

Risk Mitigation

Training

Change Management

Sustain

Safety

Environment

Compliance

Quality

Productivity

Yield

Cost

People

Processes

Equipment

Change

4Wilson Perumal & Company, Inc.

Our integrated approach delivers transformative results throughout the organization with less resources & time

Traditional Approach - Lean & Six Sigma WP&C Approach - Operational Excellence

Objectives

• Focused on individual processes – bottom-up­ Eliminate process waste­ Reduce cost and lead time­ Improve quality

• Focused on overall business – top-down• Excellence in execution and control of processes• Address product/service and organizational issues

together with process performance

Tools / Activities

• Analysis led approach• Continuous flow, standardized work• Value stream mapping, error proofing, 5S, SPC, DMAIC

• Experience-driven insight informed by analysis • OE Framework, Management System, and Key Controls• Focused use of LSS tools for greatest value creation

Pros

• Disciplined and well-known process• Wide variety of tools available• Great results in well-bounded, tightly scoped issues

• Transformative results with impact throughout the business

• Holistic view drives quick alignment on key issues• Broad-based approach yields dramatic results with fewer

resources and less time

Cons

• Focus on individual processes does not take organizational and process interactions in to account – sub-optimization often results

• Effort often diluted across multiple bottom-up projects; reductionist & piecemeal approach - can get lost in data

• Significant resources and time to address many projects

• Not appropriate for single processes or narrowly-scoped issues

• High-level of organizational commitment required to change the way business is done

Drives incremental improvement in tightly scoped, well-bounded issues of individual processes

Cuts through complex, dynamic process & organizational issues driving transformative results

Wilson Perumal & Company, Inc.

We have a track record of delivering dramatic improvement in operational performance

Does your operation feel out of control?

Are you unsatisfied with your current efforts to achieve Operational Excellence?

Situation: A leading manufacturer of building products had a plant that was performing well below its expectations and industry averages. Productivity had declined by 15% over the past year.

Approach: The 7 Element Operational Excellence Management System was installed, and our top-down approach was used to develop an OE Plan in 6 weeks time. We mentored plant leadership and put processes in place to ensure successful execution of the plan.

Results: • Achieved 380+ days without a recordable injury

• 20%+ increase in productivity in less than 6 months

• 15%+ increase in production schedule attainment in less than 2 months

• 20%+ increase in maintenance schedule attainment in less than 2 months

Situation: A $35B integrated energy company was struggling to implement a company wide Operational Excellence Management System, and had gained little traction in more than 2 years.

Approach: WP&C worked with key leadership to align them on a common understanding of OE, the role of the OEMS, and the best approach for achieving it. We redesigned their implementation process and helped guide execution of the OE plan.

Results: • Time to implement the OE Plan development process was reduced by more than 40%, shifting resources from planning activities, to executing activities that will create tangible results

• Critical key leaders who had passively opposed the implementation are now active supporters because they see the value being created.

Contact Information:On the Web: www.wilsonperumal.com

Email: contact@wilsonperumal.com

Twitter: @Wilson_Perumal

LinkedIn: http://linkd.in/10BnH1i

United States: (972) 716-3930

Europe: +44(0)203 206 1496

Contact us for more information about our Operational Excellence Management System and to schedule a workshop for your Leadership Team

We will customize a workshop to provide your team with a strong foundation to implement OEMS:

• Alignment on what Operational Excellence (OE) means to your company and the value it can create

• Understanding the OEMS role in achieving Operational Excellence

• Step-by-step, practical guidance on implementing the OEMS

• Clarity on Operational Discipline and cultural requirements to achieve OE

Learn more by following our Operational Excellence Blog at www.wilsonperumal.com/blog

7Wilson Perumal & Company, Inc.

Our team has deep, hands-on operational experience Stephen Wilson, Managing Partner• More than a decade of experience advising senior executives globally on issues relating to cost-

competitiveness, operations and strategy• Recognized as a thought-leader on the topics of complexity, cost-reduction, operating models and

innovation; co-author of Waging War on Complexity Costs• MBA from the Wharton School in Strategy and Finance• Deep experience in several industries including manufacturing, consumer goods and retail

Andrei Perumal, Managing Partner • Thought leader on complex systems and integrating strategy, operations, and organization• Formerly with George Group Consulting (Engagement Director of the Year) and Bain & Company

(winner of Best of Bain Award); co-author of Waging War on Complexity Costs• Developed the Joint Munitions Command Integrated Logistics Strategy for the US Army• Aerospace, nuclear, and chemical engineer; prior aerospace industry experience• BS Aeronautical & Astronautical Engineering, Massachusetts Institute of Technology

Tim Collins, Manager• Strong background in business and operations transformations. Experience includes supply chain

management, logistics, manufacturing, sales & marketing, product management and finance• Former senior product manager & plant manager at ABB for it’s pulp & paper automation line• Adjunct Lecturer for Supply Chain Strategy and Operations Management, The Ohio State University

• MBA, concentration in Finance, The Ohio State University, BS in Computer Science, Northwestern University

8Wilson Perumal & Company, Inc.

Our team has deep, hands-on operational experience Brian Flis, Case Team Leader• Expertise in manufacturing, operational excellence, and LEAN implementation• Developed complexity reduction plan for a U.S. manufacturer; identified cost savings of $140 million• Supplier Quality Manager, Eaton Corp. - Handpicked by Senior VP of Supply Chain, Operational

Excellence and Quality to launch urgent business performance initiatives across the business• Acquisitions Officer, U.S. Air Force - Led process improvement team that successfully increased ballistic

missile booster production from 1 booster a month to 8 boosters a month• MBA, Ohio State University; MS Mech. Engineering; BS Mech. Engineering, U.S. Air Force Academy

Chris Seifert, Consultant• Expertise in manufacturing, operational excellence, and management system design and

implementation• Former Operations Leader, Owens Corning (increased plant productivity by 25% in just 9 months)• Former Plant Manager and Manager of Business Strategy & Analysis, George Pacific (Koch Industries)• Top-ranked submarine officer, US Navy (ranked #1 of 9 submarine junior officers)• MBA, Summa Cum Laude, University of Georgia; BS Business Administration, St. Louis University

Sound Strategy

Operational Excellence

Leading Performance