Sustainable HighPerformance and Profitability

Wilson Stefano, Jr. — Oliver Wight Americas

Informative Guides On Industry Best Practices

Inspiring Business Excellence

The Journey That Never Ends

In the rapidly-moving global environment, business organizations in every sector are continually being challenged. They are being confronted by an increase in global competition, the pressure to maintain growing and profitable businesses, and to meet more stringent and changing customer demands.

These conditions and more are driving organizations

to seek solutions to manage this constant change in a

dynamic environment and to achieve Sustainable High

Performance and Prof tability, which is characterized

by operating the business effectively while eff ciently

improving its capabilities and enabling it to continuously

maintain a distinct competitive advantage and compile

the best performance in the industry.

One solution to achieve Sustainable High Performance

and Prof tability in this environment is for industry

leaders to look at their organizations in a holistic

manner as an integrated and structured entity. The

purpose of this white paper is to introduce and

describe the steps necessary to start on the journey to

Sustainable High Performance and Prof tability and how

to do it in a holistic manner.

The ability to

manage continuous

change quickly and

effectively in a

“Stabilized Dynamic

Condition” is a key

driver for business

success.

“

”

SUSTAINABLE HIGH PERFORMANCE AND PROFITABILITY2

FACING THE CHALLENGES

The ability to manage continuous change quickly and effectively in a “Stabilized

Dynamic Condition” is a key driver for business success. For the purpose

of this paper, Stabilized Dynamic Condition is def ned as the capability to

understand the various business scenarios and marketplace requirements

while anticipating and initiating the necessary changes to meet these new

conditions through a structured and integrated management process.

Many organizations say they are in a continuous improvement journey, yet they

do not achieve acceptable performance improvements due to a variety of poor

execution or other factors, such as:

• Lack of business control due to disconnected management practices,

which leads to informality and f re-f ghting activities that ultimately impact

short-, medium-, and long-term decisions.

• Failure to align strategic business goals and objectives throughout the

entire organization and monitoring adherence to them.

• Ignoring or failing to investigate and correct customer complaints such as

quality, service, and delivery.

• Lax enforcement of initiatives to reduce

cost, working capital and inventories.

• Lack of recruiting top talent, and

motivating and retaining valued

personnel.

SUSTAINABLE HIGH PERFORMANCE AND PROFITABILITY 3

Many organizations cannot articulate

these or any other ongoing challenges

they may have, hence, they cannot def ne

a clear journey with the appropriate

sequence for improvement to assure

sustainability. The result, then, is a series

of isolated initiatives, often overlapping

and competing for the same resources

that reach suboptimal results (see Figure

1). Achieving a Stabilized Dynamic

Condition is an ongoing challenge and a

prerequisite for organizations to maintain

Sustainable High Performance and

Prof tability.

Figure 1 The Challenge of Sustainable High Performance Journey

Figure 2 The Oliver Wight Integrated Business Model

SUSTAINABLE HIGH PERFORMANCE AND PROFITABILITY4

BEGINNING THE JOURNEY

Many organizations attempt to solve their problems

in a non-holistic manner. By so doing, it means

that each function is focusing on its own individual

performance (and often to the detriment of the entire

business). Instead, each function should align its

actions and initiatives to the strategic map developed

by the organization. The journey to Sustainable High

Performance and Prof tability, and completed in the

right sequence, is the key to success. The specif c

steps include:

INITIAL EDUCATION

The f rst step is to learn and understand the concepts

and best practices for creating an organization with

integrated and structured management processes,

as detailed in the Integrated Business Model (see

Figure 2). Also integral to the education process is

studying and understanding the various maturity maps

developed by the Oliver Wight organization over 40

years of advising and witnessing industry best practice

processes. These include the maturity maps relating

to each integrated process, such as the Business

Maturity Map (Figure 3), and the Integrated Business

Planning (S&OP - Sales and Operations Planning)

Maturity Map (Figure 4).

Part of the initial education step is to have an initial

understanding of where your organization stands in

relation to these maturity maps. Following a model

helps to develop a holistic view and an initial vision on

how to manage the business as a whole.

Figure 3 The Oliver Wight Business Maturity Map - Integrated Business Planning

SUSTAINABLE HIGH PERFORMANCE AND PROFITABILITY 5

DIAGNOSTIC

In the second step, a broad-based diagnostic of the

organization is conducted. The initial diagnostic makes

use of the maturity maps studied in Step 1 and is

supplemented by The Oliver Wight Class A Checklist

for Business Excellence, Sixth Edition.

At this juncture, the checklist will be used only to

support the broad-based diagnostic and will not

detail or attempt to score the initial output. The detail

and scoring output will be done after the milestone

to be developed is identif ed, def ned, and assessed.

At that point, the output will be a formal and macro-

level diagnostic reinforcing the discussion from the

initial education and after the gaps, issues, and

opportunities are identif ed.

The primary reason for the diagnostic is to develop a

strong sense about where the organization is currently

and to create an initial vision about where to start

the journey to Sustainable High Performance and

Prof tability.

Figure 4 The Maturity Journey - Integrated Business Planning (Advanced S&OP)

SUSTAINABLE HIGH PERFORMANCE AND PROFITABILITY6

EXCITE, COMMIT, AND DIRECT

The third step of the process involves the executive

team reviewing the documents, assessments,

opportunities, and priorities that have been developed

in the previous steps. After reviewing these and the

plan to execute the identif ed milestone, the team

makes a “go,” “no-go” decision.

A ”go” decision commits the organization to the

Sustainable High Performance and Prof tability journey

(see Figure 5).

This represents the f rst part of the Oliver Wight

Proven Path process (see Figure 6). In this phase, the

Leadership has knowledge of what needs to be done,

the resources required, and the effort required to

bringing the milestone(s) to completion.

Figure 5 The Path to Sustainable High Performance

Figure 6 The Oliver Wight Proven Path - Leadership Phase

SUSTAINABLE HIGH PERFORMANCE AND PROFITABILITY 7

IMPLEMENTATION

The fourth and f nal step in the process is of a series

of individual steps through the “Development” and

“Ownership” phases (see Figure 7).

Typically, several improvement projects move through

the Proven Path process at any one time. Each is

evaluated at the “Milestone Assessment” stage where

its progress and achievement is reviewed. A decision

is then made whether or not it should proceed to

the next step in the process. Obviously, and for any

number of reasons, some of the improvement projects

are not approved for further activity; other projects’

Figure 7 The Oliver Wight Proven Path

SUSTAINABLE HIGH PERFORMANCE AND PROFITABILITY8

Figure 8 The Path to Sustainable High Performance - A series of improvement programs (milestone definitions)

milestones have been achieved or realized (see Figure

8). The objective of any organization is for the journey

to Sustainable High Performance and Prof tability

and the Proven Path process being undertaken at all

times. It should not be stagnant because, as stated

previously, this journey “Never Ends”. Therefore,

additional milestones must be evaluated, considered,

and moved into the journey toward Sustainable High

Performance and Prof tability to ensure the “Sustain

and Mature” part of the process.

SUSTAINABLE HIGH PERFORMANCE AND PROFITABILITY 9

CONCLUSION

Business organizations will need to work hard to develop improvement programs related to the development

of Integrated Business Management. Referencing the Oliver Wight Business Maturity Map, the majority of

the organizations we have observed are in Phase 1 (Coordination) or “Eliminating unplanned events, or doing

routine things routinely.” A minority have advanced to Phase 2 (Business Process Control), “Eliminating failure in

business processes.”

Business organizations which have begun their journey to Sustainable High Performance and Prof tability have

experienced a number of signif cant achievements. Depending on the maturity of their processes, people, and

technology solutions, the range of the individual benef ts they report are:

• Increased Sales Plan Accuracy - 18 to 25%

• Increased Sales Revenue - 10 to 25%

• Increased On-Time Delivery - 10 to 50%

• Inventory Reduction - 18 to 46%

• Safety Stock Reduction - 11 to 45%

• Increased Productivity - 30 to 45%

An enormous opportunity exists for organizations that begin their Journey to Business Excellence and make

use of the structured methodology with best practices as described in this paper to attain Sustainable High

Performance and Prof tability.

SUSTAINABLE HIGH PERFORMANCE AND PROFITABILITY10

Inspiring Business Excellence

© Oliver Wight International

Oliver Wight Americas, Inc

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Telephone: 1.800.258.3862 1.603.526.5800

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info@oliverwight.com www.oliverwight.com

Informative guides on industry best practices

ABOUT THE AUTHOR

Wilson Stefano, Jr. Wilson Stefano Jr., a principal with Oliver Wight since 1998,

has over 30 years of “hands-on” experience in the manufacturing industry. He

has coached management teams to achieve “Class A Business Excellence” and

embrace sustainable high-performance and profitability. The improvement efforts

he facilitated with his most recent client, Henkel Mexicana AC Division, concluded

in Oliver Wight Class A awards in Planning and Control. He supports organizations

in Brazil and Latin America in the assessment, implementation, and continuous

improvement of their integrated business management processes. Stefano’s

degree is in Business Administration with a specialization in Business Management.

He also holds a Master’s degree from UNICAMP, where he is also a researcher.

He has authored many articles available on the website. He frequently speaks at

events in Brazil: SAP FORUM; Supply Chain Council, and FGV – Fundação Getúlio

Vargas.

Oliver Wight - leading business improvement specialists who educate, coach, and mentor people to lead and sustain change on the journey to business excellence and outstanding business performance.