The resurgence of operational excellence
Operational excellence can boost margin growth and productivity
Operational Excellence (OpEx) for margin growth
In times of challenging market conditions and disruptions, the spotlight on Operational Excellence (OpEx) increases as organisations seek to maximise efficiency and productivity to weather the storm. The relaunch of OpEx programs becomes a strategic imperative for organisations, offering a pathway to not only survive but thrive in the face of adversity.
In this article we delve into the pivotal role of OpEx in navigating challenging times and explore how organisations can harness its power to emerge stronger and more resilient. In addition, we outline key OpEx value drivers and present our rapid diagnostics approach to kick-starting an OpEx programme.
Leading Swiss enterprises are prioritising OpEx
Our research1 reveals a growing trend: Swiss-based companies across various industries are ramping up their investments in OpEx. Notably, 46% of the top 100 Swiss firms1 have spotlighted OpEx as a strategic priority at either the group or divisional level, or are actively recruiting OpEx specialists. Given that the current macroeconomic challenges affect small and medium-sized enterprises even more acutely, we believe they too are adopting OpEx initiatives, which is probably making OpEx even more prevalent across the Swiss marketplace.
According to our research1, OpEx investments can take various forms: a global Life Sciences company boosting manufacturing productivity2, an industrial goods manufacturer revamping its Operational Excellence system3, a consumer health company reviving its continuous improvement programme4, or a leading food processing and packaging company striving for end-to-end excellence5.
Leading organisations focus on implementing OpEx programs to drive EBITDA expansion
The trend to streamline and optimise the operations has increased, with cost reduction and margin improvement programs on the rise and a key focus of many organisations.
Figure 1: Relevance of OpEx and key OpEx drivers for margin improvement
As outlined in Figure 1, OpEx serves as a pivotal catalyst to propel earnings before interest, taxes, depreciation and amortisation (EBITDA) growth. It uses a multifaceted approach, strategically managing the product mix. Organisations can optimise their offerings to maximise profitability, capitalising on high-margin products and services.
Simultaneously, a relentless focus on operational efficiency enables streamlined processes, reduced waste, and enhanced productivity, directly contributing to EBITDA growth. Embracing technology and automation opportunities as well as a refined operating model also enables businesses to achieve greater cost efficiencies, scalability, and adaptability, permitting further, sustained improvement in EBITDA.
Proper leverage of OpEx value levers can drive enterprise value
Key OpEx levers serve as the means to unlock substantial savings and value within an organisation. Strategic deployment of these levers not only generates financial benefits but also cultivates a culture of operational discipline and continuous improvement, positioning organisations for sustained success in dynamic and challenging environments. OpEx focuses on the relentless pursuit of elimination, standardisation, simplification, and automation to drive transformative efficiency and effectiveness. By applying different improvement levers across the Eliminate- Standardise – Simplify – Automate framework (presented in Figure 2), non-cumulative savings of between 5% and 20% can be achieved for each lens considered. Given the need for digital transformation, special consideration should be directed to automation, whether through Robotics Process Automation (RPA), Optical Character Recognition (OCR), new Generative Artificial Intelligence (GenAI) capabilities or any other adjacent technologies, empowering businesses to automate repetitive tasks, reduce errors, and free up human capital for higher-value activities.
How can OpEx drive value for organisations?
Improving a business involves more than just increasing efficiency or maximising return on investment. In today’s global economy, organisations must also be flexible enough to adapt to changing markets, conditions and technologies.
Figure 2: Value generation through the application of key OpEx levers6
While it is essential to ensure that all levers across the Eliminate-Standardise-Simplify-Automate framework are effectively utilised, organisations should consider a structured approach to train their employees, thereby embedding new ways of working into the organisation's DNA. This should involve not only embarking on continuous improvement training for employees, but also providing similar opportunities for leaders. By prioritising a comprehensive approach to OpEx, organisations can foster a culture of continuous improvement and sustainable success.
Our rapid diagnostics approach to kick-starting your OpEx journey
To kick-start or relaunch an Operational Excellence project, we recommend our proven rapid diagnostics approach over a six to eight week period (as presented in Figure 3) encompassing three phases. After stakeholder mobilisation the initial Define & Diagnose phase involves a comprehensive assessment of the organisation’s current state and identification of pain points, and sets clear objectives for improvement. Subsequently, the Design phase focuses on crafting tailored solutions and strategies to address the identified challenges, leveraging best practices and innovative approaches.
Within the Design phase the improvement potential can either be determined via intelligent process transformation, using digital tools such as process and task mining, or via a classical Lean Six Sigma activity analysis. Finally, the Implementation Planning phase centres on the development of a detailed roadmap to execute the proposed initiatives, including resource allocation, timelines, and key performance indicators to measure progress and value generation. Our rapid diagnostic approach ensures a swift yet thorough foundation to reignite Operational Excellence, setting the stage for an impactful and sustainable transformation and strengthened EBITDA growth.
Figure 3: Our approach to kick-starting an OpEx-led transformation
Summary – and what’s next?
As we conclude this exploration of the renaissance of Operational Excellence for margin improvement, it is evident that the pursuit of excellence in operations is not merely a response to challenges, but a strategic imperative for sustained success. The journey towards Operational Excellence demands a commitment to continuous improvement, innovation, and adaptability, empowering organisations to thrive in dynamic and competitive landscapes. By embracing the principles of elimination, standardisation, simplification and automation, businesses can unlock new levels of efficiency, profitability, and resilience. As you navigate the ever-evolving business environment, harness the power of Operational Excellence. For more insights on process simplification and process transformation please refer to our preceding blogs covering both process and task mining.
Contribution/Author
Davide Granata
Senior Manager
