Large businesses often operate in a number of geographically-dispersed facilities, which typically overlap in terms of the services provided or products produced. Moreover, these businesses regularly serve the same customers out of a number of different facilities, especially if the customers span a large geography. And despite the logistical challenges of managing multiple locations, all customers rightly have high expectations around consistency in terms of quality, customer service, and customer reporting, no matter what facilities are involved in their product or service delivery.
Unfortunately, too many companies still operate in a disjointed environment where either legacy, a false interpretation of the concept of empowerment, or the singular perspective of the individual plant manager determines the organization’s processes and procedures. This approach, however, hinders corporations from achieving their full potential in terms of customer service and return-on-capital-employed.
The implementation of a rigorous and prescriptive universal operating structure is the most effective way to guarantee the highest level of standardization and scalability to deliver the greatest operational efficiencies and best performance against relevant customer KPIs.
Jozef, ‘Jos’, Opdeweegh has been a CEO of large international companies for close to two decades and recognizes the importance of standardizing operational practices for optimal efficiency. In the following, he shares his perspective and insights on the importance and hallmarks of standardized operational procedures.
Aligning Interconnected Facilities
When a company operates a number of geographically-dispersed facilities, they are likely interconnected in one or more of the following ways. They may share a supplier/customer relationship, with one facility producing components that are used further down in the assembly or production process in another company-operated facility. In other cases, such as in the distribution industry, facilities are interconnected as the products are collected and stored, or cross-docked, in various locations. More simply, the organization may serve the same customer out of different facilities.
In the case of interconnected facilities, though important, it is arguably not the average performance of the company against a number of critical customer KPIs that is most relevant. Instead, the variance around the mean, and specifically the negative outliers, is the most relevant component. While these worst performers will mathematically drag down the average performance of the company against relevant KPIs, they will have an even more harmful impact on the customer’s perception of the quality of operations. The quality of the end product is only as good as the weakest link in the chain.
Scalability of the Platform
Since it is a strategic imperative of companies to grow, companies with a dispersed landscape of operating entities will typically increase the number of facilities and its geographic reach over time. In an environment where a consistent operating system is successfully deployed, launching incremental facilities becomes a much easier task. The platform is much more scalable, as the processes and procedures that determine how the operations and support functions inside the new facility will be organized are already largely determined. Some minor tweaking may be required to accommodate a new service offering, a new product design, or different customer requirements, but the core of the proven solution will already be solidified.
Mobility of Human Talent
When a standardized operating system is in place, human talent is much more interchangeable and transferrable. Since the company’s professionals have been trained in a standardized environment, they can easily and efficiently be deployed to fill talent gaps in other operations in the group or to help address quality deficiencies in sister facilities. Additionally, these resources are ideal in helping to launch new facilities in different geographies, or new service or production offerings as knowledge is portable, universally deployable, and highly valuable.
In a standardized operating environment, continuous improvement is a key imperative. Whether the improvement initiative finds its origin in one of the company’s facilities where a colleague has devised a better way of performing a specific task, or in an idea that emanates from a continuous improvement team, once the idea has been tried and tested it should be rolled out and deployed throughout the entire organization. In the standardized environment, nobody can take a shortcut. A bad idea will not be implemented in any location, and a good idea will find its way to all locations.
As such, to provide the best service to customers in the most cost efficient and effective manner, Jos Opdeweegh suggests placing a dedicated focus on the development and implementation of a comprehensive set of processes and procedures from the outset.