sustainable-high-performance-stefano
- 1. Sustainable High Performance and Profitability Wilson Stefano, Jr. — Oliver Wight Americas Informative Guides On Industry Best Practices Inspiring Business Excellence The Journey That Never Ends
- 2. 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 Profi tability, which is characterized by operating the business effectively while effi 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 Profi 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 Profi 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
- 3. 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 defi 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 fi re-fi 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
- 4. Many organizations cannot articulate these or any other ongoing challenges they may have, hence, they cannot defi 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 Profi tability. Figure 1 The Challenge of Sustainable High Performance Journey Figure 2 The Oliver Wight Integrated Business Model SUSTAINABLE HIGH PERFORMANCE AND PROFITABILITY4
- 5. 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 Profi tability, and completed in the right sequence, is the key to success. The specifi c steps include: INITIAL EDUCATION The fi 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
- 6. 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 identifi ed, defi 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 identifi 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 Profi tability. Figure 4 The Maturity Journey - Integrated Business Planning (Advanced S&OP) SUSTAINABLE HIGH PERFORMANCE AND PROFITABILITY6
- 7. 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 identifi ed milestone, the team makes a “go,” “no-go” decision. A ”go” decision commits the organization to the Sustainable High Performance and Profi tability journey (see Figure 5). This represents the fi 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
- 8. IMPLEMENTATION The fourth and fi 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
- 9. 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 Profi 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 Profi tability to ensure the “Sustain and Mature” part of the process. SUSTAINABLE HIGH PERFORMANCE AND PROFITABILITY 9
- 10. 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 Profi tability have experienced a number of signifi cant achievements. Depending on the maturity of their processes, people, and technology solutions, the range of the individual benefi 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 Profi tability. SUSTAINABLE HIGH PERFORMANCE AND PROFITABILITY10
- 11. Inspiring Business Excellence © Oliver Wight International Oliver Wight Americas, Inc PO Box 368, 292 Main Street New London, New Hampshire 03257, USA Telephone: 1.800.258.3862 1.603.526.5800 Facsimile: 1.603.526.5809 Asia/Pacifi c 131 Martin Street, Brighton Victoria 3186, Australia Europe, Africa & Middle East The Willows The Steadings Business Centre Maisemore, Gloucester GL2 8EY, UK [email protected] 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.