In an era defined by innovation and disruption, manufacturing leaders are struggling to contend with the interconnected challenges of unstable financial performance, swelling material costs, global supply chain disruptions, workforce shortages, and slow technological adaptation—all of which threaten their bottom line, requiring CEOs to act. The status quo for manufacturing operations is no longer an option.
This is particularly the case for Micro, Small, and Medium Enterprises (MSMEs) manufacturers where, according to recent research we conducted, 50 per cent of MSMEs in the U.S. close within the first 5 years. Smaller businesses struggle even more to weather the storm and face even more pressure for business owners and leaders to respond to the times. As Bill Gates has said, “Most new businesses don’t survive the first few years, and it’s crucial to understand why.” Often, operational excellence (OpEx) plays a massive role and is the key to unlocking growth and avoiding business failure.
Yet, by embracing OpEx principles to become a lean and agile manufacturer, not only can CEOs increase productivity, but statistics have also revealed that businesses have successfully boosted operating profits by 40 per cent, reduced raw material costs by 28 per cent, and reduced staff turnover by 20 per cent. Additionally, OpEx is essential in achieving sustainability goals by streamlining operations and business performance.
What does OpEx mean in manufacturing?
According to Forbes, “operational excellence is a business strategy about delivering agile and high-quality products and services.” When combined with lean manufacturing, OpEx drives efficiency, cuts waste, and improves visibility, unlocking value across operations.
CEO’s who prioritise OpEx can reveal inefficiencies previously hidden. A McKinsey and Co. report highlighted an industrial appliance manufacturer producing USD$4 million of products monthly yet accumulated a USD$1 million backlog due to neglecting daily performance tracking— a key aspect of operational excellence.
A strategic approach to operational excellence in manufacturing
To fully capture the benefits of OpEx, manufacturing CEOs must prepare to address key challenges like allocating budget for innovative OpEx solutions while preventing cybersecurity risks that arise and navigating their team’s resistance to change. Gartner reported that if leaders incorporate employee perspectives when adjusting business objectives, workers were nearly four times more likely to be high-performing.
CEOs must establish and maintain uniform processes and continuously monitor key performance indicators (KPIs) to detect and address improvement areas. Operational excellence is not exclusively focused on operations, reducing waste and downtime but also fostering a people-centric, risk-positive culture that is safe, non-judgemental, and creatively solves problems for a better future for the company in the long run.
Key Performance Indicators (KPIs) for Success
In terms of measurement segments, KPIs areas of focus could include customer satisfaction, financial performance, business innovation and growth, and internal efficiency to holistically measure and drive operational excellence. CEOs must ensure that their KPIs are aligned with their business goals, including them in a comprehensive OpEx roadmap focused on measuring and monitoring progress across all facets of OpEx.
Introducing a new dynamic OpEx duo: KPIs + OPERI
INCIT empowers manufacturers to overcome challenges to achieve success through aligning strategic KPIs with our innovative five-step approach featuring our Operational Excellence Readiness Index (OPERI)—a standardised framework to assess the digital maturity and operational efficiency of MSMEs in developing countries. The steps involved in this process are TIER, which stands for:
(T) Today State
(I) Impact
(E) Evaluate business objectives
(R) Reference to identify gaps
Below, we outline our five-step roadmap to OpEx success that provides a clear and actionable roadmap created to drive organisations forward to achieve operational excellence.
Develop a 5-step comprehensive operational excellence strategy
Step 1
Assess your company’s “Today State” and operational maturity with a special focus on financial performance, material costs, supply chain challenges, workforce, and innovation integration to design a suitable roadmap with short-term and long-term goals and strategies.
Step 2
Plan with “Impact” and “Evaluate” insights and collect data from INCIT report to identify improvement areas and ensure existing operations conform to new goals.
Step 3
Implement the new OpEx roadmap strategically and “Reference” gaps to ensure the business is aiming to achieve best-in-class standards, aligning with business objectives.
Step 4
Foster continuous improvement after the comprehensive roadmap is executed and adjust when needed, measuring progress and areas for improvement along the way.
Step 5
Leverage Industry 4.0 technologies for manufacturing excellence with innovations such as IoT integration, AI and ML, advanced analytics for real-time decision-making and predictive maintenance technologies.
The continuous journey of manufacturing excellence with OPERI
CEOs who employ a strategic OpEx roadmap while fostering a high-performance operational culture and continuously monitor and measure KPIs, successfully position their business to not only maintain a competitive edge but also surpass their peers.
CEOs who leverage OPERI can unlock profitability, streamline operations and grow their businesses sustainably. By identifying improvement areas, OPERI offers expert guidance to support MSMEs while they navigate digital transformation, optimising their processes along the way. This transformation will also lead to expanded and integrated use of digital tools across functions to become future and expansion ready.
Ensure every layer of your business, from the shop floor to the boardroom, meets the demands of today with OPERI. Now, CEOs can refine operations to surpass current market demands, placing their business for success in a competitive landscape. Hubungi kami to learn more.
