As an Operations Director, you are typically responsible for the performance of your core business activity. This involves sourcing the right material inputs, safely manufacturing high quality products and delivering them to your customers, on-time and in-full. As material and conversion costs typically represent a large percentage of the overall cost of sales, both competitive and profitability pressures will mean that the Operations Director is continuously looking for ways to reduce waste.
Typically, the goals of an Operations Director come under four key categories:
- Safety & the Environment
Relentlessly driving out waste does not just mean reducing the cost-to-serve (though this is clearly one benefit that can significantly enhance profitability). True waste elimination can only take place when there is a deep understanding of what the customer values and your people are inspired, capable and held accountable for eliminating the non-value-added activity; every single day. The Operations Director can heavily influence enhancement of the customer experience by improving the quality of products, reducing lead times, improving delivery performance and effectively responding to changes in customer demand. By producing at minimal waste and low operating costs, the Operations Director can also provide the commercial functions with greater flexibility. This freedom can be used to increase profitability, retain customers and win new business.
The most common challenges we typically identify are with an organisation’s inability to align their people, purpose, principles and processes to the pursuit of improving the customer experience, while relentlessly driving out waste.
In particular, we commonly find disconnects in:
- Dealing with product and customer complexity. As organisations grow, the product portfolio typically expands, creating the potential for significant waste and complexity across a business’s operations. This waste includes lost production capacity (due to a greater number and complexity of production changeovers), greater inventory of both material inputs and finished goods, as well as increased risk of obsolescence and scrap.
- Aligning the New Product Development (NPD) and Innovation process with the pursuit of waste elimination. Often, much of the waste experienced in manufacturing and the supply chain is institutionalised due to ineffective New Product Development (NPD) practices. When the two are aligned, Design For Manufacture (DFM) thinking is embedded into the earliest stages of both the sales process and new product development.
- Driving out waste from the Supply Chain. The consistent pursuit of waste elimination is the key to both enhancing the customer experience, reducing costs and improving cash flow. Substantial opportunities for improving the customer experience and driving out waste can typically be found by analysing the manufacturing and supply network in the context of customer locations and demand patterns.
- Driving out waste from Manufacturing. For many manufacturing organisations, non-stable production & quality processes lead to substantial waste and inefficiencies. These include excessive rework or scrap, lost capacity, poor service delivery, long lead times and excessive labour costs.
- Reducing customer complaints and quality issues. Unstable production and new product development processes can to lead to increased quality defects and customer complaints. Customer complaints represent a significant dissatisfaction with the quality of your product or the overall customer experience. In turn, it presents a significant commercial risk of lost business and financial claims.
- Developing an effective process and culture in Project Management. Project Management is a key vehicle through which change happens. This includes building or enhancing manufacturing and logistics operations, moving products & capabilities across the supply chain, as well as introducing new products and technologies. We have found that developing a critical mass of people that can consistently deliver on project objectives, on-time and on-budget, is a major success factor for the successful execution of any operations strategy.
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If you can identify with any of the issues or challenges above, why not contact us today to learn more about how Pico can help you to grow your business by enhancing the customer experience, while relentlessly driving out waste.