Operations operational excellence

The following statements by the CEO and president in its 2004 Annual Report summarize SYSCO s focus on operational excellence and the company s top-to-bottom focus on the details of doing business daily. 

It is well known in the world of independent ventures that there often comes a point at which the founding team needs to be replaced by managers with different qualities. Indeed, one of the ways in which venture capitalists claim they add value is in provoking these transitions and helping locate relevant managerial talent. The same applies to many key people working within a corporate venture those with the right skills to function well when the task is discovery and creation are not necessarily able to make the transition to the tasks of enhancement and operational excellence. Moore (1991) terms this transition the transition from pioneers to settlers. As he describes (1991, p. 199) ... 

This previous definition had been broadened after the FDA s issue of the PAT guidance document to encompass aU factors influencing the quality and efficiency of a chemical or pharmaceutical manufacturing process. Driven by developments in Six-Sigma and operational excellence programs an extended definition included such items as ... 

Since Excel is a powerful tool used widely for many different purposes with many options not all options can be discussed in this chapter. The focus of the chapter is on manually self-created spreadsheets for data calculation and checks against acceptance criteria (logical operations). Excel spreadsheets that are used with other electronic systems for automatic data or information entry, for further operations, or used as a view tool for databases are not within the scope of this chapter. Nevertheless, these types of spreadsheets are viewed as a normal spreadsheet with automatic entry, and validation, including validation of the interface, will be included to cover this item. In this chapter we provide guidance in validation and revalidation of Excel spreadsheets and information about managing validated spreadsheets. 

Key factors of success R D Access to raw material Process development Engineering R D Process technology Integration International presence R D Sales Marketing Process and application technology Operational excellence Economies of scale Market conduct Operational excellence M A capabilities New business generation... 

Our research has shown that attempts to successfully time investment decisions to the cycle - not only the chemical industry s but broader economic cycles - are extremely difficult (Butler, P. et al.), and that other tactics such as maintaining advantages in cost and operational excellence across all functions provide a surer return. 

Operational excellence is particularly difficult to achieve in specialty chemicals, where the high complexity and diversity of the business makes operations particularly demanding, with more choices of levers to pull and in general higher capabilities required than in assets-driven businesses. Overall, we see mainly two crucial areas to address ... 

Besides a financial performance dialogue, specialty chemicals conglomerates also need to establish an operational performance dialogue. The corporate center can help drive operational excellence by challenging and coaching the individual business units, setting benchmarks, and fostering know-how transfer between the units. 

They need to strive for operational excellence in particular in production and marketing and sales to improve their market position. 

To achieve the sustainable continuous improvements of truly lean operations, companies need to execute holistic programs. They have to give their organizations clear visions for operational excellence and the ability to identify and execute on situation-specific targets, but also individual approaches to address the soft side of change - capability building and changes in mindsets and behaviors. The journey is difficult, but the rewards are still fast and very considerable. 

Finally, operational excellence made the chemical industry competitive enough in some instances to enter new markets. The fact that the industry can now reach... 

Drawing up the blueprint also sets a common language and communicates the shared vision for the level of operational excellence required across the production network. It provides a clear idea of the company s future operating system. Company executives also benefit, as it sets their individual activities in an overarching context. Finally, a blueprint can be codified and expert groups can be established to help roll it out globally. However, caution must be exercised so that this does not lead to yet another corporate standard that is not appropriate for the local sites, and therefore is never realized. 

In an industry as capital-intensive as chemicals, the focus on operational excellence of the last two decades is understandable. However, a significant additional source of value creation potential exists which is largely untapped creating a revenue advantage. Excellence in sales and marketing can lead to a tangible incremental improvement in ROS. In addition, a one percent improvement in price leads to significantly more value than a similar reduction in variable costs (Fig. 21.1). 

However, none of this will matter if the company loses sight of operational excellence - paramount in the highly competitive Chinese chemicals market. 

Christoph Schmitz is a consultant in McKinsey s Frankfurt office. He is a member of the global energy and materials practice and has worked in various fields of the process sector with a particular focus on the chemical and pharmaceutical industries. His main areas of emphasis are supply chain management, total operational excellence, and sourcing. He holds a Dipl.-Chem. and a PhD in chemistry from the University of Bayreuth. 

Companies that choose the former approach radically refocus their entire business portfoHos via extensive mergers and acquisitions, like Hoechst or ICl. Those selecting the smoother transition, such as BASF, target their efforts at strengthening existing core businesses through operational excellence and selected M As. 

The winners will have to be strong in both traditional crop protection and plant biotechnology, and will be able to combine both skills effectively. They wiU have operational excellence in traditional agrochemicals and will use the returns from the traditional business to invest in plant biotechnology as a medium term growth platform. 

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