In the manufacturing industry, operational excellence programs have long been an important approach for ensuring long-term success of companies. Connecting OPEX programs to the challenges of sustainable development offers a lever to leverage both new potentials for cost efficiency and reduction of negative environmental impacts (e.g. CO2, waste). Using the example of the classic 7 Wastes of Lean of the Toyota production system, we explain how OPEX can be expanded to ‘Sustainable Excellence’ and what results companies can expect from it.
OPEX programs already achieve sustainable results today
Today, OPEX programs are considered as the tool for creating long-term competitiveness in the manufacturing industry: The core results of OPEX initiatives for companies include, for example, a systematic leverage of cost and material saving potential, the empowerment of employees to solve problems and the creation of a culture of continuous improvement. For an increasing proportion of companies, OPEX is therefore also a central component of the business model. As a positive side effect of OPEX programs, there are often improvements in negative environmental impacts, e.g. reduction of the CO2 footprint or waste, even though this has not yet been explicitly part of the objectives of the programs.
An ecological view on the 7 Wastes of Lean of the Toyota production system
Increasing the degree of value-add of production by sharpening the view on the 7 Wastes of Lean is common practice. Thereby, a distinction is made between avoidable and reduced waste. The first includes overproduction, scrap and over-processing. Inventory, waiting times, transport and motions are elements to be reduced. In the following table, three representatives of the seven wastes are analyzed also for their ecological potential.
An example from our experience
The production of a supplier of the aviation industry is organized in a classic workshop production. A value stream design with a focus on waste reduction ensures the transformation into a flow production. Smaller batch sizes and new planning of safety stocks reduces inventory by 45%. The internal transport by means of gas-powered forklifts can be reduced to 20% due to spatial proximity. An planned extension of the cold storage (-25°C) for semi-finished products does not have to be implemented. The economic effects are in the six-digit range. Extending the results by the ecological focus, these measures have saved more than 2000 tons of CO2 annually alone within the (planned) operation of the plant.
Sustainability also improves the economic results of OPEX programs
Many OPEX experts in companies know how difficult it can be to get the necessary resources approved, even though the positive results from the classic effort/benefit evaluation are clearly recognizable. Targeted integration of sustainability aspects into OPEX programs can often also improve economic results of the programs and thus OPEX managers have an additional argument for the implementation of appropriate measures in their hands. More precisely, in practice, economic results often need to be demonstrable in the short term. This makes it sometimes difficult to anchor incentives for long-term thinking in OPEX or Kaizen teams. As a result, measures are prioritized that promise short-term economic success and are easy to implement. There is a risk that companies will stop at “low hanging fruits” when it comes to leveraging the potential. Supplementing the objectives of OPEX programs with social and environmental objectives can make the potential of OPEX measures broader, so that long-term economic potentials that are more difficult to exploit are also considered when approving resources.
Here is a short example: One of our customers in the metal casting industry identified retooling or equipping with new machinery for a production step as a measure to reduce overproduction. The measure was not easy to implement because, in addition to investments, it required restructuring of work processes and to some extend of the flow production. Despite a positive economic potential, the implementation of the measure was therefore rejected. A short time later, the company introduced CO2 saving targets and alongside imputed CO2 costs. On this basis, the measure was re-evaluated and finally implemented. Thus, both the cost saving effects could be realized by avoiding overproduction in the production step, at the same time the environmental impact was significantly reduced. In this example, the implementation of the measure also led to a better working atmosphere.
Identify blind spots and leverage additional potential through ‘Sustainable Excellence’
A major advantage of OPEX programs is that they use a networked perspective. For example, interfaces between production, logistics and procurement are taken into account and so the risk of silo solutions, i.e. optimization of individual processes or problems without taking into account the overarching effects, is avoided. Now broadening the idea of a ‘Sustainable Excellence’ approach, these network effects can increase even further and additional potential can be uncovered. To leverage sustainable potential, the frame of reference is extended, for example across the value chain or towards product development. For example, it can be investigated which product design leads to a particularly efficient and resource-saving production system, or to what extent waste streams from production can be reused as raw materials in other processes. In this way, new economic and ecological potentials become clear.
True, broadening the frame of reference increases complexity. However, the positive effects outweigh it in most cases. These effects include, for example, in addition to the realization of additional efficiency and innovation potentials, the strengthening of exchange of information in the interfaces. In general, this increases the ability of the workforce to act agile and solve problems independently, even across interfaces. Also, ‘Sustainable Excellence’ programs tend to be better integrated into the strategic development of the entire company, as they are more broadly aligned with the overall goals of the company.
Following the expanded approach of ‘Sustainable Excellence’, OPEX programs can become a success factor for successful corporate development as a whole: resulting in increased transparency across the value chain as well as providing starting points for further development of strategies, for example in the area of circular economy. ‘Sustainable Excellence’ thus lays the foundation for long-term success in a volatile and increasingly complex corporate environment.
Have you already gained experience with ‘Sustainable Excellence’? What added value do you see for your company? Get in touch, we look forward to your examples and further exchange!
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