Biography of John S. Mitchell xv

Preface Journey to Operational Excellence xvii

Acknowledgments xxi

Introduction 1

1 Operational Excellence-The Imperative 7

Definition of Operational Excellence 7

Definitions from Leading Global Enterprises 8

A Simpler Definition for Operational Excellence 9

Operational Excellence Embraces Everyone in an Enterprise 9

Operational Excellence Improves Efficiency 10

Efficiency and Effectiveness 10

A Familiar Program 11

Description 12

The Journey 13

Roadmap to Operational Excellence 14

Reliability 14

Risk 15

Changes in the Business/Mission Environment 15

Conventional Operations Management 16

Maintenance Within an Operating Enterprise 17

Managing Improvement Initiatives 17

The Solution 19

Leadership 20

Working Level Improvement Action Teams 20

Operational Excellence Improvement Initiatives 21

Sustainability 22

Effectiveness and Value Throughout the Enterprise 22

The Operational Excellence Initiative 23

Operating Performance Excellence 24

Asset Performance Excellence 24

Success-Greater Than the Sum of the Parts 25

Essentials for Success 25

Application 26

What You Should Take Away 26

2 Application of Operational Excellence 29

Process Characteristics 29

Operating/Market Environment 31

Enterprise Strategy 32

Strategic and Tactical Endeavors 33

Growth Strategy 34

Effectiveness 34

Changes in the Operating Environment 34

Value 35

Journey into the Future 36

What You Should Take Away 39

3 Foundation Principles 41

Operational Excellence-A Program Equivalent to Safety 41

Use of Proven Practices 42

Scope of Operational Excellence 43

Financial Considerations 44

Driven by Business/Mission Results 45

Foundation Principles 47

Principles of Operational Excellence 47

Six D's of Operational Excellence 47

Eight Elements of the Operational Excellence Program 48

Results 49

Leadership 49

Requirements 50

Program Definition 50

Supporting Practices and Procedures 50

Working Culture 51

Information Management 51

Follow-Up 52

Implementing the Operational Excellence Program 52

Benefits of Operational Excellence 52

Improved SHE/EHS Performance 52

Reduced Risk 53

Improved Production/Mission Operational Effectiveness 53

Improved Reliability 54

Greater Predictability-Reduced Variation 54

Improved Capital Effectiveness 54

What You Should Take Away 54

4 The Operational Excellence Program-Overview 57

Initiation 57

The Value Principle 59

Use of Proven Practices Processes and Technology 61

Operational Excellence Program 63

Improvement Processes 64

The Operational Excellence DIPICI Process 65

Implementing Sequence 66

Program Elements 67

Essentials for Success 67

Results 67

Leadership 68

Requirements 68

Program Definition 68

Practices and Procedures 69

Working Culture 72

Information Management 74

Follow-Up 74

Implementation 75

Where and How to Begin? 77

Considerations for Commencing with a Pilot 79

Third Party Facilitation Assistance 79

What You Should Take Away 80

5 Business and Financial Elements 81

Connection to Business Results 81

Performance Measures 82

The Opportunity 83

Profit Center Mentality 83

Justifying Improvements 84

Value Prioritization 85

Value Imperative for Operational Excellence 85

Definition 85

Financial Orientation 86

The Financial Statement 86

Selecting Financial Measures of Performance 87

Accurate Lifetime Cost Tracking 88

The Business Value Model 89

Value Within an Operating Environment 92

Value Within Operations and Maintenance 93

Operating Effectiveness 93

Overall Operational Effectiveness 93

Real Compared to Normalized Values 95

Leveraging Mission/Conversion Effectiveness 95

What You Should Take Away 97

6 The Essential Evolution to Real-Time Business Operational Excellence 99

Background 100

Necessity for Real-Time Operational Excellence 101

Integrated Business and Operations System 102

Real-Time Business Focus 102

Developing Real-Time Business-Driven Operational Excellence 105

Segmenting a Complex Concept 107

What You Should Take Away 111

7 Leadership Vision Strategy 113

Executive Champion 113

Visibly Engaged 114

Communicate Compelling Vision 115

Define Overall Enterprise Business Strategy 116

Translate Business/Mission Objectives into Program Requirements 116

Select Appoint and Empower Operational Leaders 116

Continuing Tasks 116

Steering Team 117

General Guidelines 118

Appoint Operational Excellence Program Leader/Champion 119

Define Program Charter 119

Facilitate Teamwork 121

Empowered Decisions 121

Leadership Succession 122

Program Leader/Champion 123

Summarized Duties and Responsibilities 123

Program Leadership Team 124

What You Should Take Away 125

8 Safety and Human Performance Excellence 127

Safety Performance Excellence 127

Risk Management 127

Human Performance Excellence 130

Automation Technologies 131

Improvement Culture 132

What You Should Take Away 133

9 Define the Program and Program Objectives 135

Executive Leadership 136

Operating Organization 136

Steering Team 136

Program Leader/Champion 139

Program Plan 139

Program Objectives 140

Mission Statement 140

Charter 141

Principles 142

Values 142

Program Strategy 143

Organization: Management Control and Administrative Systems 144

Organizational Objectives 146

Business and Risk Models 147

Formulate Program Operating Plan 147

Appoint Working-Level Leaders-Champions 150

Program Leadership Team 151

Add/Optimize Supporting Processes 153

Information Structure and System 153

Activity-Based Management/Accounting 154

Roll Out Operational Excellence Program 155

Maintain Motivation and Enthusiasm 155

Clear Acknowledgement that Sustainable Progress Requires Time 155

What You Should Take Away 156

10 Optimize the Organization 157

Organizational Requirements for Successful Operational Excellence 158

Inspiring People 158

Consistency of Message and Action 159

Necessity for Improvement Requirements and Overall Objectives 159

Empowerment 160

Establish the Basis for Organizational Improvement 161

Initiating Organizational Improvement 163

Improvement Management Process 163

Identify Potential Structural and Organizational Improvements 164

Move the Organization from Management Control to Team Partnership 164

Work Culture 165

Achieving Individual and Organizational Success 165

Improving Behaviors 166

Skills Management and Training 166

Information as a Basis for Training 167

Personnel Reductions 168

Necessity for Effective Communications 169

Communications Requirements 170

Communication Groups 171

Messaging 174

Communications Program 175

Communications Team 175

Methods of Communication 176

Address all Anticipated Concerns 177

What You Should Take Away 177

11 Conduct Initial Training Workshops 179

Establish Team Training Facilitation and Review Process 180

Technical Training 180

Workshop Description 181

Workshop Process 181

Review and Refine Program Basis 184

What You Should Take Away 184

12 Identify and Value Prioritize Opportunities for Improvement 185

Validate Scope of Improvements 185

Opportunity Identification Process 187

Primary Detractors from Business/Mission Effectiveness 188

Performance Objectives 188

Improvement Methods 190

Step-Change Improvement 190

Continuous Improvement 191

Identifying Specific Potential Improvements 191

Quantify and Prioritize Opportunities-In Business Terms 193

Value Prioritization 194

Necessity for Complete Accurate Data 194

Identify Below-Average Performance and Performers 195

History 195

Categories of Performance 196

Safety Health Environment 196

Conformance to Business/Mission Objectives 196

Multiple Objectives 197

Methods for Identifying Opportunities 197

Pareto Analysis 197

Risk 201

Risk Analysis 203

Failure Modes and Effects Analysis 205

Financial Normalization 207

Analyze to Determine Highest Potential Value Opportunities 207

Identify Value Potential Probability of Success 208

Valuation Challenges 209

Final Stage 209

Construct Priority List for Improvement 210

Expand Leadership Team 210

What You Should Take Away 211

13 Process Reliability Techniques Help Make More Money 213

Introduction 213

Pareto Distribution 214

Cause of Deficiencies 215

Traditional Weibull Plots 216

Process Weibull Plot 216

Waste and the Hidden Factory 218

Production Weibull Analysis 219

World-Class Performance 219

4th Quartile Performance 221