Design for Operational Excellence: A Breakthrough Strategy for Business Growth

Design for Operational Excellence: A Breakthrough Strategy for Business Growth

by Kevin J. Duggan


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Design for Operational Excellence: A Breakthrough Strategy for Business Growth by Kevin J. Duggan

Design processes wisely.
Grow your business endlessly.

Design for Operational Excellence is a blueprint for a joined up, end-to-end designed operation that makes Operational Excellence a reality. The book excellently outlines the process of creating flow that every employee can see and, most importantly, fix without management intervention. Kevin Duggan’s emphasis on creating standard work for abnormal flow hits one of the biggest gaps in most continuous improvement initiatives. This book will change the way that you think about continuous improvement and the case studies will demonstrate that it works.”
−Philip Holt, Director, Customer Collaboration Online, Philips Consumer Lifestyle

“The approach outlined here can transform the phrase ‘leapfrog the competition’ from cliché to reality. Kevin’s approach is clear, the method sound, and the results achievable. Don’t just read this book: use it!”
−Jack McQuellon, Global Parts Manager, Caterpillar Paving Products

“In Design for Operational Excellence, Kevin Duggan provides a framework that focuses on the real endgame—levering operational excellence as a means of driving business growth. This book provides a comprehensive and systematic approach to designing and implementing value streams and supporting processes that will enable a business to assertively grow the top line as well as the bottom line.”
−Al Mason, Corporate Director, Altra Business System, Altra Industrial Motion

About the Book:

The ability to implement and maintain improvement initiatives like Lean and Six Sigma is essential for improving quality, eliminating waste, reducing costs, and increasing output—but it’s only the first step. Eventually, the improve-sustain-improve-sustain pattern itself becomes the end product. But it doesn’t have to be this way.

Why make operational improvement a perpetual process when you can make business growth a perpetual process?

In this trailblazing book, Kevin Duggan—author of Creating Mixed Model Value Streams and founder of the Institute for Operational Excellence and Duggan Associates—takes you beyond Lean and Six Sigma to achieve true Operational Excellence. By developing a “design for operational excellence” you can leverage the operations side of the business to enable continuous growth.

Design for Operational Excellence provides the design criteria and guidelines that enable you to grow your business organically by refocusing management’s attention from running the business to growing the business. Duggan takes you step by step through the new principles of Operational Excellence:

#1: Design Lean Value Streams
#2: Make Lean Value Streams Flow
#3: Make Flow Visual
#4: Create Standard Work for Flow
#5: Make Abnormal Flow Visual
#6: Create Standard Work for Abnormal Flow
#7: Have Employees in the Flow Improve the Flow
#8: Perform Offense Activities

Case studies illustrate how companies that applied Duggan’s methods grew consistently over time by designing and implementing a lean flow of product to the customer. The result was a flow that “self healed” when interruptions occurred, which removed the need to manage flow. These methods work in any business environment, not just manufacturing. Everything from insurance, financial, and banking organizations to hospitals, mining companies, universities, and even government can benefit from the bottom-line and topline business results Duggan’s methodology offers.

Design for Operational Excellence is the next great leap in the evolution of sustained business growth. Begin designing for growth now and stop reacting to customer needs. Instead, position your operation to provide customer solutions in changing markets, which will lead to profit and growth in even the most severe economic and market downturns.

Product Details

ISBN-13: 9780071768245
Publisher: McGraw-Hill Professional Publishing
Publication date: 08/17/2011
Pages: 320
Sales rank: 587,862
Product dimensions: 6.30(w) x 9.10(h) x 1.10(d)

About the Author

Kevin J. Duggan is the author of Creating Mixed Model Value Streams and the lead author of The Office That Grows Your Business: Achieving Operational Excellence in Your Business Processes. A sought after international speaker on Operational Excellence, Duggan has appeared on CNN Headline News and Fox Business Network as the expert in Lean Manufacturing. He lives in North Kingstown, RI.

Read an Excerpt

Design for Operational Excellence: A Breakthrough Strategy for Business Growth

By Kevin J. Duggan

The McGraw-Hill Companies, Inc.

Copyright © 2012Kevin J. Duggan
All rights reserved.
ISBN: 978-0-07-176824-5



The Engine of the Business

In the early 1970s, there probably was a day in most people's lives when there was an important event that they had to attend in the morning, let's say an interview or a final exam. They were probably nervous about the event, having studied or prepared for it the entire night before. When they got up that day, they were apprehensive. Over and over again, they ran through the information they had studied and how they expected the events of the day to unfold. They left their house promptly, walked out to their car, and got in. Suddenly, they were no longer nervous about the obstacle that was ahead of them that day. The apprehension, however, did not leave them. Instead, their focus had shifted and their worry intensified: they wondered whether their car was going to start to even get them to the interview or exam.

The car had had trouble starting in the past, and they hoped that the engine would not be finicky again today. They tensed up as they put the key in the ignition, saying things like, "Come on, baby, you can do it," then turned the key and perhaps said a silent prayer all in hopes that the engine would fire up (and continue to run). Once they turned the key, the ritual would begin by pumping the gas pedal or pulling a choke, and cranking the engine again and again. Soon, the battery would drain of its power and they had to use their last resort: push the car (hopefully downhill), jump in, shift into gear, then pop the clutch!

Hopefully, this ritual would get the car started, but there was no guarantee of success. The engine might rev up for a few seconds and then die. If the car finally started and ran smoothly, the driver would breathe a long sigh of relief and go on his way, his thoughts (and apprehension) returning to the event that was ahead of him.

Fast-forward to the present day. When you go out to a late-model-year car, do you have any apprehension about whether it will start? Do you find yourself nervous? Do you even give it a momentary thought? Would you ever even think about pushing your car downhill, jumping in, and popping the clutch to get it started? Your answer to these questions is probably no. You simply turn a key or press a button, and the engine magically starts the first time, every time. You have no worries that it won't start consistently every time. And that's exactly how your operation should run: it should start every time.

When customers give us orders, we should not have to think about, worry, or wonder whether those orders will be finished on time, with perfect quality, and delivered to the customer when the customer wants them. The order comes in from the customer (that's the start button), and the operational side of the business processes the order with no interruptions and then delivers the product. We shouldn't have to think about it or worry about it. Without flaw, the process should take place when we get an order. Just as today's engine starts every time, our operations should start every time, and like the modern engine, they should be smooth and seamless, without any managers pumping the gas pedal or pulling the choke, or management teams pushing the car to jump-start it.

While the concept of a smooth, seamless operation delivering product to customers without management intervention may seem implausible, as was the concept of starting a car on the first try in the 1970s, it is entirely attainable. Of course, we may think it was technological changes that allow today's engines to start every time. The advances in electronics and microprocessors played a big role in this, but technology is not the only reason why the modern car engine starts consistently every time. The main reason that today's engines start every time is that someone at a car manufacturing company, perhaps in Sales or Marketing, decided that the company needed an engine that would start consistently in order to be competitive in the marketplace. This challenge was then given to the engineers. To be successful, the engineers could not simply keep tinkering with, adjusting, or continuously improving the engine as it was. They had to redesign the engine. In other words, the reason the modern-day engine starts the first time, every time, is that it was designed that way. So why won't our operations start every time? They are not designed that way.

The Business in Motion

When an engineer designs something that is in motion, such as an aircraft, an engine, or an elevator, she considers both a static design with the object at rest and a dynamic design with the object in motion. For example, the static design of an aircraft at rest is the size of the wings, fuselage, landing gear, windows, seats, and other such things. The dynamic design of an aircraft is the design for its performance in flight: the cruising speed, center of gravity changes, slipstream effect, drag characteristics, and other related aspects.

When we use the words business operations, we are talking about the dynamic side of the business. Think of it as the business in motion, or the day-to-day activities that a business must carry out in order to get its products or services to the customer. Most companies spend quite a bit of time and do a good job on the static design: the necessary building size, the right equipment to meet production capacity, the physical layout of the factory and offices, the number of shipping and receiving doors, the number of parking spaces for employees, and so on. All of this is well planned and well laid out.

When they are considering the physical layout, more progressive companies have even thought about creating "flow," and have therefore designed their facilities to support flow. They have connected processes, created cells, moved heavy machinery, eliminated inventory storage locations, and streamlined their factory layouts to provide products to customers in an efficient manner. Some companies have even rearranged their offices to support flow. While these initiatives are good and are heading in the right direction, they are still just dealing with the physical layout. They involve where machines will be placed, how wide the aisles will be, where conference rooms will be located, and so forth. What they don't cover is the dynamic side of the business, meaning what they will do when the customer calls, or when things are in motion.

While the static design of business operations is typically carried out with great care, many questions in the dynamic design often go unanswered or even unasked. For example, is your office layout designed to flow information to production when it needs it? Or, more important, does it flow information to the customers when they need it? In your office, how will everyone know what to work on next? When will information flow? How will we know whether the office is on time? On the manufacturing floor, similar questions apply: Sales may know what the customer wants, but how will each operator know what to work on next? How will we know whether the operation is on time? How often will we know that it's on time? What will we do if there is a problem?

While the static side of the business is clearly planned and thought out, the more important business in motion side is left up to management. Managers are charged with making decisions to steer the course and keep things moving in the right direction. Every day, they manage the operation and at the same time try to continuously improve it.

Rarely do we step back and think about an actual dynamic design in our operations. If we do, we find that developing and implementing the improvements in the operation that are needed in order to achieve the company's preset goals are left up to indi

Excerpted from Design for Operational Excellence: A Breakthrough Strategy for Business Growth by Kevin J. Duggan. Copyright © 2012 by Kevin J. Duggan. Excerpted by permission of The McGraw-Hill Companies, Inc..
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Table of Contents

Foreword Jeffrey K. Liker vii

Acknowledgments x

Introduction: The Return on Your Investment xi

Part I Destination: Creating Operational Excellence 1

Chapter 1 The Engine of the Business 3

Chapter 2 The Myth of Improvement 9

Chapter 3 The Leapfrog 19

Chapter 4 Denning Operational Excellence 27

Chapter 5 Creating the Road Map to Operational Excellence 37

Part II Nine Tough Questions on Continuous Improvement 53

Chapter 6 Preparing People to Jump 55

Chapter 7 The First Question: Why Do We Do Continuous Improvement? 59

Chapter 8 The Second Question: What Is the Best Way to Improve? 63

Chapter 9 The Third Question: How Do We Know Where to Improve? 67

Chapter 10 The Fourth Question: Why Do We Strive to Create Flow? 75

Chapter 11 The Fifth Question: What Causes the Death of Flow? 81

Chapter 12 The Sixth Question: What Would the Shop Floor Look Like if We Did Everything Right? 91

Chapter 13 The Seventh Question: What Would the Office Look Like if We Did Everything Right? 97

Chapter 14 The Eighth Question: What Would the Supply Chain Look Like if We Did Everything Right? 105

Chapter 15 The Final Question: Where Will Our Continuous Improvement Journey Take Us? 111

Part III The Eight Principles of Operational Excellence 119

Chapter 16 The New Operations "Engine Design" for Operational Excellence 121

Chapter 17 The First Principle: Design Lean Value Streams 125

Chapter 18 The Second Principle: Make Lean Value Streams Flow 165

Chapter 19 The Third Principle: Make Flow Visual 171

Chapter 20 The Fourth Principle: Create Standard Work for Flow 181

Chapter 21 The Fifth Principle: Make Abnormal Flow Visual 189

Chapter 22 The Sixth Principle: Create Standard Work for Abnormal Flow 199

Chapter 23 The Seventh Principle: Have Employees in the Flow Improve the Flow 215

Chapter 24 The Eighth Principle: Perform Offense Activities 227

Part IV Extended Case Studies 239

Introduction to Case Studies 239

Chapter 25 Parker Hannifin Corporation 241

Chapter 26 IDEX Corporation 257

Chapter 27 Hypertherm 273

Conclusion: Our Blueprint for Growth 292

Notes 294

Index 296

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