Achieving Operational Excellence in Manufacturing and Distribution

Leaders in manufacturing and distribution know that operational excellence (OpEx) doesn’t happen by accident. They also know that this approach, which has its roots in various management and quality improvement methodologies developed throughout the 20th century, including Six Sigma, is not easy to achieve.

OpEx combines continuous process improvements, lean methodologies, and holistic thinking. Derived from the Toyota Production System in post-World War II Japan, modern lean manufacturing and OpEx principles emphasize waste elimination and respect for people – employees, customers, and supply chain partners included.

Investing in a few key operational areas can improve your manufacturing and distribution enterprise, often in a short amount of time – and without a lot of extra cost. OpEx is within reach, and so is the roadmap for getting there.

Barriers to Achieving OpEx

Across industries – from machinery and plastics manufacturing to automotive, chemical, and primary metal manufacturing and distribution – CEOs and managers are reporting the same challenges. An uncertain economy and “flavor of the week” technologies leave many leaders confused about how to establish and maintain OpEx practices.

This lack of vision, combined with unclear expectations for staff and departments, results in rudderless enterprises. Other barriers to achieving OpEx include failures to establish and benchmark key performance indicators, lack of meaningful data that could help drive better performance and cut waste, inertia (“we’ve always done it this way”), and day-to-day disruptors, such as production disruptions, labor shortages and supply chain challenges.

Overcoming Barriers

Despite the obstacles, manufacturing and distribution leaders who want to achieve and maintain OpEx have several options for overcoming barriers and getting on the right course. Leadership should consider establishing a clear strategy and sticking with it: get clear on common goals, and make sure everyone in the enterprise knows and supports those goals. Invite feedback from each department and level – and listen to the feedback. This is a key aspect of OpEx, and it leads to improved communication, better employee engagement, and improved safety and compliance.

Leaders may also want to seek the support of a consultant. For example, a manufacturing business advisor can help your company identify where you are on the OpEx journey and craft a customized plan for improvement. A business advisory firm that hosts a national manufacturing survey and offers proprietary benchmarking tools can help you leverage business outcomes and data to drive digital and other strategies.

Not all data is created equal, however. Working with an experienced business advisor can help you target the most meaningful data for your company. Some businesses may be tempted to cast a wide data-gathering net. While this can be beneficial, it’s important to make sure to gather relevant and accurate data on the metrics that matter most.

In manufacturing, targeted data gathering can be used to predict equipment failures before they occur. This proactive approach minimizes downtime and maintenance costs, contributing to overall efficiency. Accurate and relevant data gathering can also help identify potential risks and vulnerabilities in your supply chain. By analyzing this data, organizations can develop strategies to mitigate risks and ensure smooth operations.

To overcome disruptions associated with labor shortages and further establish OpEx, enterprises should look at short- and long-term strategies. In the short-term, maximizing the targeted use of temporary labor to work on more basic tasks can enable businesses to achieve longer-term goals: cross-training employees, improving mentorship programs, and investing in other staff retention efforts.

Finally, moving toward OpEx requires seeking harmony between every department, individual, and level of an organization. Establish a culture of continuous improvement and blameless problem-solving.

Putting It All Together

Despite real obstacles to achieving and maintaining OpEx in manufacturing and distribution, leaders who understand OpEx principles can introduce meaningful changes to their business. OpEx requires intentional, focused effort, and the benefits include decreased waste, increased profits, smoother operations, and better employee and customer satisfaction.

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Aprio’s Manufacturing and Distribution services assist manufacturers and distributors across the U.S. in navigating competitive market conditions by embracing innovation and advanced technology. Moving beyond traditional tax and assurance, Aprio provides strategic services such as financial benchmarking, process improvement, and transaction advisory, tailored to drive growth and manage risk. As active participants in the manufacturing community, Aprio also offers access to valuable industry resources, including the Georgia Manufacturing Survey and Next Generation Manufacturing forum.

Aprio is the brand name under which Aprio, LLP, and Aprio Advisory Group, LLC, deliver professional services. Since 1952, clients throughout the U.S. and across more than 50 countries have trusted Aprio for guidance on how to achieve what’s next. As a premier business advisory and accounting firm, Aprio Advisory Group, LLC, delivers advisory, tax, managed and private client services to build value, drive growth, manage risk and protect wealth, and Aprio, LLP, provides audit and attest services. With proven experience and genuine care, Aprio serves individuals, entrepreneurs, and businesses, from promising startups to market leaders alike. Aprio has grown to 2,000+ team members providing solutions to clients in industries including manufacturing and distribution, non-profit and education, professional services, real estate, construction, restaurant, franchise and hospitality, government contracting and technology and blockchain.

Adam Beckerman works closely with the C-suite executives and finance managers of mid-market manufacturing and industrial, distribution, and e-commerce companies across a variety of sectors, including chemicals, plastics, medical, flooring, technology, and software developers, helping clients achieve their goals, increase profitability, and streamline operations.