It managed to reduce costs through productivity gains by 35 percent and saw a 40 percent lift in its net promoter score. Rapid, concentrated projects aimed at making continuous, incremental, small-scale process improvements at the line level. They must rigorously apply a full set of levers across their entire operations … cookies, prominent performance-improvement programs, the level of senior-management involvement required, prepared to work and lead in new and different ways, McKinsey_Website_Accessibility@mckinsey.com. Soon, employees began carrying index cards listing the improvement priorities they had spotted during the previous week. Senior executives found that back-office workers were relatively prepared to adopt a mind-set of continuous improvement because they already had a strong sense of ownership and responsibility for customers. Please click "Accept" to help us improve its usefulness with additional cookies. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Operational Efficiency is the key to unlock Digital Transformation for Banks. Without getting into a mini-course on strategy … Please try again later. To address these challenges, banks have deployed tools including lean, process digitization, robotics—and, in some cases, advanced analytics—to lower operations costs on one hand, and provide customers with experiences that match those delivered by digital natives like Amazon or Uber. The potential benefits of digital risk initiatives include efficiency and productivity gains, enhanced risk effectiveness, and revenue gains. Moreover, a survey of workers found that their satisfaction levels had risen by 10 percent. That realization changed the design of the program and raised its goals—in some cases, by a factor of three. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. If you would like information about this content we will be happy to work with you. According to a McKinsey estimate, an operationally excellent team spends 50% of their time on value-added activities compared to an industry average of 25%. Senior executives launched an initiative to redefine the attributes and requirements for back-office managers so that they could succeed in this new environment and discussed the initiative with them to explain that they would play an important role in the success of the program—and of the company. projects across many operating units and by relying on broadly themed, company-wide training programs to instill the new philosophy of continuous improvement. People create and sustain change. Rapid, concentrated projects aimed at making continuous, incremental, small-scale process improvements at the line level. There the managers saw similar improvements in action and heard the enthusiasm that line managers and union leaders expressed for them. Our tech-enabled transformations address high-impact levers, such as advanced analytics for commercial, operational, and planning optimization; large-scale process automation and digitization. 3 Examples of Machine Efficiency » Efficiency vs Quality . Never miss an insight. Creating a lasting impact in global manufacturing and supply-chain operations. Some companies set their sights too low; others falter by implementing lean and other performance-enhancing tools without recognizing how existing performance-management systems or employee mind-sets might undermine them. We use cookies essential for this site to function well. The company’s back-office managers, however, found the program disquieting. ... For this group, the priorities are to improve operational efficiency … A better understanding of the cultural starting point enables top companies to determine where they should focus at the beginning of a program, when to implement its various elements, and how to achieve their goals. ... McKinsey … For example, one bank achieved a 20 percent efficiency improvement by applying lean in its account-closure process; a good result, but the process constituted less than 1 percent of the bank’s total operations cost and so did not move the needle. Flip the odds. Kevin guides strategic and operational transformations, helping executives take stock of their performance in core functions and find ways to achieve sustainable cost and efficiency gains. During the past 20 years, lean has become, along with Six Sigma, one of two kinds of prominent performance-improvement programs adopted by global manufacturing and, more recently, service companies. Shop floor deadlines are fierce, line leaders are busy, and many of them lack the skills to direct large initiatives. Transforming customer experience, and enterprise efficiency and effectiveness. Automated operational efficiency is in vogue but can produce mixed results if automation creates its own inefficiencies by acting too quickly. December 3, 2019Many banking operations leaders feel caught in a tug of war, expected to deliver cost savings while customer demands continue to increase. That approach is understandable. A step change in operational and clinical performance across the healthcare value chain is needed. In order to improve operational efficiency, you need to have an unbiased, detailed view of customer arrivals, wait times, and branch workflows, as well as how associates are spending their time … … Reinvent your business. Please try again later. The task of rolling out a performance transformation program across a company’s global operations—with thousands or even tens of thousands of workers—presents big challenges, which are particularly evident in attempts to scale up successful pilots. The consultancy promises CEOs 'stacked wins'—higher customer satisfaction, operational efficiency, and employee engagement—from CX improvements. Each facility may specialize in different products or services and face unique pressures from customers, competitors, and regulators. Stefan Roggenhofer is a principal in McKinsey’s Munich office. tab. Units often are scattered across dozens or even hundreds of sites throughout the world, function independently, and have distinct corporate cultures—particularly if M&A has fueled a company’s growth. ... A recent McKinsey study found that these legacy systems account for 74% of a company’s IT spend while hampering agility at the same time. We strive to provide individuals with disabilities equal access to our website. Article ... 2020 – US shale drillers lead the world—but even so, investing to improve drilling efficiency… We have made significant investments to make many of our models and tools scalable and accessible to Louisiana even after McKinsey finishes the engagement. A report from consultancy McKinsey has raised concerns about the mining industry’s climate change and decarbonisation strategy, arguing it may not go far enough in reducing emissions in the face of pressure from governments, investors, and activists. An aerospace manufacturer, for example, wanted to increase production of a product with rapidly growing sales. Operations. Our flagship business publication has been defining and informing the senior-management agenda since 1964. Unleash their potential. By contrast, when a company shifts the attention of its line managers away from firefighting, develops their leadership capabilities, and expects more from them, the gains are bigger and longer lasting. Previously, they had considered themselves akin to general managers, with high standing in the organization. ... in the case of renewables and efficiency improvements) or broader boosts Unleash their potential. The broader challenge underlying such problems is integrating the better-known “hard” operational tools and approaches—such as just-in-time production—with the “soft” side, including the development of leaders who can help teams to continuously identify and make efficiency … In addition, the company created a prominent visual tracking system to reinforce the new behavior by showing employees, in real time, when shifting workloads required their immediate attention. Still, by outsourcing the responsibility for initiatives (and, by extension, the underlying ideas) to experts, even their own, these companies often miss significant opportunities. These building blocks, or “minitransformations,” can be much larger than typical kaizen projects if the operating areas involved have logical boundaries—for example, a production line in a large plant, everything within the walls of a small plant, or all operations associated with a particular customer. The first step toward organizational excellence is building efficient … If you would like information about this content we will be happy to work with you. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. Senior executives, however, observed that enthusiasm and engagement soon started fading among the line workers. hereLearn more about cookies, Opens in new McKinsey Quarterly. Operations ... MCKINSEY & COMPANY Inefficient processes and wasteful operations put a drain on the He advises companies in industries where operational efficiency … This revelation spurred the executives to refocus the program, investigate the organizational factors behind the difficulties, and ultimately identify much more far-reaching solutions—starting with an effort to get sales and operations to collaborate in setting production priorities and to work together on a daily basis. Manufacturing & Supply Chain. But there are a few banks that have identified a full range of levers and developed plans to apply them across all of their processes, putting them in position to achieve efficiency gains of 30 percent or more. 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