After an OPIP review recently, I went back and reread the blogs that I wrote earlier this year about the “OPIP” – the Operations Performance Improvement Plan. Rereading those blogs (OPIP. Another Acronym? and SmartSheets, Schedules and Priorities) several months later and with the experience of attending many, many OPIP meetings, I’ve realized that I should be more descriptive about what an OPIP is and its purpose.
The “Operations” in OPIP refers to how your part of the company is operating. While that may not have been the original intent in Brandon’s mind when the OPIP acronym was born (read OPIP. Another Acronym? to understand the reference), it works really well in this context. In other words, how are you running your part of the business. When I think about operational goals, they can be related to manufacturing, supply chain, engineering, human resources or any other part of BIW. Every area within the company should have operational goals. Operational goals are those big goals or targets that your team is trying to hit to improve your performance in a meaningful way. That meaningful way should be primarily focused on improving performance in our five pillars (Safety, Quality, Schedule, Cost and People) in the Business Operating System (BOS). By improving performance in any one of our pillars, we ultimately reduce costs.
Let’s look at a few different potential goals related to cost. In Production, the operational goal could be reducing the total hours it takes to build the ship. The target would be a specific number of hours lower than today’s ship-build hours. For Supply Chain, the goal could be to improve vendor on-time delivery, and the target could be that we require 97% of suppliers to deliver on time. Engineering could reduce errors on drawings released to production, and that target could be a 25% reduction in errors by the end of 2025. Operational goals, therefore, identify a few key things: what we are improving, how much we need to improve it by, and a way to measure that improvement.
How we’re going to measure improvement in the examples I’ve just described can be expressed with many different units of measure. It could be hours, days, a count, a percentage and so on. But all of these improvements should ultimately reduce costs in a meaningful way for the company.
Once the operational goals are identified, it’s time to figure out how you are going to hit the goal you set. I’m sure you know that the hours will not just melt off because I asked you to reduce your costs. While that would be awesome and easy for everyone, it’s just not reality. So what we’re talking about is identifying what we have to do and laying out the order we have to do it in. In other words, we need to make a plan.
It takes a plan to burn down hours and decrease the production cycle or achieve any of our other goals in the company. Enter the OPIP!
There might be a few different projects we have to implement to hit the target, so we also must prioritize the project plans so that we execute the plan with the biggest return on investment first – that will bring us closer to the goal faster.
This gives us the definition of an OPIP: a method to organize performance improvement projects for Safety, Quality, Schedule, Cost and People in priority order to achieve an operational goal.
It may be helpful to think about the OPIP as your GPS. If you’re like me, you use your GPS a lot (whether I’m trying to find something local or far away, I like knowing where I’m going). For a road trip to Cleveland, my GPS calculates a route to get there that would include many roads and intersections, some road construction, tolls and fuel and rest stops. The route is broken down into step-by-step directions with time estimates that ultimately lead to Cleveland and a predicted time of arrival. If I started to drive and followed the directions, I would end up there.
Your OPIP is very much the same thing, but there is no “calculate the route” button to get you from where you are today to where you want to go. Mapping out that route requires you to use your knowledge of the process you manage. You might have to ask other people in the company (in your department or other departments) to take on certain tasks and incorporate their knowledge into the plan.
As in every company, we want to reduce costs in building our product. For the purposes of this conversation, let’s say we want to reduce 1,000,000 hours from our build (that’s 1 million hours). We can all agree it’s a big number, and we can understand that such a large target requires all teams to reduce their hours so the reductions across the company add up to 1 million hours. In our map analogy, the million-hour goal would be our “Cleveland.” The OPIP is the step-by-step directions to go from our current performance level to our destination (the 1 million-hour reduction).
No one area will reduce our schedule performance by 1 million hours. That’s why each team has their own OPIP for their area or department. This goal is a cumulative improvement where everyone’s savings coming together will achieve the bigger operational goal. Everyone has to be improving and making progress to make that happen.
Back to the OPIP. Your improvement plan is based on your knowledge of how we build ships: what you have learned here, what your team has learned, mistakes made previously, lessons learned, other work experience, listening to new ideas, experiments and so on. That experience is how we create the step-by-step directions of our plan. To reduce our current ship-build hours to our target hours, each area is generating a list of projects with an estimated number of hours reduced and a plan detailing how we are going to execute the projects to achieve the hour target. That is the OPIP.
Now enter SmartSheets. SmartSheets is the software tool that houses the OPIPs (the plans). This software allows us to organize, sort, prioritize, assign and track progress. In our Cleveland analogy, consider SmartSheets similar to Google Maps or Waze. It’s just the software that displays the directions to get from where you are to where you want to be.
I hope this removes some of the mystery around OPIPs. The OPIP is a great tool that will help us achieve targets that we didn’t think were even possible. I am already seeing very good improvements from using it. I know we can get even better at using it and benefit from it across the company. It’s all about the plan!
See you on the deckplates!
Safely Execute High Quality Work!