Why introduce operational efficiency?

Operational efficiency is the capability of an enterprise to deliver products or services to its customers in the most cost-effective manner possible while still ensuring the high quality of its products, service and support.

It is often achieved by streamlining a company’s core processes in order to more effectively respond to continually changing market forces in a cost-effective manner. In order to attain operational efficiency a company needs to minimize redundancy and waste while leveraging the resources that contribute most to its success and utilizing the best of its workforce, technology and business processes. The reduced internal costs that result from operational efficiency enable a company to achieve higher profit margins or be more successful in highly competitive markets.

Improving efficiency is a key concern for executives, and a goal for many technology initiatives and implementations.

Why it’s important to introduce operational efficiency in our organizations?

·       To Increase efficiency by connecting business groups and systems

It is essential because manual and inefficient processes for critical communications, create a soloed environment between departments. These applications did not provide consistent data validation or reporting tools for management, impacting efforts to introduce initiatives and slowing information to the referral network.

For example, a hospital requires the following for a system:

• To connect group access across departments
• Improve productivity and plans for referral outreach communications to physicians, case managers, nurses and therapists,
• Provide remote access and enhanced reporting tools for management
• If the entire work process addresses all the above-mentioned issues; only then it is operational efficient.

·      To streamline processes which help make better decisions

Similarly, it’s very important to streamline all the process within a company to create more consistency in its decision-making process. If there’s a financial investment agency so, they need to follow a criteria for distributing funds, but moreover they also need better tools to control the application and decision process and make clear final decisions. To be more upfront and confident with conclusions, the agency sought a process to:

• Refine the initial application and redefine staff roles and responsibilities
• Develop a scoring sheet and scoring model
• Update policies, forms and procedures
• Modify the audit process to review how grant monies are spent
• Identify key performance indicators

·      To Process improvements which turns growth into profit

Sometimes many companies have through such processes where it needed improvement, and existing guidelines were not documented or followed on a consistent basis. For example, an industrial products distributor with $30 million in sales was growing, but the bottom line was shrinking. Products were often stocked wherever they would fit, complicating the picking process and leading to incorrect cycle counts and incorrect customer orders. It needed the following to cater more efficient processes:

• Reorganize warehouses for maximum accuracy and efficiency
• Install a bar-coding system to improve order accuracy
• Rationalize delivery routes by analyzing profitability of current routes and implementing best practices
• Instituting a quality control system based on ISO 9001 guidelines

Final Words

In fact, even if goals are being met, it is always interesting to try to make processes more and more efficient. For this, look for opportunities for improvement, such as wastage that you can avoid, delays you can eliminate, or other problems.

Think of a new way to execute the process and train your employees to meet the new improved procedures. Then measure it again, analyze it and improve it until you get the operational efficiency you want!