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  • Writer's pictureLaia Sastre

Three ways to improve operational efficiency

When talking to business owners, there is one thing they all want: the efficient and smooth running of their business operations. Why? To save time and money. Efficiency can free up your time to spend elsewhere (What about working on the business? Or spending time with your family? Or going on a holiday?). Efficiency can help your business meet customer/client demand faster, which translates into better serving your customers/clients and serving more of them.

What is operational efficiency?

I found this definition at TechTarget that I liked: Operational efficiency is the ability of an organisation to reduce waste in time, effort and materials as much as possible, while still producing a high-quality service or product. Financially, operational efficiency can be defined as the ratio between the input required to keep the organization going and the output it provides. Input refers to what is put into a business to operate properly, such as costs, employees and time while output refers to what is put out or gained, such as rapid development times, quality, revenue, customer acquisition and customer retention.

Let’s have a deeper look!

Why is operational efficiency important?

Organisations that operate efficiently focus on how to reduce costs while improving efficiencies to boost revenue, usually by performing tasks and delivering client goods and services in less time and/or with fewer expenses. I would add that another key point is that they are driven by continuous improvement. Those businesses continually review and improve processes, tools, and resources which enable the business to respond effectively to any challenge or opportunity.

Have you ever thought about what would happen if you could do it better, faster, and at a lower cost? Would this support your business's success? This is likely in the current times with the rise of new technologies which have helped organisations tighten up and improve many aspects of their business (although this is a subject for another post!). But it’s not just about putting the right tools in place, it’s a mindset too. A way to think that has to be embedded in the company, at every level, from employees to leadership. When everyone understands that they play a key role in helping the business become more efficient, then you can transform your business performance.

As one of my managers used to say back in my corporate days: we need to work smarter, not harder!

3 ways to improve operational efficiency

Take a critical look at your processes

If teams are spending too much time on repetitive tasks, fixing errors, and relying on paperwork to take care of everyday operations, chances are, that your business processes need improvements. Automating repeatable tasks and implementing software platforms that centralise data and keep it up-to-date can help teams reduce the time spent on administrative work and reduce errors.

The review and creation of standard operating procedures is something we touched on in a past article about things that a VBM can do for you and your business, and I’ll develop it further in another post.

Information-sharing and collaboration

When information flows freely and transparently, teams across departments and functions can more easily work with each other to carry out tasks, meet goals, and drive innovation. Research shows companies with cross-functional collaboration typically outperform those that don’t have it. Plus, improving collaboration can help everyone feel more engaged. Related to this, in the last month's blog post, I talked about the benefits of capturing the knowledge in your business.

Support employee management practices

Even though most employees may feel they’re doing their best, there could be areas where they need more support or ways in which they’re being held back. By taking a closer look at the day-to-day performance of employees, you can discover which employees are being overworked, or, which of their skills and talents are being underutilised, for example. Who is working in their area of genius and feeling motivated, and who isn’t. Then, you can refine annual role reviews accordingly and determine if more training / upskilling is needed.

In summary, it takes a combination of the right tools and management practices to optimise operational efficiency. Efficient operations are cost-effective, and by reducing waste while maintaining quality and service, you are going to have happy clients (and happy life!).

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