Delivering a superior customer experience is one of the most important focus areas for businesses. Products and services are designed with the customer’s requirements at the core. The marketing team designs marketing campaigns as per current customer requirements. The internal business processes also need to be aligned for providing a great customer experience.
Strategy and Steps to Achieve Operational Efficiency
Efficient and smooth internal processes translate to superior customer experience. Internal operational efficiency shapes the customer experience offered by the business. As per a recent Global CEO Survey by PwC, 77% of the 1300 global CEOs consider the efficiency of business operations as the main factor that drives revenue growth.
Understanding Operational Efficiency
Business success requires the smooth functioning of various business functions and processes. Operational efficiencies can be improved only when business processes run smoothly.
When executed in the proper manner, operational efficiencies have a tangible effect on the business’s bottom line. With the latest technological advancements and automation, businesses can operate their business processes more efficiently than ever.
Operational efficiency is a metric that is the measure of the profit earned as a function of the operational costs. It is a direct indicator of a firm’s profit margins. Improving operational efficiency is not a one-time effort but an ongoing, combined effort toward optimizing processes, finances, and technology.
The main factors that affect operational efficiency are:
- Resource Utilization: Right resource allocation enables businesses to derive the most value out of them. Getting the most from resources and eliminating production waste are important considerations in operational efficiency.
- Distribution: Manufacturing companies, wholesalers, and retailers need to focus on their distribution network to maximize operational efficiency. Companies need to figure out the most efficient way to transport goods from the manufacturer to the wholesaler, and from the wholesaler to the retailer. A software-driven approach helps find the most efficient transportation route that ensures zero wastage.
- Production: efficient production is a major operational efficiency goal for manufacturing companies. Adopting lean manufacturing principles is a good way to bring operational efficiency to a manufacturing business.
- Inventory Management: Inventory management is key to operational efficiency for distribution channel members. Holding just enough inventory to meet immediate requirements is how product resellers operate. Managing excess inventory affects the profitability of the business.
Business productivity versus efficiency
|The productivity of a business is a measure of the throughput over a period of time.||Efficiency on the other hand is a measure of input versus output.|
|Productivity considers the amount of work completed and its worthiness towards the business goals.||It measures the output against resource investment like money, time, people, components, or raw materials. Efficiency is gauged by comparing the no. of resources utilized with the useful output derived.|
|Productivity is the rate at which output is achieved||It is about the resources invested and the waste involved. The effectiveness of the process is indicated by its efficiency|
|Productivity is a good indicator of personal performance||Efficiency is a good indicator of process performance|
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Ways to Improve Operational Efficiency
The strategy and steps to achieve operational efficiency vary with the type and scale of the business. Improving process efficiency is an ongoing process that businesses should adopt for continuous business process improvement.
As mentioned earlier, operational efficiency is a good indicator of process performance. It helps managers identify underperforming resources and process bottlenecks and take measures to eliminate them.
Here are a few strategies to increase operational efficiency:
- Refining workflows and eliminating manual processes: Process streamlining is the first step towards operational efficiency. Running a business manually brings down the operational efficiency of the business. Repetitive steps in a process can be automated to improve process efficiency. Workflow automation is very useful for work-intensive processes that are managed by human effort. Mundane activities like data entry or admin work can be automated so that human resources get to spend their work hours more productively.
- Supporting employees: Freeing employees from mundane, repetitive work helps them focus on productive work. Establishing business process management methodologies like workflow automation enables employees to manage their time more wisely and productively.
- Lean management methodologies: Delivering value to the customer by optimal usage of resources and ensuring minimal wastage is the primary aim of lean management methodologies.
Efficient operations streamline business processes for a significant impact on the business’s bottom line.
Streamlining business processes by adopting technology and automation helps improve operational efficiency significantly. Cflow is a workflow automation platform that streamlines business processes. Businesses can implement effective strategies and steps for process efficiency with Cflow. It is a no-code workflow solution that helps you create value from every single working hour and generate efficiencies that scale up as your business grows.
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