How to Assess and Improve Your Business Operational Efficiency

Operational efficiency refers to an organisation’s ability to use less available resources or input (human, capital, material, and time) to achieve more output (services, products, or profits). In simple terms, it’s about doing more with less to achieve greater results. That’s the peak of performance, making efficiency a necessity in every business. Operational efficiency is not about cutting corners or using substandard resources. Efficiency does not compromise quality.

Operational efficiency directly impacts performance, profitability, and sustainability. It is crucial in business to reduce cost, increase productivity with value-driven tasks instead of low-impact tasks, improve customer satisfaction by delivering value with speed, and increase profit by utilising resources and reducing wastage. 

Assessing efficiency begins with a clear understanding of your current processes. Here’s a simple framework to help you evaluate:

•  Identify Key Processes 

The first step is to understand your current processes and identify the key areas that keep your business running, including accounting, customer sales, sales, marketing, human resources, etc. Highlight the tasks regularly performed by these key departments. 

•  Use Your Performance Metrics 

Quantify your business efficiency using your Key Performance Indicators (KPIs) to measure and gauge your overall performance for a while, such as cycle time, error rate, output, and employee productivity.

•  Analyse Bottlenecks

Upon analysing your KPIs, you will have adequate data to track inefficiencies in your processes. Follow through by analysing the clogs in the pipes. Identify the areas where things get stuck and need improvement. Use feedback methods to gather more information from customers, clients, and employees. 

•  Assess Your Technology Usage 

Are you using the right tools? Is your software up to date? If your system does not accommodate automation or if you leverage the worn tools, it affects your business efficiency. Consider upgrading your gadgets and software. 

•  Analyse Employee Engagement Rate

 Human resources is an important aspect of business. A motivated and engaged workforce puts in more effort and drives better results. The level of employee engagement also affects your business efficiency. 

After assessing your current level, the next step is to improve your operational efficiency using the following guidelines:

•  Delegate

Delegation is one of the easiest ways to improve efficiency. By delegating tasks to experts on your team, you leverage their strengths and focus on other core areas of your business. The fear of delegation shouldn’t hinder you from enjoying the numerous benefits that come with it. 

•   Automate

Repetitive tasks are time-consuming, so instead of spending hours responding to customer complaints or inquiries, automate the responses, use DM templates, and save time. 

•  Standardise Your Processes

Create a standard operating procedure for your business processes, especially the critical ones. This helps you reduce errors, confusion, miscommunication, or delays. 

•  Collaboration and Communication

Improve your communication system by fostering better communication among your team using communication channels such as Slack, Asana, Trello, or WhatsApp chat.

•  Constantly Monitor and Review to Improve

Efficiency is not a one-off task; it is a continuous process that requires constant monitoring to improve. As your business grows, it places a need for improvement in your structure to accommodate growth. 

In conclusion, the process of assessing your operational efficiency and identifying key areas that need improvement may seem cumbersome but it significantly improves performance and profitability in your business. 
Are you ready to improve your business operations and infrastructure? Contact Sisi Manager now to achieve your goals.