What is Operational Efficiency?

For a business, Operational Efficiency can be defined as the ratio between the output generated by a business to the cost of operations that generate that output.

Why focus on Operational Efficiency?

Improving operational efficiency directly impacts a company’s profit margins.  In order for a company to increase profits, they either have to raise the price of their product/service, sell more OR reduce the cost of creating their product. The first two courses are challenging in an increasingly competitive market. Lowering operational costs by increasing operational efficiency is within the company’s realm of control and a very feasible path to increasing profits.

How do you measure Operational Efficiency?

A quantitative measurement of Operational Efficiency can be done by analyzing financial statements, analyzing cost of goods sold etc. It is also important to measure Operational Efficiency in a qualitative manner…ensure that the efficiencies are effective in achieving the strategic goals of the company, quality standards are maintained and customer satisfaction is sustained. A company has to determine key performance indicators for input and output in order to measure and monitor operational efficiency. These indicators will be determined by the nature of the industry. Within an industry, the indicators may differ from company to company depending on the strategic focus of the company.

What does Operational Efficiency have to do with Managing Growth?

Growth in a business is usually due to an increase in sales. Companies have the option to generate ‘more from more’ – meaning more output from more input OR to generate ‘more from same’ – more output from the same input. In order to achieve more from same, a company needs to maximize the efficiency of their existing operations thus increasing its capacity.

 How can you help improve our company’s Operational Efficiency?

Our consultants have spent years providing solutions to operational issues faced by businesses across multiple industries. With a strong technological background and years of experience in dealing with business issues, we bridge the gap between business and technology and provide effective solutions to operational efficiency issues. We have an in-depth understanding of operational functions and the role they play in helping the company achieve its goals. We will help uncover the gaps within your operations and provide solutions, both technological and non-technological, to help you improve your company’s Operational Efficiency. We focus on three important factors within your operations – People, Processes and Tools.