Learning to move your business forward in the right ways is all about being efficient with what you have. The concept of operational efficiency is a critical aspect of business performance, which focuses on maximising output while minimising input resources. But what are the key hallmarks of operational efficiency in business? Here are 6 most important ones to get your brain whirring.
By Team Savant
Image: Alexandr Podvalny
Risk Management
The importance of risk management cannot be understated. In the world of fleet management, a top-rated fleet insurance company can provide invaluable support through risk assessment, so risks are identified before they escalate. This can be done through predictive analytics, which is not just exclusive to fleet management but is pivotal to risk management in general.
When we leverage data, we can identify the problems before they permeate our practice. Risk assessments can be more accurate through telematics and real-time data, which many advanced insurers do, making far more informed decisions overall. Managing risks is a very delicate dance, and therefore, when we look at how we can do this properly, we'll see just what the positive outcomes can be.
Time Management
An efficient business is not just prioritising processes but recognising how to use their time more effectively. In manufacturing, there are a number of ways to do this, such as SMART goals. SMART goals involve practices being specific, measurable, achievable, relevant, and time-bound.
Additionally, other practices like Kanban, are closely linked with time management. Kanban is a time-honoured technique that provides a visual representation of tasks and their progress. It helps businesses identify bottlenecks that slow down processes and prioritise tasks based on urgency and importance. Kanban emphasises limiting the number of tasks in progress at any given time, which reduces multitasking, encourages focus, and helps to manage workload.
Time management can help businesses decrease the time required to complete processes, but also detect and address issues with quality promptly, which is where a system like Jidoka has been invaluable, as it involves providing machines and operators the ability to detect abnormal conditions and stop work when a problem occurs. It's that excellent blend of technology and the human touch.
Resource Utilisation
Ultimately, we should remember that to be an efficient business, we should make the most of our available resources. We can often spend time thinking we should get the newest and greatest tools out there, but we're all limited by our expenditure, and therefore, learning to make the most of what we have rather than wasting time and energy thinking about what could be will contribute to your overall efficiency.
Ensuring that equipment, personnel, and other assets are used productively with minimal idle time, while also streamlining workflows and eliminating unnecessary steps to reduce waste and improve productivity, can work wonders. Ultimately, smaller businesses may not be at the stage where they know what is out there, but a variety of techniques can help you be more productive. Tools like the 80/20 rule, also known as Pareto’s Principle, refer to the fact that 80% of the outcome is achieved through 20% of the efforts.
Other concepts similar in outlook, like Parkinson's Law, which refers to the fact that we perform our work within an allocated time frame, can improve focus. If we were to shorten the deadline ever so slightly, this could increase motivation, but it's important to be sparing with this practice.
Additionally, tactics like the Pomodoro Technique encourage focus, where you work in blocks of 25 minutes and take a 5-minute break, and once you've completed four of those, you take a longer break. Ultimately, if we make the most of what we have, be it tangible tools, concepts, or resources, we will learn to make the most of what we have.
Cost Management
When we struggle with operational efficiency, we need to ask ourselves if we are truly controlling our costs. Wastage is one of the biggest expenses, and if we minimise material waste and even time waste, we're going to actively focus on the inefficiencies that drive up costs. This is all about working smarter rather than harder, an approach that, over time, can make a huge impact on our abilities to work effectively.
Learning to control our costs is tough for smaller businesses, but if we learn operational efficiencies through accounting software or a business accountant, we will be able to see the overall incomings and outgoings and make a fair and balanced decision.
Quality and Performance
The biggest driver of operational efficiency in many ways is the performance of your processes. In manufacturing, the high overall equipment effectiveness (OEE) metric considers equipment availability, performance, and quality to measure productivity in manufacturing.
We should always remember that high standards must be in place while we optimise our processes, and it can be a chicken-and-egg situation where sometimes operating processes at a high standard can improve our quality, but also quality services help to optimise our processes.
Sometimes understanding the ISO standards can make things far clearer because these reputable hallmarks of operational efficiency can help to understand what it truly takes to get that gold standard. There are various ISO certifications in quality and efficiency that can help to deliver consistent product and service quality.
Adaptability and Flexibility
An efficient operation is not one that's nailed down with spikes, but can respond quickly to changes. We can implement methodologies like lean manufacturing practices or agile processes so we can adjust operations in response to market demands or unexpected challenges, which can help to create a far more reactive business.
Processes are pivotal, but if they are not malleable, this can be to the detriment of our overall business practices.
Operational efficiency in business is a journey, not a fixed point in time. With so many different factors at play, it becomes vital to understand what our version of operational efficiency is. You can see many of these methodologies and practices in place, and even implementing one or two can get you started towards a greater sense of operational efficiency.