ACROBAT FOR BUSINESS | 6-MINUTE READ
What is operational efficiency and how to improve it?
Operational efficiency helps businesses cut costs and increase profit.
Efficiency is important because it allows individuals and organizations to save time, reduce stress, and promote better work-life balance. When a business has efficient operations, the business, employees, and customers all benefit.
Your business is up and running, but you can’t help but wonder if it is running the best it could be. Your operations are critical to profitability and both your team’s and your client’s satisfaction. You know you have operations that get the job done. Now, you need to improve operational efficiency. What is operational efficiency? Keep reading below to find out.
What is operational efficiency?
The operational efficiency definition is broad because it applies to all organizations and industries. Operational efficiency refers to the ability of a business to optimize its processes and resources. The end goal is to achieve the maximum output with the minimum input.
The theory behind operational efficiency is simple: When you streamline operations, eliminate waste, and improve productivity, you will improve your performance and profitability. Every business — from a one-person solopreneur to an enterprise organization — has limited time and resources. You need a standard operating procedure that functions at the highest level of efficiency to achieve your goals.
Operational efficiency is the process of becoming a more profitable business by reducing operational costs without sacrificing quality.
Benefits of operational efficiency.
When your business is operating efficiently, it benefits employees, finances, products and services, facilities, and your customers. The following are just a few of the many benefits of operational efficiency:
- Time savings. Streamlining processes eliminates unnecessary steps, frees up time, and increases productivity. You will discover steps in your processes to automate, which reduces human error. With time freed up in their schedules, your employees will have more time to think strategically and innovate.
- Cost savings. Efficient resource management reduces waste and needless expenses, which saves your business money. As you analyze your products and services, you will also gain insight into which areas of your business are the most profitable. This knowledge will help you know what projects to prioritize for investment and expansion.
- Improved productivity. Focusing on core activities and effective time management maximizes productivity. You must be efficient to be productive.
- Enhanced customer satisfaction. Faster response times and consistent service delivery build trust and loyalty. Satisfied customers keep you in business.
- Higher employee satisfaction. Employees are happier when they feel they are being efficient in their roles. By removing roadblocks, you will improve your team’s work-life balance and enable them to focus on more engaging, valuable tasks.
- Increased resilience and agility. When your organization is operationally efficient, you will be able to make decisions quickly and grow sustainably. You can adapt processes without significant disruption.
- Competitive market advantage. Increase your market presence by beating competitors with the quality of your products and services, the speed of your delivery, and lower prices.
How to improve operational efficiency.
When you look at improving efficiency at every level and in every process in your business, the task can seem daunting. Remember that you don’t need to tackle every challenge at once. Move systematically and prioritize your improvements.
As you work through the steps below, documentation is key. Document workflows and processes as they stand. This will help you visualize what steps in the process can be made more efficient. Anytime you make changes, update your documentation. Tools like Adobe Acrobat for business can help you create, edit, and organize your digital documentation for simple access and sharing.
1. Determine your baseline of operations.
Your baseline of operations lays out the functions currently in place that make your organization run. This is a discovery process to gain insight into how departments and individuals are currently accomplishing tasks and meeting goals. Talk to each of your major stakeholders. Seek to understand the major responsibilities of their department and what steps they take to carry out those responsibilities. Work together to determine what variables, both outputs and inputs, are most important for success.
2. Record your current performance.
Use the variables you selected in your baseline discovery process to identify key performance indicators (KPIs). You can compare your KPIs to industry standards or competitors for further insight. A clear picture of your current performance will give you a solid reference point for measuring improvement.
3. Identify bottlenecks.
Bottlenecks are any steps in a process that prevent a task from being completed. Bottlenecks make the process slower and are sometimes completely unnecessary. Other times, they present a chance for automation or other improvements. Chances are, your employees already know where the bottlenecks are, and they will happily tell you.
4. Remove bottlenecks.
Collaborate with your team to eliminate bottlenecks in your processes. The more invested your team is in updating the way things are done, the more successful they will be in carrying on those new approaches in the future. The following are three common bottleneck solutions that apply across most organizations:
- Templatize documentation. When you create a business document for a client, repurpose it for others. With Acrobat, you can design a fillable template to be reused again and again. You can also templatize document workflows to collect form data and e-signatures.
- Digitize invoicing. You don’t make money unless you bill your clients. But calculating rates and generating invoices can be time-consuming and error-prone. Plus, tracking down late payments and being sure you can account for your work can feel daunting. Instead, try digitizing your process with invoicing software. With the right software, you can log hours, generate invoices, set up automatic payment reminders, and track clients with outstanding balances all from one central location.
- Streamline project management. Good project management software tracks and accounts for the time you bill and integrates with your invoicing software. Be sure that you can automate deadline alerts and reminders to keep your team on schedule and prevent tasks from falling through the cracks.
5. Track improvements.
As you make changes to your operations, measure your performance. Compare your new KPIs to those at your baseline. While you hope to see KPIs improve, be sure that the quality of your work does not decrease. Meet as a team to review your metrics and identify what changes are working and what areas still need to be refined. Use Acrobat to create visuals and reports that keep all stakeholders on the same page.
Frequently asked questions.
The concept of operational efficiency is embedded in many other business terms. Depending on your industry, you may hear this concept phrased differently. Other terms for operational efficiency include:
- Efficiently operational
- Operational effectiveness
- Business efficiency
- Cost efficiency
- Resource optimization
- Streamlined operations
While you may hear the terms productivity and efficiency used interchangeably, they are different things. When a company wants to improve productivity, it wants to do more with the same amount of resources. When a company wants to improve operational efficiency, it wants to do the same with fewer resources.
A successful company will operate both productively and efficiently, but focusing on efficiency first is a good strategy. As you seek operational efficiency through sound business process management, the amount of wasted effort and resources in your organization will decrease. Once you know you are operating efficiently, you can turn your focus toward productivity and build it on a stronger baseline.
Operational efficiency focuses on your current state. It centers on processes and improvements that you can make right now. Operational excellence is a mindset, always looking to perform at a higher level and continuously improving.
If you want your employees to do their best work, you need to put people in the right roles and give them the right training. Make strategic hiring decisions to put A-level players in every position. Offer ongoing professional development programs and opportunities to keep your workforce up to date on the latest methodologies and technologies. Foster an environment where open and transparent communication thrives. Your employees will help you find more ways to be efficient.
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What is operational efficiency and how to improve it?
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