Operational efficiency is calculated by dividing production (revenues, sales, cold calls, incoming leads, etc.) by input (resources, working hours, licenses, etc.). As Mankins explains in the Harvard Business Review, efficiency consists of producing the same product with fewer inputs. The ability to reduce the amount of resources allocated to a specific task without altering the results of that task is operational efficiency. A study conducted by PwC UK showed that two-thirds of companies in the United Kingdom expected to reduce costs over a 12-month period, but less than 30 percent of those organizations could achieve their operational efficiency objectives and only about a fifth of them could maintain the benefits of cost reduction over a three-year period.
Once you achieve operational efficiency, you'll start saving money, which will be reflected in your profit margins or in the competitive prices of your products and services. This way, you can create an effective and efficient maintenance routine adapted to your company's operations. Whether you plan to incorporate automation into your business or not, it's crucial to review, update and document your processes to improve operational efficiency. Once your operational inefficiencies are resolved immediately, your company will be competitive in a fast-paced world.
It's difficult to maintain operational efficiency when employees don't have access to best-practice methods. Improving efficiency requires eliminating workflow inefficiencies, which means that you must trust technology and allow computer-aided solutions to form part of your daily business operations. As the increase in order volume places increasing pressure on labor resources, managers of e-commerce order fulfillment centers are always looking for ways to improve operational efficiency. If production decreases, it means that efficiency has not increased, but that the entire productivity of your system has only decreased.
Operational efficiency is the relationship between production and inputs in an organization that, when solid, helps companies reduce unnecessary costs and, at the same time, increase revenues. In addition, your company can create an environment conducive to increasing efficiency and productivity by obtaining quality order fulfillment services. Operational efficiency is much more than reducing costs; it requires strategy and foresight to understand how an organization works.