Companies that want to improve their results need to pay attention to operational efficiency. This, however, is a constant challenge, which requires technology and integrated management. Want to know how to put it into practice? Keep up with us!

The operational efficiency of a company is the reflection of the actions that are put into practice, in the day to day of the operation, with the objective of using the minimum of resources to deliver quality products or services. Basically, it’s about efficient operation .

We know that achieving this goal takes time and requires a lot of work, both from managers and employees. In addition, actions need to be analyzed and monitored so that it is known whether or not they are achieving the goals.

That’s why we’ve prepared this post to help you get the results you want! Here, you will find out what operational efficiency is, tips for optimizing it, as well as understanding which indicators you should observe. Come on?

What does operational efficiency mean?

Operational efficiency is nothing more than a set of practices carried out in the company so that its resources are used in the best possible way .

In this way, the results can be aimed both at reducing product and/or service failures, and at offering better, faster deliveries.

Basically, in practice, operational efficiency is about working better, spending less and making more . It is continuous improvement to keep a company competitive with good results.

However, controlling and managing the company’s operational efficiency is a challenge. This is due to the fact that it is not just a sector, an area or a team that is responsible for it, but the organization as a whole.

Thus, keeping the gear running requires the proper management of several resources, such as: 

  • Equipment;
  • Weather;
  • Processes ;
  • People;
  • Financial investiment. 

 

Now, you will understand about the main differences between strategy and operational efficiency. These differences can be allied, if used correctly. 

Strategy and operational efficiency: main differences

At the outset, it is important to understand why we are explaining this now: many managers confuse strategy with operational efficiency. They are not the same thing, but they can work well together.

According to the theory of Michael Porter, an international reference on the subject, while strategy focuses on doing things that competitors don’t do to stand out, operational efficiency is about becoming a reference, being the best at what you do . 

In this way, both must exist in your business, but working in an integrated way, never one replacing the other. 

In other words, you can be a competitive company on two fronts: doing something that the competition doesn’t do (strategy) and becoming a reference, being the best in the service or product you offer (operational efficiency). 

However, it is worth noting that both work best when used intelligently. For example, being exploited at specific times. 

After all, there are cases where it makes more sense to be better and others where it is necessary to do differently. It is up to you to analyze your audience and type of market well, in addition to following the company’s trends. 

Finally, now that you know what operational efficiency is and the main differences with the strategy, understand better about the indicators and how to use these essential metrics for your business. 

 

Indicators that impact operational efficiency

That data should be the manager’s best friend you already know, don’t you? A company that wants to remain competitive must seek to obtain, understand and work with the data that emerges from it . 

However, sometimes, excess demands or lack of knowledge can prevent a manager from correctly reading and taking advantage of the indicators, as well as knowing which ones should be used.

Therefore, we have selected 4 indicators that will help measure your company’s operational efficiency, considering the resources mentioned above: equipment, time, processes, people and financial investment. Shall we check?

1. Overall equipment effectiveness (OEE)

Initially, we have the OEE indicator, which concerns the overall efficiency of the equipment. To calculate it, three aspects must be considered: 

  1. Availability : Ratio between the time produced and the time programmed to produce;
  2. Performance : Relationship between real production and theoretical production;
  3. Quality : Ratio between items – according to quality parameters and total items.

 

The result of the three points indicates the degree of efficiency of the evaluated equipment. 

2. Return on investment (ROI)

Next, we have one of the best-known indicators among managers: ROI. 

In short, ROI considers the capital available and the cost generated to carry out a certain action . This calculation can be done to evaluate the acquisition of new technologies, reorganize processes, manage time and promote people management.

The value of the return on the initial cost (financial or not) of the investment shows whether it is feasible to maintain the efforts in operation or whether it is necessary to modify the strategy. In plain English: you can see if it was really worth it for your business (aligned with your goals, of course).

3. Operating cash flow (FCO)

When talking about FCO, we are specifically dealing with operating profit . So, in this case, all inputs and outputs are considered, using 3 variables: earnings before taxes, depreciation and taxes. 

Therefore, this indicator is very important for the company’s financial control . Thus, analyzing the ROI, the decision-making of how much and where to invest becomes more assertive.

4. Net Promoter Score (NPS)

NPS is a metric of customer loyalty and satisfaction towards your product or service . In this way, by observing this indicator, it is possible to know how the experience you provide to your consumer is doing.

In other words, by crossing this data with the previous ones, you can identify points of improvement in internal processes that directly impact the external public . 

Well, now you understand about operational efficiency and what data should be used to promote it within the company, so now it’s time to get down to business. Learn how to optimize operational efficiency.

How to increase operational efficiency?

As we have already mentioned, it is not the responsibility of a specific area to increase operational efficiency. For this, several actions must be taken in order to generate a significant impact on the results. 

Check out some actions that should be performed for optimization:

1. Invest in process standardization

By implementing process standardization in your operation, you can reduce costs , save time and minimize errors. After all, with guidelines to be followed, that is, standards, the entire team follows the same guidelines and control will be greater.

In addition, the team’s productivity also increases , as there is a guide to be followed, which must be accessible to everyone. 

In this way, employees will have pre-defined tasks and processes, optimizing operational efficiency.

2. Manage non-conformities

When there is standardization of processes, it is much easier to identify where the flaws are. However, it is worth remembering that just being able to detect non-conformities is not enough to increase operational efficiency. For that, it is necessary to treat them. 

In this sense, creating and implementing action plans to resolve nonconformities in processes is essential . This type of practice allows for the continuous improvement of processes, in addition to adding or removing steps along the way.

3. Align quality control and operational efficiency

Offering a quality product or service is a priority for a company to succeed. With that in mind, implementing checking , auditing and problem solving processes is essential to maintain an excellent delivery.

Therefore, it is very important to be agile and to be open to feedback (internal and external) as a way of maintaining continuous improvement. This type of attitude promotes the professional and personal growth of employees and the maturity of the company as a whole.

After all, what actions does your company have aimed at continuous improvement? It’s time to think about it!

4. Invest in technology

Currently, companies that remain competitive are those that see technology as an indispensable ally for the business to progress. After all, having the entire company digitized is the first step for everything we’ve said so far to work. 

Through artificial intelligence and automation of basic manual and administrative processes, it is possible to spend less time, less money and speed up deliveries. 

In other words, digitizing is the key to optimizing and, consequently, increasing operational efficiency . 

Also read: 11 benefits of process digitization

Finally, you are ready to start implementing and/or optimizing operational efficiency in your company. But if you’re still in doubt, understand now why it’s so important to get this change in your business. 

Why is it so important to achieve operational efficiency?

Beforehand, let’s reflect on your company’s goals. I’m sure increasing profitability and delivering better results to your customers is within this, right? 

Therefore, it is essential to keep in mind that you cannot maintain a constant improvement and good results without operational efficiency. In other words, it is everything your business needs to stay competitive. 

To better understand, press play and check out the Google Cloud Cast podcast , with some Google experts talking about it. It’s unmissable! 

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