Operational Efficiency

“Standard work output is a goal that depends upon having a standardized way of doing the tasks in a organization. This also requires a production cycle with predefined connections between customers and supplies.”

Ivan Luizio Magalhães

In today’s world, both organization and business accelerates at such a fast pace that everyone wants to do more in less time. This type of increased productivity is also the definition of efficiency for some.

Here are tips for anyone looking to improve the operational efficiency of their organizations:

Focus on your customers – Working on the things that matter the most to customers makes any operation effective. In Mr. Drucker’s terms, this equated to doing the “right” things.

Ensure that strategy, plan and day to day priority is aligned with customer needs – By capturing customer needs through their feedback and translating critical customer requirements into key metrics, an effective management system is put into place.

Direct resources and focus toward the most critical customer service metrics and indicators – Learning that to only focus on efficiency for the purpose of improving efficiency will not provide the right results is painful. Naturally efficiency is gained by not wasting energy on less important things.

Set the right efficiency measurement to guide continuous improvement – The best improvement comes from continuous progression toward a meaningful but ambitious target. A good target usually is not easy to attain yet has the key stakeholders excited about it. There’s an old adage that says, “You can’t manage what you don’t measure.” One consistent process among top organizations was the integration of a system for measuring performance. Measurement requires continuous feedback to guide a organization’s planning efforts, and it provides a basis for selecting what improvements to make first. The gamut of measurement tactics can range widely. A sheet of paper used to tally the number of jobs run is a simple example, while electronic counters and computer software can automate the process and capture real time data. SWOT (Strengths, Weaknesses Opportunities, Threats) analysis, action plans, and balanced scorecards are other tools used to not only to measure but also to improve performance of the most successful organizations.

Effectiveness and efficiency go hand in hand – A leader should never lose sight of efficiency measures, yet his or her utmost important mission is to keep the organization effective. Do right things the right way!

Audit – Periodically auditing your practices and procedures will help weed out the ones that are no longer working. It will also help improve those that are working but could be more efficient. Ask your employees to help with this process. It can be frustrating for employees to be handed a procedure that they will have to utilize everyday with no ability to comment on its effectiveness or potential improvements.

Ensure the procedures you put in place help your employees be more efficient and ask for their feedback on the process.

The people with the hands on experience are the ones that can help you determine what will make things faster and easier.

Document Control – The ability to find necessary documents as easily as possible is a crucial part of operational efficiency. Finding the most current variation of any particular piece of paperwork – contracts to drawings to specifications – can help keep you on your critical path. Keeping your organization is organized is key!

Document revisions can also be important, depending on your type of organization. If you sell services or goods that will require service in the future, knowing exactly what the final product the client ended up with is important when supporting them later.

Procedures for document control start from the top down. Set a good example and document control will be easy!

Consistent Procedures – Consistency makes for efficiency. Creating and maintaining consistent procedures throughout your organization operations will help keep everyone on the same page, cutting down on confusion and rework. A simple plan of how to properly dispose of information properly, is an example of how to keep consistent procedures.

When procedures are consistent across the board, training employees is easier and assessing performance is a snap.

Small Steps – Nothing is going to be perfect right away. Small, thoughtful steps in the right direction will get your organization up to its optimal operational efficiency.

As technology evolves and becomes more applicable to your organization, you may be inclined to rush into upgrading and swapping all your systems over right away but taking small steps to ensure efficient integration of these technologies will likely be better for your organization in the long run.

Adequate training on new technologies with enough time for cross training is an important part of implementing new processes.

Make it Visible – If we don’t know something is wrong, how will we know it needs fixing? All too often we hide the pile of statistics and data away from our agents of change – our operators and sales persons; those who are in the best position to influence change. The second practical observation of top organizations is their consistent and prominent display of performance measures. Opportunities to display pertinent data for your workers abound whether it is shown on their desktop, viewed on a mobile device, or featured across a big screen monitor. Visual dashboards place data in front of people with their feet on the floor and their eye on the prize; these kinds of visible metrics keep employees accountable by displaying progress toward individual, team, or organization goals. It’s highly effective for everyone to see all the data all the time.

Build & Document Processes – If it’s not documented, it doesn’t exist. There’s nothing worse than realizing too late that integral steps in your procedures were skipped or simply forgotten. Documentation is another performance task that may take some time, but pays significant dividends in the end. Leading fabricators have become proficient at documenting processes and procedures not only to provide consistent performance, but also to meet the demands of a changing workforce. The pool of skilled operators in our industry is aging. Long term employees are leaving organizations, taking with them invaluable years of experience. Younger professionals are changing positions more rapidly and bringing with them more technical expertise. As the next generation of skilled employees takes the floor, documentation will provide a road map for creating long-term process improvements.

Continually Improve – The saying, “If you’re not moving forward-you’re moving backward” is more relevant than ever before. Those organizations that have instilled a culture of continuous improvement tend to outperform the competition. The rapid broadcast of quality management ideologies has created positive change throughout the industry – those who are unable to implement them are often left behind. At risk are yields in improved quality, increased utilization, shorter production times and decreased costs. Today there are numerous resources to help your organization on its continuous improvement journey. Still, be mindful of the fact that one size does not fit all. While philosophies like Lean Manufacturing and Six Sigma are both popular and proven, they can also be costly to implement. Don’t be afraid to seek out additional opportunities that might be a more realistic fit for your organization.

Make it Everybody’s Organization – Opportunity is around every corner. Improving efficiency must be the job of everyone in your organization to be effective. If you leave efficiency up to a single department, you might miss out on valuable insight. Breakthrough innovation comes from a culture that encourages employees to make a personal commitment toward the successful future of your organization. The most efficient manufacturing organizations keep everyone abreast of both immediate and long-term goals, encourage input from every level, and often build reward systems that inspire breakthrough thinking.

Improve Cross-Departmental Communications – When divisions exist between various departments within your organization, it’s impossible to experience optimal efficiency. The first thing you need to do is ensure all team members, departments, and groups have open lines of communication between them. One tip is to develop cross-functional hybrid teams that consist of employees from different departments. These teams help close gaps and give each department representation.

Use and Update the Right Technologies – Keeping your technologies updated plays an important role in your organization’s ability to remain efficient and relevant. Just having the right technology isn’t enough. It actually needs to be updated and improved on a regular basis. Otherwise, these tools and resources will become more of a hindrance than a benefit.

Identify and Overcome Bottlenecks – In almost every case, there is an identifiable bottleneck at the root of operational inefficiencies. Successfully finding and removing these bottlenecks is the key to improving.

The theory of constraints is an important tool that many organizations use to improve their processes. While Eliyahu M. Goldratt popularized the theory in his famous book The Goal, the theory is actually used by thousands of organizations in many different industries. It consists of a five-step process:

• Identify process constraints;
• Decide how to exploit the process constraints;
• Subordinate everything to these decisions;
• Evaluate the process constraint; and
• Remove the constraint and then reevaluate the process.

If you feel like there’s a bottleneck holding you back, it would be wise to study the theory of constraints in detail. You can learn a lot from this idea.

Create Incentive Programs for Employees – While a organization can spend a lot of time focusing on improving operational efficiencies, the reality is that growth happens on the ground floor. Unless your employees are on board, you won’t be successful.

One of the best ways to implement a plan for improving operational efficiency is to directly tie it to an incentive program. Rewards give employees a vested interest in the outcome of a project or task. As such, it’s helpful to give employees something they can tangibly enjoy.

Streamline and perfect your internal business processes – Being a small or medium-sized organization does come with its advantages. One advantage is the ability of smaller organizations to react more quickly to issues compared to larger competitors. This is especially true when smaller organizations choose to outsource internal processes. By choosing to work with a specialized Business Process Outsourcing (BPO) organization, they work to streamline your business processes for you. As a result, your organization is able to cut processing costs, increase productivity and reassign employees to others areas of your organization.

Improve your customer service – How can you improve your customer service? It’s actually very simple. By streamlining your organization, increasing productivity and decreasing processing errors, customers will be happier and more satisfied by receiving a smoother transaction. IT performance, HR functions and financial services are some of the most commonly outsourced business process functions today. Deciding to hire an Business Process Outsourcing (BPO) expert to process non-core business functions typically leads to far better customer service, increasing your positive organization reputation.

Focus on your core business – Some large organizations make efficient, secure business processes a prerequisite for doing business with them. This means your organization must process data to their standards. With ever-evolving technology, this can be very costly. To increase efficiency with these business processes that meet the requirements of your partners, your organization needs a secure, reliable network infrastructure. By working to streamline your non-core internal organization operations through outsourcing, you are then free to focus on the fundamentals and core structure of your organization. Typically, organizations who have a plan and keep it updated are most likely to streamline their operations, thus outperforming the competition. Without focusing on redundant processing tasks, such as check writing and check printing, Electronic Data Interchange (EDI), third party billing, rebate fulfillment, barcode labels, Human Resource (HR), Information Technology (IT) and more, organizations are then able to direct their focus to the work that really matters and defines your organization. In the end, streamlining your organization allows you to increase work flow/productivity, decrease internal processing costs, manage projects faster and make customers happier.

Ensure your team has continuous access to organization information – Continuous, uninterrupted access to accurate, real-time information is critical. Your employees should be working on one system – not multiple, separate systems. Sharing one database will ensure your team is working with the same information in order to make accurate, quick decisions and effectively complete tasks. To ensure your team has continuous access and doesn’t encounter any downtime throughout the day (or loss of data), make sure you have a business continuity and disaster recovery solution and plan in action. Never skimp on a good business continuity solution!

Make it possible for your remote workers to access organization info from their mobile devices – To make sure your team (even those working out of office) have access to your management system (organizational information) at all times. Sales reps visiting customers will be able to input orders right away into the system from their mobile device (by logging into your organization’s mobile business application); this ensures orders are accurate and can be processed quickly. Customer satisfaction will definitely see a boost with this tip!

Create efficient processes with Trading Partners – Receiving an email or fax with your partner’s purchase order and then manually inputting it into your management system, only to manually create and send back an invoice cannot be any more ineficcient. It’s time you look into EDI in order to send and receive partner messages electronically. EDI documents, like Purchase Orders, Invoices, ASNs, can then be converted to XML/CSV in order to be automatically integrated into your management system – reducing any human intervention.

Develop & review a technology plan every year – Technology is continuously evolving. Your business requirements are constantly changing as well. Your organization’s hardware and software will need to be re-evaluated every so often to ensure these IT solutions align properly with your organization objectives and requirements. Every year or so, depending on how fast your organization grows, you can sit down with an IT consultant or your IT Provider to determine what your organization may be missing in order to stay competitive and efficient. Perhaps it’s time to upgrade your system, simplify a few processes, bring in process consistency and standardized procedures, implement a Business Intelligence & Analytics tool and more. Develop a technology plan for all this so years don’t go by before you realize you’ve hit a wall and need a whole IT revamp that can have major disruptions to your organization.

Schedule – A clear schedule will keep you and your employees aware of the expectations you have for how they spend their time. Keeping a schedule will help make sure your bills are paid on time and your customers’ needs are taken care of. It will help forecast resources you may need as well as allow you to help schedule your personal life – everyone needs a vacation!

Maintenance – Maintaining your organization’s assets is important. Whether or not its equipment used to manufacture your product or simply the printer/copier used by the office staff, keeping these items operational is critical to organization running smoothly.

A little time and money now will help keep costs down in the long run – It’s better to maintain equipment as you go than pay for a complete breakdown when things finally fail.

Credit: linkedin.com