Operational Efficiency

Operational efficiency is possible, you just need to take the first step.

operational efficiency definition

Operational Efficiency Meaning

The definition of operational efficiency or "operational effectiveness" in a business context is the degree to which an organization can deliver its goods and services with minimal waste. Waste can occur in production, service delivery, labor, finance, logistics, inventory, and any other part of operations and operational costs. The goal of any business seeking to achieve operational efficiency and effectiveness is, therefore, to find and eliminate any source of waste.


Process Improvement for Operational Efficiency

Operational Efficiency Examples: Areas to Target with Process Efficiency Programs:

Finance Operations: Efficiency and Effectiveness

finance operations efficiencyA more efficient finance organization means skilled finance workers spend less time dealing with low-value activities like processing simple transactions and more time on strategic planning and consulting with other business areas. Based on a CFO.com survey, Finance teams spend 49% of their time on transaction processing and only 17-20% of their time supporting decision-making. Hardly an efficient use of their time. Improving operational efficiency in Finance operations includes automating and streamlining processes like:

Service Operations: Efficiency and Effectiveness

customer service efficiencyReducing the time a customer spends waiting for resolution and ensuring the accuracy of the response are the goals of any customer service team. That means customers don't have to bounce around to different staff members to solve their issues because a consistent, standard process is in place to handle any request. Improving operational effectiveness means reducing inefficiencies and waste in areas like:

Labor Operations: Efficiency and Effectiveness

labor efficiencyEmployee Lifecycle Management is often an inefficient and manual workflow nightmare from hiring to offboarding. Operational efficiency and effectiveness in hiring means you can hire better candidates faster and have them performing productive work much sooner. Once aboard efficiencies can be built around any new hire interactions to reduce friction and confusion as well as ensuring employees can spend more time working and less time dealing with internal issues.

Workflow automation can make processes like these more efficient, improving operational effectiveness:

Vendors and Vendor Management Operations: Efficiency and Effectiveness

manage vendors efficientlyThe term Vendor Management refers to the efforts around maintaining a positive, efficient, and productive relationship with an organization's vendor partners. Operational inefficiency can spring up around anything from sourcing new vendors to monitoring the performance of existing vendors. Hiring a bad vendor can set an organization back months, so the process for finding new vendors should reduce risk and ensure proper fit. Any new projects vendors take on should be rigorously evaluated and vetted by the proper stakeholders, finance, legal, etc. Finding operational efficiencies in these areas should be paramount:

More on Operational Efficiency and Operational Effectiveness

Below are additional resources you can read to learn more about improving efficiency in your organization from SOPs to documentation.


Additional Resources


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