Operational Efficiency: A Quick Guide

Operational Efficiency: A Quick Guide

Operational efficiency is a metric used to measure the ratio between the input that's necessary to keep a company going and the output it provides. It is used to reduce wasted time, effort and/or materials by streamlining operations and eliminating redundant processes. To achieve these goals, companies look at resource utilization, production, inventory management and distribution. The formula for measuring operational efficiency is simple, but it's not an easy task.
Operational efficiency is a great performance indicator, and the more operational efficiency you have, the lower your costs to make the same amount of money. Automation is a great tool to increase a company's operational efficiency, but reducing waste and increasing efficiencies will positively impact a company's bottom line. The formula for operational efficiency is simple, but getting your operational efficiency down is more complicated than basic mathematics. There are different strategies to achieve operational efficiency, such as less input for the same output, more output for the same input, changing the number of outputs or increasing outputs and inputs.