The 5 Myths of Operational Efficiency

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An efficient operation is a competitive advantage. While it is an common goal, companies might not benefit from it when the focus doesn’t align with the intent leading to compromised results. There are 5 myths about operational efficiency.

1. Low cost is good for the bottom-line

Keeping cost down is important for a healthy bottom-line. Intense cost consciousness affects your brand and the quality of your products and services. Often, actions undertaken to cap cost have converse effects.

Lower grade input materials impact product durability. Dull packaging affects the product appeal and value perception. The most economic courier option keeps customers waiting; it might lead to high potential loss claims. Poorly staffed post-sale customer support breeds dissatisfaction.

2. Speed is most important for efficiency

Getting things done quickly is good but doing them poorly is counter-productive. You end up with rework, frustration, and finger-pointing to avoid blame. When speed becomes the sole focus for operational efficiency, it leads to hidden costs downstream.

Examples include passing on a work order with incomplete information in order to meet the target turnaround time; shipping products without adequate quality checks; hasty product designs that lack input from important stakeholders; and incomplete responses to customer inquiries.

 3. Productivity comes with efficiency

Many of us expect that productivity is achieved when there is efficiency. It is not necessary the case. Productivity is a relative measure. What you include as input and output might lead to different conclusions. Beware of the narrow focus on activities within the business only.

For instance, a business needs to share data with a third-party to complete the delivery of its service. Every month, it provides a customer file. The file is easy to produce as it is a data dump. Unfortunately, the partner needs to do a fair amount of data manipulation before consumption. Producing the rudimentary report is considered efficient from the business’ perspective, but it is truly unproductive work.

4. The lower the staff count the better

Labour cost accounts for a major portion of operating cost in most businesses. There is no debate that technology has displaced labour in many ways. However, we still need workers to provide the human touch that an application or machine doesn’t offer. Inadequate staffing is problematic.

Customer support remains a service that the human touch is preferred. It is not helpful when the customer has an issue and he has to be on hold for an hour to speak with an agent. It is frustrating when the interactive voice response system has multi-level instructions that don’t lead to a human who could provide assistance. It is annoying to do an online chat when the wait time in between typed responses are long because the agent handles multiple customers at the same time.

5. Automation is a necessary driver for efficiency

The advance of technology has made it rewarding to mechanize routine work. Manual work is deemed to be inefficient and error prone. However, mechanizing chaos is a waste of capital. Adopting technology without doing the proper due diligence is haphazard.

Many companies hop on the bandwagon and implement applications such as Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) tools. The appeal of automation leads them to plunge in without clearly defining how the new tool would make the intended work more efficient. As a result, users’ expectations are not met. The tool is abandoned.

 An ‘efficient’ job is not necessarily a job well done. It is crucial to determine the results that you aim for first before diving into how best to achieve them. This will lend a proper perspective to what would work best. The need for a customer-focused orientation differs from an internal need to drive efficiency. When you understand the intent that is meaningful for the business, applying the proper operational efficiency mindset would deliver the benefits.

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