Foundational Approaches to Achieve Operational Efficiency
by Susan Dekker, Director, Integrated Insight
Published March, 2021
Operational processes can become out-of-date as customer expectations and technology continue to evolve. This inefficiency results in excess costs, unnecessary frustration for both customers and employees, and lower quality products or services. While operating efficiently is an obvious goal, front-line employees are often too busy fighting fires to dedicate time and resources to improving or are caught in a “this is how we’ve always done it” mentality.
The risks of operating inefficiently are too great to ignore:
Increased transaction times, longer waits for service: The longer it takes to process a customer, the longer all customers must wait.
Diminished quality: Processes prone to errors or rework ultimately result in an erosion of product quality.
Poor customer experience: Waiting longer for an inferior product usually results in lower customer satisfaction.
Poor employee experience: Inefficient processes are frustrating to all involved, employees included, as they strive to do their best.
Increased costs: Errors and delays cost real money, both in terms of wasted product and additional holding costs.
Decreased sales: The universality of online product reviews and social media means one poor customer experience can deter multiple future customers.
Identifying potential improvements can be done through structured observations and data analysis. Observe the process in person with key stakeholders to be sure they can visualize opportunities. Analyze historical system data to understand the impact of the issue. See “How to Conduct an Efficiency Summit” for more details.
Often companies focus on “big picture” initiatives, resulting in company-wide standardization or major organizational changes. But there is always opportunity to make incremental progress by optimizing lower-level processes as well. Types of changes, both big and small, could include:
1. Organizational: Align roles in the organization that can result in a streamlined process. For example, a centralized scheduling group may be more efficient than a dedicated scheduler within each business unit.
2. Transfer of responsibility/information: Often times the ball can get dropped as product fulfillment or customer service is handed off from one department to another. Clarify responsibilities and standardize communication to prevent issues.
3. Technology: Ever-changing technology may mean some processes are now obsolete and can be eliminated. Or, there may be newly-available software that can automate processes currently done manually.
4. Resources: Quantify the amount of both labor and physical resources needed to ensure there is sufficient capacity available to meet customer demand, at your targeted service level.
5. Facility: Optimizing customer or product flow may require adjustment to facilities. Quantify the cost/benefit of such changes to see if warranted.
6. Layout: Even minor layout changes can make big differences. Do employees have to walk 3 steps to pick up materials to finish a transaction? Is there an opportunity to move those supplies to within reach of the register?
7. Communication: Identify what aspects are currently confusing to customers, and improve communication through signage, mobile alerts, and how employees are trained to explain products and services.
8. Production/Inventory: Evaluate production levels to make sure the right amount of inventory is available at the right time.
Creating lasting change takes work, so be sure to set your company up for success from the start. Ensure front-line operators have buy-in from the beginning by including a representative on the project team. Pilot and test any changes before widespread implementation to work out all the kinks and avoid negative perceptions from the consumer or employee. Retrain all employees on the new process – and make sure they know WHY the change was made, not just WHAT the change is. Update any training documents or SOPs to reflect the new method so employees have the right information. And give them permission to STOP doing what is no longer necessary.
Achieving operational excellence doesn’t just happen from a one-time analysis. Regular maintenance is needed to avoid stagnation. Regularly revisit and observe processes and create forums where front-line employees can share their improvement ideas. Recognize and reward innovative ideas, as well as the employees who are advocates of changes. Measure and report out on progress, both so employees can see the impact of the change and also hold the right personnel accountable to the new standards.
Operating efficiently is not easy – it requires active work and input from all organizational levels. But the results are worth it: improved customer experience, minimized costs, and increased employee morale.
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