Don't Let Operational Inefficiencies Hurt Your Bottom Line


Insights for ProfessionalsThe latest thought leadership for Management pros

Thursday, April 22, 2021

Identifying and addressing operational inefficiencies in your business can help you improve your bottom line by optimizing costs and reducing expenditure.

Article 4 Minutes
Don't Let Operational Inefficiencies Hurt Your Bottom Line

Your bottom line is one of the most important indicators of the health of your business. Long-term, sustainable success depends on your ability to turn a profit by keeping costs to a minimum without making unacceptable sacrifices in key areas like customer experience, product quality and innovation.

According to PwC, less than 30% of cost-cutting programs achieve their initial objectives and less than a fifth deliver consistent benefits for three years after implementation.

Getting costs under control is clearly a big challenge, but it can be overcome if you have the right strategy and a good understanding of the issues holding you back.

Looking into common sources of operational inefficiency and asking if they're present in your organization is a good starting point.

Working in silos

Organizational silos - which occur when different departments work in isolation and fail to share information or best practices with each other - can severely hinder your efforts to maximize operational efficiency.

There are numerous examples of how a business could be disadvantaged by its various teams failing to collaborate and communicate. If customer service and account management staff don't share the latest customer feedback with the product development team, for example, you could miss valuable opportunities to tweak or redesign your products to reflect what your audience really needs.

Similarly, marketing and sales should be working closely together to share the latest buyer insights and information. Stronger customer understanding, based on the broadest possible range of data, will help both of these teams do their jobs more effectively.

If silos are limiting efficiency and hindering productivity in your business, here are some of the steps you can take to break down barriers between teams:

  • Ensure managers are taking the lead on demonstrating how a free flow of information benefits the whole organization
  • Use shared tools - such as customer relationship management (CRM) dashboards - to ensure everyone has access to the same data and goals
  • Introduce cross-departmental training and exercises
  • Create councils or forums where representatives from different teams and functions can collaborate and share ideas

Lack of process integration

Another common inefficiency - one that's closely linked to the idea of silos - is the use of different systems and tools across the business. This can lead to wasted time and lost productivity if people often have to switch between processes and make sure they're up to speed with how each one works.

For example, a company that relies on separate CRM, inventory management and order tracking systems could find its customer support staff having to make frequent transitions across these platforms to deliver the best possible outcomes for the end user.

If you're looking to raise efficiency, it's important to take a fresh look at the key processes and technologies that keep your business running and how they could be streamlined.

Ignoring innovation

In the 21st century's digital-first business environment, constant technological evolution and innovation have become the norm. The development of new systems and software shapes how businesses operate and what they're able to achieve, so you must be prepared to evolve if you want to stay relevant, competitive and efficient.

One of the clearest examples of a modern concept that offers enormous potential to help companies become more efficient is automation. By automating routine, repeatable tasks, you can get important jobs done faster and with a lower risk of human error. Furthermore, your employees can put their skills to better use on more productive, high-value activities.

Organizations that have invested in robotic process automation have seen their expectations met or exceeded in key areas including improved quality/accuracy (90%), higher productivity (86%) and cost reduction (59%), according to research by Deloitte.

You could also have a lot to gain from harnessing the power of data analytics, which can help with anything from studying how your supply chain is performing to evaluating your workforce management.

Poor prioritization

To use your available time and resources effectively, you need to be absolutely clear about the biggest priorities for your organization and the critical tasks and processes that keep your core business running.

Clearly identifying your most important functions and objectives will help to ensure that the resources at your disposal - whether it's staff, stock, machinery or anything else - are carefully deployed to deliver maximum value.

This becomes particularly important when you're facing serious challenges, such as economic adversity that might be affecting customer demand or limitations in your workforce capacity. If you're struggling to manage employee attendance or going through a period of high absenteeism, for example, it's vital to ensure that the staff you do have available are using their time in the most productive way.

If you're setting the right priorities and using this framework to enable optimal allocation of your resources, the entire business will benefit from the resulting improvements in efficiency.

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