Best Practices to Improve Operational Efficiency for Your Business

You’re running a small business that’s starting to grow. Orders are coming in faster than ever, and your team is working harder, but something feels off—you’re constantly putting out fires, missing deadlines, or overstocking your inventory. Despite the growth, it feels like you’re running in circles, and the frustration mounts.

This is a common experience for businesses of all sizes. Whether you’re a small business scaling up or a larger enterprise navigating complex operations, inefficiencies can creep into your everyday processes. What sets successful companies apart, especially in the ever-changing market, is their ability to improve operational efficiency—finding ways to deliver the same or better results using fewer resources, less time, and with minimal waste.

So, how do you improve your operational efficiency in your business? In this article, we’ll explore some of the best practices that can streamline your operations, help you stay competitive, and, most importantly, reduce the daily headaches that come with running your business

What Is Operational Efficiency?

Operational efficiency refers to how well an organization can deliver its products or services using the least amount of resources—whether time, money, or labor—while maximizing output and quality. In simple terms, it’s about getting more done with less and avoiding wasted effort.

To visualize this, let’s say you have a manufacturing company that can produce 1,000 units of a product with ten employees in eight hours. If your company could produce the same amount with fewer employees or less time without compromising the quality, you have improved your operational efficiency. When your company is efficient, everything becomes streamlined and flexible. And the best part? You’re able to make more profit. 

Now that you know what operational efficiency is all about, how can you improve operational efficiency in your business? What are the steps to boost the efficiency of your business and improve your productivity?

Best Practices to Improve Your Operational Efficiency

Let’s be honest here. Improving operational efficiency in your business is no small feat. It requires a multi-step approach that really takes a lot of time, but it’ll be worth it in the end. Let’s say you’re in a service-based sector. Your human resources are your biggest asset. In fact, they can also be your biggest cost. What does this mean? It indicates that the approach you use in managing your people will determine how you’ll be able to improve your business efficiency. 

The best approach to improving your operational efficiency is to align your people, processes, technology, and data. That way, you can reduce your operational costs, increase your productivity, and satisfy your clients and customers. Here are some of the best practices to improve your operational efficiency:

Analyze and Optimize Your Workflows

As mentioned earlier, three key components can help you achieve business transformation. They include your human resources, processes, and technology. How do they work? Your people execute the tasks, your processes make the work repeatable, and your technology adds efficiency to those tasks. It’s a golden triangle, and you must ensure that your processes are actually fit for purpose. That’s when you can improve your operational efficiency. 

Now, how do you achieve this through analyzing and optimizing your workflows? It begins with auditing your existing processes. What kind of processes do you have in place? How does these key components contribute to the overall goal you intend to achieve in your business? Do you have an optimized system to achieve your business goals?  To do this, identify your current bottlenecks and redundancies. Use tools like process mapping and workflow automation to gain a clear insight into areas of your business that are not efficient or areas that would slow down your productivity. Then, update and optimize your processes based on these insights. 

Once you’ve done that, create a Standard Operating Procedure (SOP). This provides a clear guide to your team or employees regarding your step-by-step processes. That way, they will become familiar with your process and learn how to be more efficient. The best? Your operational activities will be conducted in the same efficient way at all times regardless of who among your employees is performing them. Sounds intriguing, right? 

Leverage Automation In Your Operational Processes 

Most businesses today run manual tasks like data entry, invoicing, customer follow-ups, and many more. These create a major battery to your operational efficiencies, saps time, and reduces your morale. In fact, you wouldn’t be able to focus on other tasks that could benefit your business. Remember, we are in a world of advanced technology where automation is at the center stage. Therefore, you do not have an excuse to manually engage in these time-consuming and labor-intensive activities. 

According to a Gartner report published on the Forbes website, by 2025, automation could reduce operational costs by up to 30%. Additionally, integrating AI and machine learning into your business operations can enhance your decision-making through predictive analytics. Think about resource allocation as an example. You have all the necessary resources in the right folders. All the right team members are assigned the right tasks in the right place at the right time. Everything about your operations is effectively in motion. Then, the scope or schedule of the project you’re working on suddenly changes, and you need to begin reallocating all of these resources accordingly. 

You can’t have your project manager handle this type of project, as it would definitely take several hours. The best way to go about it is to use resource allocation software, which can handle all the tasks in a matter of minutes. That way, you can make all the necessary changes quickly, and your project manager can move on to tasks that add significant value to your business, such as strategic planning and innovation. 

Fostering Cross-Department Collaboration 

As your business grows, it becomes a bit difficult to maintain cross-collaboration across departments and team members. Maybe you established your business with a small team and they communicate by shouting across the office spaces. You have departments across marketing, sales, finance, HR, and consulting, and you’re now experiencing faster growth. You have different teams with these departments, each focusing on separate business functions with different processes and systems. 

Your business success now solely depends on your team members. That’s why you must build a culture of communication and cross-functional collaboration among your team members across departments. Beyond that, information must be shared in a timely fashion. Without this, you could have isolated projects or initiatives leading to inconsistencies and siloed data, which impacts your decision-making and misalignment among your team members, which could undermine your operational efficiency in several ways. 

In addition to establishing a culture of collaboration in your organization, you must constantly review your team structures to identify whether they are fit for purpose, create a single and efficient work system, and standardize your data into a single source of truth for your entire organization. 

Make Data More Accessible 

With accurate data, you can make more informed decisions that impact your business. Therefore, siloed or inconsistent data is not an option as it creates a barrier to your operational efficiency. That’s why you must standardize and centralize your data and develop a single source of truth for your organization. This helps to ensure that all your team members across departments are working in sync. In addition, project leaders, managers, or coordinators are guaranteed to have a 360-degree insight into the overall performance of your organization. 

Let’s take resource utilization in a service-based business as an example. Usually, project managers or coordinators are saddled with the responsibility of monitoring how resources are utilized to avoid under- or over-utilization. For project managers to succeed, they need data on every project and resource. This data must be stored and updated regularly, which will help the organization make informed decisions for both the people and the project. 

In addition to boosting your decision-making, making your data more accessible also helps to reduce waste and manual effort, cutting annual data spend by 5-15%, according to McKinsey research. This means that you’ll be able to save more money and time with responsible data management, architecture, and governance. 

Invest In Time Management

Regardless of your type of business, time is money. Therefore, you must have a system in place that monitors how your employees or team members spend their time. According to research, workers spend at least 2.8 hours per day on productive tasks, and about 27% of their time is dedicated to tasks that are directly related to their skills. 

This report shows that time tracking is one of the effective ways to boost your organizational time management, which could positively impact your operational efficiency. Meanwhile, you do not need to force your team members to be 100% productive or enforce a billable hour system that isn't realistic. What this means is that you ensure that your team members are fully focused and dedicated to adding value to your business with their skills, knowledge, and expertise. 

Measure and Monitor Key Performance Indicators (KPIs)

Key performance indicators, or KPIs, are sets of quantifiable measures that gauge your company or organization’s performance against some set objectives, strategies, or actions. Therefore, tracking operational KPIs is another best practice to improve your operational efficiency. As a service-based business, your metrics could include project cycle time, resource utilization, and customer satisfaction. When you track these metrics, you’ll be able to identify areas that need adjustment or improvements. Utilizing real-time analytics and dashboards allows you to make informed, data-driven decisions quickly, ensuring that operations remain optimized.

Embrace Lean Management Principles

Originally developed by Toyota in the 1950s, the lean management principle is a practice focused on eliminating waste and improving processes. Many successful organizations, including Nike, Amazon, Ford Motor Company, Boeing, and more have adopted lean management principles in their business to improve productivity, quality, and customer satisfaction. When you identify and remove non-value-adding activities in your business, you can streamline your operations and focus on what truly matters. 

Lean Enterprise Institute reports that companies implementing lean practices reduce costs by up to 30%. A core component of lean management is the concept of continuous improvement, or Kaizen, which encourages businesses to make incremental changes to keep processes efficient over time. As an organization, you must empower your employees with the right skills to identify opportunities for improvement, experiment with new ideas, and implement changes to your processes and systems.

There you go! Perhaps some of the best practices to improve operational efficiency in your business. Other best practices to boost your operational efficiency include optimizing your inventory and supply chain management, prioritizing employee training and continuous development, setting SMART goals, choosing the right people, and thinking ahead. 

Besides, you must understand that operational efficiency isn’t just about cutting costs—it's about creating a smoother, more agile business that can respond to challenges and opportunities with speed and precision. When you implement all of these best practices, you can set the foundation for sustainable growth and success. Businesses that prioritize operational efficiency see immediate gains in productivity and also long-term improvements in profitability and customer satisfaction.

Are You Ready to Boost Your Operational Efficiency? Talk to Us at Elev8 Matrix

Ready to streamline your operations and unlock your business’s full potential? At Elev8 Matrix, we specialize in crafting tailored strategies that optimize efficiency and drive results. Contact us today for a consultation, and let's transform the way your business operates—efficiently, effectively, and with lasting impact.

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