Looking to calculate and improve efficiency? This is how!

calculating efficiency

You’ll often hear the war cry, “We need to work more efficiently!” But, as often as not, the term “efficiency” remains somewhat vague if you fail to make it tangible. This article digs into what this term actually means and how you can improve the “efficiency” of your staff and operational/production processes alike. Here goes!

 

So, what is “efficiency”?

Productivity and efficiency are two key success factors in any company. Efficiency, however, addresses the resources you use to complete a particular task or configure a given process. Generally, the more time or raw materials required, the lower the process’s efficiency.

Efficiency can also imply output quality. It may sound impressive if you’re producing a hundred widgets an hour or developing twenty applications a year, but this is meaningless if you have to reject a significant number because they don’t meet your quality standards.

Although we often use the term “efficiency” in the same breath as “productivity,” there’s actually quite a big difference. Productivity relates to the quantity of work an individual, team, or company delivers, whereas efficiency leans more toward the quality of the work produced. Efficiency and productivity occasionally conflict with one another. For example, increased productivity can lead to reduced efficiency, and vice versa.

 

Workplace efficiency

In practice, workplace efficiency takes several forms:

 

1. Production processes

Efficient production processes rely on several key principles:

  • proper-functioning machinery & ancillary equipment
  • minimal material & energy wastage
  • cost optimization

Suppose your machines were repeatedly breaking down or malfunctioning. This would cost you a lot of time and money. Automation and Total Productive Maintenance (TPM) are two ways to nip this issue in the bud and make your production processes more efficient.

 

2. Operational processes

Even operational processes can benefit from efficiency improvements, for example how you create and implement your marketing strategy, set up your customer service system, or implement your secondary processes. In these examples, efficiency would primarily address how you could improve your service speed and value.

A common problem with operational processes is they often rely on a large or even excessive number of repetitive activities. This means your staff may be spending hours on mind-numbing tasks that aren’t contributing toward optimal service levels, because they’re wasting too much time on secondary tasks such as emails, telephone calls, and information searches. By automating certain tasks, where possible, your staff can focus on those tasks that actually add value and boost your service levels.

 

3. Human resources

The third area of workplace efficiency are your human resources and, by definition, a very personal variable in the efficiency equation.

So, what sort of efficiency-related problems exist at a staffing level? For starters, staff performing pointless tasks that offer negligible personal challenge and add little or no value to your service levels. Staff efficiency entails every individual staff member throughout your organization spending time performing meaningful tasks that add value.

calculating efficiency

Calculating efficiency

But how should you go about calculating production process, operational process, and staff efficiency? Below, we’ll be discussing two ways to look at and calculate efficiency.

 

Resource efficiency

The aim of resource efficiency is to achieve as high a capacity utilization as possible. This means that both machinery and staff are productive and optimally deployed.

Efficient processes entail minimal downtime with respect to total operational time. It’s a good sign if your staff are spending the majority of their working hours providing core business-related services and your machinery is running virtually non-stop on production-related tasks.

You can calculate “resource efficiency” by dividing your operational time by total working hours and expressing this as a percentage.

So, suppose that within a 19-hour timeframe a company operates non-stop for 17½ hours – item manufacturing and packaging – without downtime, then your efficiency is 17.5/19 × 100% = 92.1%.

 

Flow efficiency

Alternatively, you can look at efficiency from a different angle, namely flow.

To calculate this type of efficiency, divide operational time by the total turnaround time.

For example, the process begins with a customer placing an online order for a takeaway meal and ends with the food delivery service handing it over to the customer.

  1. The customer places their order.
  2. The restaurant receives the order.
  3. The kitchen cooks the food.
  4. A staff member packages the order.
  5. The food delivery service picks up the order and heads off to the delivery address.

In every process, there are always steps you can optimize to make it faster and more efficient.

If the turnaround time is high compared to operational time, then you need to look at improving efficiency somewhere in the process.

 

Improving production and operational processes

Luckily, there are many ways you can give your organization a significant efficiency boost. Let’s first take a look at production processes and then operational processes.

 

Improving production processes

Streamlined production processes lie at the heart of every successful manufacturing company. Using the strategies and techniques outlined below, you too can make your production processes more efficient.

  • Carefully evaluate those workflows that involve staff, processes, and technology. Any insights you gain provide a basis for making tangible efficiency improvements.
  • Update any processes and technologies you use to make sure they meet the latest standards and requirements.
  • Set up scheduled maintenance procedures to minimize downtime and technical problems.
  • Keep your workplace neat and tidy. Efficiency goes hand in hand with a clear overview.
  • Adopt a continuous improvement strategy. This helps keep efficiency top of mind.
  • Leverage improvement strategies such as performance support (continuous, practical learning), workforce planning (alignment of company/workforce priorities/objectives) and Training Within Industry (standardization).

Read our article, 10 ways to improve your production processes.

 

Improving operational processes

We can group operational processes into one of three categories: control, primary and secondary. Adopting only a few measures is often all you need to improve the efficiency of these three crucial elements.

  • Similarly, you may not even be aware of certain procedures and processes that are actually superfluous and extremely time-intensive. Identifying and eliminating these superfluous procedures is the first step toward greater efficiency, as does defining clear deadlines, tasks, and roles.
  • Another strategy is lifelong learning, as this helps keep your workforce’s knowledge levels up to date, which has a knock-on effect for your operational processes and their efficiency.

Read our article, 6 ways to improve your existing operational processes.

improving efficiency

Improving staff efficiency

Although improving production and operational processes will help you make major strides toward greater efficiency, your staff are the backbone of your organization. The tips and tricks we’ve listed below can give your workforce efficiency a significant boost.

 

1. Delegate, then trust

Senior managers often like to maintain firm control over everything that happens within their organizations. But micromanagement is generally a waste of time and energy. You’re far better off delegating responsibility to your staff and trusting them to do their work properly.

Staff who are trusted to hone their skills and leadership qualities generally perform their work more efficiently.

 

2. Improve communication

Good communication greases the wheels of any efficient and productive workplace. And technology offers many options in this respect, yet not all are equally efficient. For example, writing and answering emails can take up almost a third of your staff’s time.

Reverting to more direct lines of communication (face-to-face, telephone) or switching to alternative modern‑day tools (Microsoft Teams, Slack, Zoom, Skype) can often boost your staff’s efficiency.

 

3. Identify and eliminate pointless tasks

In many companies, there are often tasks that in reality add little or no value. Stop this time-wasting NOW!

So, take a good, hard look at your team and departmental routines to see if you can identify superfluous activities that you can scrap. Your staff should be focusing almost entirely on high-priority tasks that add true value to your operational processes and service levels.

 

4. Set SMART goals

Set clearly defined goals and use the SMART framework. Make sure the goals are specific, measurable, assignable, realistic, and time-related. Doing so helps staff focus and function more efficiently.

Read our article, 5 steps to setting SMART goals.

 

5. Improve internal cooperation

Efficiency will remain a pipe dream if staff and/or departments remain islands isolated from one another. Pay particular attention to nurturing cooperation between teams and departments throughout your entire organization.

Read our article, 9 tips for successful team cooperation.

 

6. Put the right person in the right place at the right time

Knowing all your staff’s strengths, weaknesses, and character traits is also vital to maximizing efficiency. Extrovert, communicative staff members with a commercial drive are probably the best people to have present a sales pitch, whereas introvert, number- or word-oriented people who shun the limelight are more suited to other tasks.

 

7. Make it visual

And last, but by no means least, competence management practices rely on having a clear picture of all your workforce’s skills and competences. Visualizing this information can help you keep your finger on your organization’s pulse.

Skills matrices are ideal for visualizing just this type of information, giving you up-to-date snapshots of your workforce’s skills and strengths. They’ll help you pinpoint exactly who’s cut out for which task. Doing so ensures you always have the right person in the right place at the right time, and what’s more, makes finding replacements and spotting skills gaps a piece of cake.

AG5’s software is the ideal tool for mapping these skills in a matrix form. You can store all your information in skills matrices in the cloud – accessible anywhere, anyplace, anytime, and on any device. Drop us a line or schedule a demo to find out more about AG5’s skills management software.

 



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