Angie Henson - July 28, 2023

Grow Your Business with 11 Operational Efficiency Strategies

Gear up for expansion with these tried-and-true tactics.

Gear up for expansion with these tried-and-true tactics.

To drive business growth, you’ll need to laser in on how to enhance your operational efficiency by using innovative strategies. These actionable strategies will start building momentum for your business almost immediately. We’ll share some real-world examples of what they look like in practice as well.

Pop-up definition:

Operational efficiency: An organization’s ability to reduce resource input while achieving the same or greater outputs.

Assessing your current operational efficiency

First, evaluate your current level of operational efficiency, working to identify inefficiencies and bottlenecks. Analyze your key performance indicators (KPIs) to gauge whether they align with your current objectives and support best practices for an organization at your stage of growth. Design a map of KPIs to show how they all relate to one another. Your map can show a cause and effect relationship between safety KPIs, customer satisfaction KPIs, and revenues, as Harvard Business Review outlines.

For example, an IT company that aims to increase responsiveness to consumer needs might set a KPI of decreasing time to market for new solutions. Leaders should then ask, “What is standing in our way of achieving this goal?”

Then benchmark your metrics of success against industry standards, drawing from industry reports or performance data on top competitors.

Streamlining processes and workflows

Take the following three steps to upgrade your processes and enhance your workflows.

Engage in process mapping

Process mapping involves creating clear visuals for decision-making and project workflow. After doing so, identify time traps. Ask yourself, “Can we eliminate any unnecessary steps to become more agile?”

Employ lean methodologies

Implement a lean methodology to streamline your processes. For example, some companies engage in on-demand production rather than storing inventory. And when MicroMetl realized its heating and air conditioning units were traveling 1.5 miles around the facility during production, they created a cellularized manufacturing process that took place in a 100-foot area.

Pop-up definition:

Lean methodology: An approach centered on reducing inefficiencies and waste while producing a quality product or outcome. This approach prioritizes continuous adaptation and improvement.

Leverage technology for operational efficiency

Adopting digital tools can further bring substantial efficiency improvements—most notably, by automating repetitive tasks. Many elements of compliance, scheduling, onboarding, and payroll can be automated, for instance. Use systems that migrate employee data to wherever it needs to go, reducing data entry demands. Choose systems that can sync together, as integrating them will facilitate seamless data flow.

Embrace emerging technologies like AI and IoT, considering how they can benefit your business, too. Could AI tools introduce customers to products that best fit their needs? Brainstorm on ideas with leaders and high-performing employees.

Enhancing employee engagement and productivity

Strengthen both engagement and time-management with these business-driven HR strategies.

Boost motivation and guidance

Establish clear goals and expectations for employees to meet. Then, provide regular training and development opportunities. Encourage real-time feedback from peers and managers to support continuous improvement.

Optimize employee time-management and KPIs

Ensure proper workload distribution to set up employees for success. Also, work to identify the right individual KPIs for team members so they’ll pursue the right targets. These clear objectives must support organizational KPIs.

Know when to hire new employees—and start recruiting—too. If you need new expertise, or if you’re struggling to handle a growing workload, it might be time to hire. But a proactive recruitment strategy cultivates leads in advance, so you won’t be scrambling. By building your employer brand, you’ll naturally draw great candidates to you.

Facilitating cross-departmental collaboration

Facilitating cross-departmental collaboration

Encourage communication across functions, using collaborative tools and platforms. You’ll promote information sharing, ignite new ideas, and create a culture of teamwork as you break open silos. Hold social events like lunches that employees across departments can attend to forge new connections.

Refining financial strategy for operational efficiency

Use this three-prong financial strategy to enhance operations:

  • Focus your energy on the most profitable projects and clients. Conduct a customer profitability analysis, then determine how to better meet the needs of your top clients (or most profitable customer segment). How? Survey them, in addition to observing their purchasing trends.
  • Balance short-term and long-term financial goals. Set SMART annual and quarterly goals, breaking down how you can build toward long-term goals throughout the year. Short- and long-term goals should be mutually supportive, not contradictory.
  • Streamline budgeting and cost-management processes. Employ an 80/20 approach that focuses on the 20% of inputs that generate 80% of outcomes—the real drivers of success. Forecast costs over time and use financial modeling tools to plan how you could respond to different scenarios.

Evaluate and adapt your budget throughout the year, rather than just annually, to respond effectively to change. Generate weekly reports to easily track performance and make adjustments in real time.

Optimizing supply chain management

Collaborate with suppliers and partners to build resilient supply chains. Together, work to design innovative approaches or products, forecast needs, minimize risks, and reduce waste. For example, L’Oréal engages suppliers in a product co-development process, which enlists the suppliers to create packaging that matches consumer desires, McKinsey reports.

Implement inventory optimization strategies, which can reduce lead times and transportation costs, too. Work to predict and proactively address raw material shortages or cost changes when possible. Optimize the amount of inventory to store in particular warehouses based on purchasing trends. You can even automate inventory replenishment using software.

Refining decision-making through data analytics

Collect and analyze relevant data by using sophisticated analytical tools. Today’s business intelligence tools can produce detailed weekly reports that promote good decision-making. Implement data-driven decision-making processes that leverage these findings, increasing your agility.

Measuring and monitoring operational efficiency progress

Recognizing success and promoting a culture of improvement will keep everyone motivated to reach these goals.

Scaling your business with operational efficiency in mind

Plan for future growth and expansion by modeling different growth scenarios. Prioritize flexibility, since disruption is bound to continue, by considering how to secure the inputs for various scenarios. Through these steps, you’ll build a strong foundation for long-term success.


How do I identify the most important KPIs for operational efficiency?

Your KPIs should be attached to your organizational goals. Team KPIs should directly correlate to team objectives. Reducing delivery time, increasing customer conversion rate, and growing revenue by a certain percentage are several examples.

What are some common inefficiencies and bottlenecks in business operations?

In project management, bottlenecks can arise when individuals are overworked and burnt out—or when they struggle to prioritize. Bottlenecks can arise when managers or individuals lack appropriate decision-making permissions, too. They can also occur when a company follows a rigid annual budgetary process rather than adapting routinely to changes. Further, production bottlenecks can hamper sales. You can map out bottlenecks using a fishbone diagram to identify them.

What is the role of financial strategy in operational efficiency?

Financial strategy is the backbone of operational efficiency. A solid financial strategy will empower every department of an organization to work in tandem to reach a desired goal, giving them access to the resources they need.

In Conclusion:

By following these strategies for operational efficiency, you’ll maximize the results you can achieve. In doing so, you’ll see improvements in product, performance, talent management, and any other areas where you’ve sought to improve.


Tags: Business Growth Business Leadership

  1. About the Author:

  2. About the Author:

    As a Principal at Valesco, Angie Henson serves in key roles related to new investment origination, portfolio management, and investor relations. She directs the firm’s strategic acquisition planning and program management as acting head of research and business development operations since 2002. Angie holds a Bachelor of Science from Tarleton State University and a certificate in entrepreneurial studies from Southern Methodist University.

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