Q2. What is Operational Efficiency?

Operational Efficiency shows how much competent an organization is in regards to the delivery
of its goods or services to its target market in a manner which is cost-effective while ensuring
that the quality of the offerings is not compromised. Firms are often able to achieve operational
efficiency by streamlining its core processes in order to respond more effectively to the
constantly evolving market forces in a manner which can save costs.

Operational Efficiency can be achieved by minimizing waste while making the best use of a
firm’s resources which make it an overall success. This refers to the fact that a firm should make
the best use of its processes which are related to its workforce and technology. This in turn will
allow a firm to earn higher profit margins as well as establish a more competitive position in the
market.

In order to achieve this operational efficiency, it is important for an enterprise to discover which
processes are performing in an unsatisfactory manner. Once they are discovered then it can focus
on improving them. In order to achieve this, managers should communicate with head of
departments in order to review the current landscape of the company. After a few audits a
conclusion can be made in regards to the areas where the organization is lacking and is
performing poorly. Another factor which allows firms to achieve operational efficiency is by
keeping production costs in check. It is essential to discover how much labor and time is required
by each process within the organization so that cost reduction measures can be implemented.
Finally, the final step to achieving operational efficiency is through mapping out the sources of
failure of an organization in regards to where and why they have occurred and using appropriate
technological tools to overcome these failures.