Business efficiency is not a choice, but is the key to survival and expansion. There are inefficiencies which every business carries along without knowing, wasting resources, losing ground, and missing possibilities. The correct strategy is to conduct periodic efficiency audits to eliminate the weaknesses and transform the manner in which your business operates.
An efficiency audit is a comprehensive health check for your business processes. It will tell you where money, effort, and time are being wasted and how you can improve. Periodic audits help all businesses of all sizes remain ahead of the competition and cope with a constantly changing business environment.
Conducting an Efficiency Audit
Start with Process Mapping
Begin your audit by mapping today’s workflows through all departments. Map each step employees follow to perform day-to-day duties, from getting new customers to managing inventories. The visual map will probably reveal duplicative steps, unnecessary approvals, and bottlenecks that slow operations.
Prioritize the areas of highest impact first. Customer service, order fulfillment, and manufacturing processes usually offer the areas of greatest impact to enhance. Identify who is doing what, how long it takes, and what systems and tools are being used.
Review Your Technology Stack
Technology should be making things easier, not more difficult. Evaluate whether your current software solutions are integrated or are creating data silos. Determine systems that are replicating functionality or require data to be manually entered from one system to another.
Consider the way employees apply available technology in practice. All too often, organizations purchase strong tools that fail to gain traction because the employees aren’t properly trained or because the solutions don’t align with natural work flows.
Examine Resource Utilization
Audit what your business is spending human resources, capital, and time on. Is your best talent spending time performing tasks professionals such as King Kong or machines can do? Is marketing expenditure being allocated to media that does not produce good returns?
Track worker effort for one week to find out where effort is actually being directed versus where you think it is. The results will always surprise business leaders and provide great potential for re-allocation.
Measure Key Performance Indicators
Set baseline measures before any changes are made. Customer response time, success rates of projects, productivity measures of employees, and cost per acquisition are the most important metrics to track. These represent quantitative measures of real performance and enable tracking improvement due to changes.
Incorporating Efficiency Improvements
Prioritize High-Impact Changes
Don’t attempt to address all inefficiencies at once. Prioritize and make the highest return on investment changes first. Rapid, low-resource wins with some payoffs build momentum for more far-reaching changes.
Develop an implementation schedule addressing the most crucial issues first, while also addressing interdependencies between various improvements. There are some improvements that must be treated sequentially rather than simultaneously.
Engage Your Team
Staff are best aware of operational inefficiencies, as they are the ones who have to work around them every day. Get suggestions and feedback during the audit. Staff will be more accepting of changes when they feel they have been heard and are part of the solution to the problems.
Provide adequate training for any new process or technology. Regardless of the efficiency of a system, employees who have no idea of how to use it efficiently make it fail.
Monitor and Adjust
Efficiency improvements must be watched closely. Set routine follow-ups to ensure changes are truly doing what they were designed to do and have not caused new problems somewhere else. It might require some tweaking of some solutions through real-world application.
Establish monitoring systems that track important metrics on a consistent basis. Automated reports will allow you to detect emerging inefficiencies before they become critical.
Making Efficiency a Habit
Business efficiency is not an endpoint – it’s a path. Markets shift, teams shift, and technology arrives. Companies who regularly look in the rearview mirror and refocus their operations leave in the dust rivals who are too complacent to do so.
Perform bi-annual or quarterly efficiency audits based on your growth rate and business complexity. High-growth businesses will have to perform audits more often to ensure business processes scale with expanding operations.
Perform your efficiency audit today. Time invested in this exercise will be returned to you in terms of enhanced productivity, reduced expenditure, and a more advantageous competitive position.
