Companies consistently strive to achieve operational efficiency to ensure that their systems and processes perform optimally. Achieving operational efficiency means that an organization is operating without waste and is using its resources wisely while increasing profitability. However, a step beyond maintaining operational efficiency is achieving operational excellence. Comparing the relationship between operational efficiency and operational excellence can provide insight into how a company can achieve its best results.
This article will cover the following topics:
- Understanding Operational Excellence
- What is Operational Efficiency?
- Comparing Goals for Excellence & Efficiency
- How PayEm offers Operational Efficiency & Excellence
Understanding Operational Excellence
Operational excellence describes an organization’s ability to use specific principles and strategies to create a culture of excellence. This concept is essentially a mindset or strategic approach. It promotes unity within the team and moves the business forward toward a common goal of providing the highest level of value to each customer.
When examining operational excellence, it is first helpful to know what it isn’t. Operational excellence is not focused on how a company achieves its objectives. It also does not look at specific systems and processes, nor the exact details of how things get done. Instead, it takes a broader view and looks at why a business should be both more profitable and valuable. Instead of just cutting costs and increasing productivity, it looks at how a company can grow overall and operate at the highest level possible.
What is Operational Efficiency?
To understand the relationship between operational efficiency and operational excellence, it is essential to understand what operational efficiency is. Operational efficiency describes how well an organization can produce and deliver its services and products while minimizing cost and waste. Optimizing business systems and processes should be done at every stage of business, including production, delivery, logistics, labor, inventory, and finance. To attain operational efficiency, business leaders must examine existing operations in detail to see where changes and improvements can be made.
How Operational Efficiency Complements Operational Excellence
Operational efficiency is more about how a company achieves its objectives of higher profitability and reduced costs. It describes how those processes occur, such as the prevention of bottlenecks, the automation of manual processes, and the improvement of workflows.
However, operational excellence describes the overarching values that an organization has. It focuses on why a company strives to provide its customers with the highest level of value. It is essentially a strategy that focuses on accomplishing cost leadership while delivering unparalleled value without compromise.
Operational excellence then is intrinsically connected to operational efficiency. A company performing at its highest level of operational excellence is naturally the most efficient it can be. It has optimized its systems and processes and coordinated its staff’s focus on achieving the highest quality. In turn, having a highly efficient operation leads to operational excellence in that all systems and processes are fully optimized to perform at their best levels.
Goals For Operational Excellence
When considering how to achieve operational excellence, it helps to have markers by which a company will know that they have achieved its objectives. These markers will vary depending on whether an organization establishes goals for operational excellence or efficiency.
The goals for operational excellence include:
As a business leader explores the specific goals for achieving operational excellence within their company, keeping these three markers top of mind is essential. Financial, operational, and cultural goals help businesses focus on achieving the overall objective of higher value.
Goals For Operational Efficiency
An organization that has attained a high operational efficiency level has met significant milestones along the way. These goals serve as a beacon leading the business back to its core mission and honing in on the most effective ways to achieve optimal efficiency. Ultimately, an efficient company is one that spends less time and resources on low-productivity tasks and processes while, at the same time, finding ways to increase production and limit costs.
The goals for operational efficiency include:
- Process Efficiency
- Economic Stability & Growth
A highly efficient organization has set up automation to handle priority processes. In addition, they have a streamlined approach to managing systems that ensures a successful outcome. Low-profit actions are replaced with highly efficient protocols that push the business toward its goals concerning operational efficiency.
Operational Excellence Challenges & How To Manage Them
When organizations pursue operational excellence, they aim for each employee to deliver, see, and improve the flow of value to their clients. However, how this is undertaken can be met with challenges along the way. Some barriers to achieving operational excellence in an organization include lack of accountability, poor data collection, and difficulties meeting client expectations.
Holding each staff member accountable at every stage of the production flow is critical to achieving success in operational efficiency efforts. One way to solve this is by having a shared platform for collaboration and task completion. Financial technology solutions can provide companies with a cohesive system for holding each employee accountable at every workflow stage.
To improve operational efficiency and attain a high level of operational excellence, it’s essential to see what is taking place. It can be challenging to make improvements without knowing where the organization currently stands. One of the best ways to ascertain the current state of affairs, in order to make positive changes, is with data collection. Having the right tech stack in place can go a long way towards analyzing metrics and honing in on key performance indicators (KPIs) that enable visibility into what is going on at each operational stage.
Meeting client expectations is vital, not just to the continued existence of an organization, but also to the pursuit of operational excellence. With client satisfaction comes the assurance that the company has provided the best value and has exceeded expectations.
Some ways to reduce customer dissatisfaction and attain operational excellence include speeding up the time between a customer’s product request and the subsequent delivery. Once the bottlenecks to production are removed, clients can receive their products or services, thus equating to a better customer experience.
Meeting Client Expectations With FinTech Solutions:
- Improved client support
- Better client onboarding
- Faster customer approvals
- More efficient customer service
Operational efficiency and excellence can be accomplished by implementing financial technology within the workflow. The right fintech solutions can speed up production and eliminate bottlenecks, thereby providing better overall value. This results in improving both operational efficiency and excellence.
How PayEm offers Operational Efficiency & Excellence
The quest to achieve operational efficiency and excellence within an organization need not be futile. In fact, both can be very much within reach once the right tools & tech stack are in place. Improving operational efficiency becomes easier when businesses implement a fully-featured FinTech platform like PayEm. As a solution to both operational efficiency and excellence, PayEm allows users can do the following:
- Streamline processes with automation tools that include workflows and approvals
- Gain greater insight with data, metrics, and KPI transparency
- Improve operational efficiency with spend management
- Automate approvals & decrease the incidence of bottlenecks as well as employee frustration
- Use multiple payment options
- Connect finance tech stacks into one platform
- Reduce friction & tedious tasks for finance teams
- Increase productivity, reduce risk, and lower operating costs - all of which drive business growth
Ultimately, PayEm offers finance directors and other business leaders the opportunity to gain greater insight, clarity, and control over business operations and the methods by which they can be optimized. This insight can be used to make better decisions and increase the value brought to the end-user. Contact PayEm’s experts for a commitment-free, no-cost demo of the platform.
Jordan A. W. Steinberg