Operational efficiency key in sustaining profitability and growth

by Cerlian Russell,
Operations Manager
Bank of St Vincent and the Grenadines Ltd,
for Financial Information Month

Once again our Eastern Caribbean Central Bank is taking a lead role by using the month of October to highlight the importance of financial education, which is even more important in these challenging times as households, businesses and governments around the world grapple with the effects of a declining global economy. I encourage those among us who are knowledgeable to do likewise and help in this educational process, as I focus on my topic at hand.{{more}}

We are at a time when market growth is slowing and consumers are becoming more knowledgeable, while marketing and sales costs are on the rise, being efficient in your operations could prove critical in sustaining overall business efficiency. Operational efficiency is the capability of a business to deliver goods and services to its customers in the most cost effective manner possible, while ensuring the highest quality of products, service and support. As businesses try to cope with external market pressures, which in most cases are beyond their control, streamlining their core processes could enable their businesses to address their unique operational challenges, while allowing businesses to focus more resources on their customers who should be their core business. Simply put, to remove the fat and waste of resources within your business will not only save money, but allow you to divert resources and time in satisfying your customer needs, which is your core business.

Here are five steps towards improving your operational efficiency:

1. Analyze the current situation through an efficient process of identifying the areas of weaknesses/wastages, establish benchmarks and develop a road map of actions to improve performance.

2. Optimize and streamline business processes to remove wastage and inefficient operations, which will help cut cost while allowing the business to focus more on the customers.

3. Modernizing business through technology will allow for more automation of your business processes, which will allow for more modern service delivery, less manual labour and increase output.

4. Leaner and meaner organization means agility and speed in producing and delivering high value for your customers. Being lean and efficient along your value chain or from input to delivering the service/product to the customer is where value is added at much lower cost.

5. Monitoring and evaluating performance regularly with established benchmarks or best practices will help the organization keep cost and other quality checks at the forefront.

In order to attain operational efficiency, a business needs to reduce waste and excesses, while leveraging the resources that contribute most to its success by utilizing the best motivated staff, technology and operating processes. While market forces may not allow you to increase your prices or profit margin, having a leaner organization that delivers more value to a customer at much lower cost, based on efficiencies achieved, can contribute towards increased customer value and customer retention. An organization with more satisfied customers is most likely in a better position to sustain profitability and growth.