![]() Even within the same industry, customer behaviour might e.g. If the intention is to compare numbers with others through benchmarking it is important to define, measure and track performance indicators for load and complexity as well. Output: Revenue, customer numbers/distribution between segments, quality, growth, customer satisfactionĬomparing operational efficiency.Input: Operational expenditure (OPEX), capital expenditure (CAPEX), people (measured either as headcount including headcount of partners, or as total number of full-time equivalents).The exact definition of these performance indicators varies between industries, but typically covers these categories: When measuring operational efficiency, a company should define, measure and track a number of performance indicators on both the input and output side. Even though important, input indicators like the unit production cost should not be seen as sole indicators of operational efficiency. Quite often, company management is measuring primarily on the input side, e.g., the unit production cost or the man hours required to produce one unit. Since operational efficiency is about the output to input ratio, it must be measured on both the input and output side. Improving operational efficiency begins with measuring it. Occasionally, operating excellence is also used with the same meaning as operational efficiency. To complicate the meaning, operational excellence, which is about continuous improvement, not limited to efficiency, is occasionally used when meaning operational efficiency. An explanation of the difference between efficiency and (total factor) productivity is found in "An Introduction to Efficiency and Productivity Analysis". ![]() The terms "operational efficiency", " efficiency" and " productivity" are often used interchangeably. Outputs would typically be money (revenue, margin, cash), new customers, customer loyalty, market differentiation, production, innovation, quality, speed & agility, complexity or opportunities. Inputs would typically be money (cost), people (measured either as headcount or as the number of full-time equivalents) or time/effort. When improving operational efficiency, the output to input ratio improves. In a business context, operational efficiency is a measurement of resource allocation and can be defined as the ratio between an output gained from the business and an input to run a business operation. ![]() JSTOR ( February 2012) ( Learn how and when to remove this template message).Unsourced material may be challenged and removed.įind sources: "Operational efficiency" – news Please help improve this article by adding citations to reliable sources. This article needs additional citations for verification.
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