How Can Businesses Improve Operational Efficiency?
Operational efficiency isn’t just a buzzword — it's a critical factor that can make or break even the largest corporations.
Digital transformation is key when it comes to making operations more efficient.
Nine out of ten businesses think that their business model needs to change if they are to remain economically viable, according to McKinsey, and that means transformation that’s digital.
This digital shift is not just about adopting new technologies – it's about using technology to reimagine your business process.
Leverage technology
Amazon, for instance, has long been a pioneer in leveraging technology to optimise its warehouse operations. In addition to its ubiquitous customer data, the e-commerce giant’s use of robotics in its fulfilment centres has dramatically increased efficiency. Between 2013 and 2023, the number of robots used by Amazon grew from 10,000 to 750,000. Its robots include Proteus, kind of a robot lawnmower-type used for ferrying heavy pallets, and Sparrow, which plucks packages out of cubby holes and drops them into a plastic bin.
Utilise data and analytics
Top-tier companies’ ability to harness vast amounts of data to inform their decision-making is something they have in common when it comes to efficient operations.
Chip manufacturer Intel uses big data analytics to anticipate demand, identify supply chain bottlenecks, and in general optimise demand.
Optimising supply chains
At a time when wars are interrupting global supply routes – whether it’s Ukrainian grain exports or cargo ships using the Red Sea – combined with increasing consumer expectations for fast delivery, optimising supply chains has become critical for larger corporations.
Toyota, long renowned for its just-in-time manufacturing principles (only manufacturing what’s needed, when), has long followed its philosophy of kaizen.
The carmaker aims to standardise components across different models, reducing complexity and costs in the supply chain.
This approach has allowed Toyota to reduce development time for new models by 20% and cut production costs by 15%.
Continuous improvement
While technology plays a crucial role in operational efficiency, the world's most successful companies recognise that fostering a culture of continuous improvement is equally important.
Toyota’s Kaizen philosophy, which emphasises constant, incremental improvements, has been widely adopted across industries.
Or as Taiichi Ohno, father of the Toyota production line system, put it: “All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing the timeline by reducing the non-value adding wastes.”
Procter & Gamble, for example, has implemented its own global continuous improvement programme called “Integrated Work Systems” (IWS).
Workers are encouraged to identify and implement improvements wherever they can. As a result, P&G has reported significant gains in productivity and quality across its manufacturing operations, with some plants seeing efficiency improvements of up to 20%.
Always evolving
The strategies employed by the world's largest companies to enhance operational efficiency are diverse and ever-evolving.
The lessons from these global giants are clear: embrace digital transformation, harness the power of data, optimise supply chains, encourage sustainability, leverage AI and cultivate a culture of continuous improvement.
By doing so, your own company can aspire to the operational efficiency which has helped keep these corporations at the top of their sectors, from e-commerce to chip manufacturing.
These corporations have demonstrated that operational efficiency is not a destination but a journey.
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