Operational efficiency unlike business analytics concentrates on capturing real-time information and processing it. As a result, it enables instant decision-making for businesses and quicker reactions to changes.
Business analytics envisages the analysis of large amounts of historical data with a set of tools to deliver predictions and insights. Such analysis is conducted post-factum. Hence, the information does not bring benefits in real-time and is not always relevant to the dynamically changing operational environment. The demand for a more dynamic supply of information drove the appearance of operational efficiency.
Business intelligence is an umbrella term for all means used to collect, analyze, and process business information. The use of business intelligence takes place when strategic decisions are made. It provides the grounds for selecting the direction of development, planning long-term goals, and setting priorities.
Both, business and operational efficiency use some tools, and they are often similar. The difference lies in the purpose of using them. In process of development, experts came to the conclusion that strategic planning is necessary and helpful, but improvement of existing operations here and now is even more important.
Operational efficiency solutions
Traditional analytics in business has been used all over the industries. Banks are collecting quarterly, monthly, and annual reports, and manufacturers use analytics to conduct equipment maintenance. Although the purpose seems different, the data required is the same. It leads to the conclusion that data drives business decisions and correspondingly defines its success.
Collecting data monthly does not satisfy the increasingly rising demands of businesses. The speed of processing data solves many problems and prevents them. Hence, operational efficiency is aimed at gathering real-time information, and constantly updating it, in the same way, enabling business owners to make quick and educated decisions. The tools used for getting operational analytics are diverse. They can be simple and affordable, as well as more sophisticated and expensive.
The data collected from operational analytics is not a chunk of information to be stored for the record. It is a vital asset that influences decisions like pricing and product positioning. All the capabilities of such analytics have not been discovered yet. New tools and their applications are being introduced quite often. Hence, it is a wise decision for the companies to think of ways to implement proper data collection strategies regardless of the size of the company.
While the terms seem self-explanatory, there is a slight difference between business analytics, operational analytics, and business intelligence.
What are the four types of analytics?
For instance, you are analyzing what products were not sold well. Looking at the data, you might find out that it got into demand in December, January, and February. Hence, it is a seasonal product. That should be considered when planning your sales strategy.
With this approach, you go down the road of analyzing the causes of seasonal demand for the product. Consider the consumer demographics, age, and environment. Hence, understand what caused the surge in demand in this season and focus the advertising campaign on it.
Using the reports collected over some period of time, you can plan annual strategy and set long-term goals, and predict seasonal surges and falls.
Prescriptive analytics is used to create case scenarios for the teams working on the product. Given the possible ups and downs in sales, for example, the teams can design contingency plans. It helps with distributing the workload or even hiring extra workers for the most intense periods.
Operational analytics aims at receiving, sorting, and presenting data constantly, in real-time. It feeds all the analytics types with valuable insights.
How to manage your operational efficiency?
Operational efficiency does not often require a sky-high budget. Every business can assess current performance using affordable solutions. Yet, it is worth discovering the options on the market. Big data analytics, machine learning, and artificial intelligence are top tools for collecting, analyzing, and displaying data. While resorting to artificial intelligence might not be a short-term goal for every business, tools for data analytics are. Take a closer look at the business intelligence of the organization, and see how the following can help you get more without much investment. Here are some tools that will help you improve operational efficiency, collect the needed data, and get to work on boosting your performance.
- BI tools
- Data repository
Whatever tools you use, to improve the processes, the possibility of integration is vital. Most companies require custom-made solutions. All-in-one software rarely covers all the needs. One of the ways to get more from the existing assets and add more value is to opt for custom-made software.
Operational efficiency and IoT
Since data drives business, it is high time to start exploring your options on how to handle yours. IoT data is widespread and easily accessible for different scale companies.
What makes this technology so popular is flexibility. It works for all industries and does not require much waiting time for the benefits.
IoT is one of the tools that help organizations connect all parts of the business and get data instantly. The sensors, controllers, and software enable control over all the daily processes, improve efficiency, and produce analytics.
Operational efficiency might come from different sources and IoT is one of them. Here are some practical examples of IoT use and the data it collects:
- Asset tracking
Logistics, healthcare, construction, farming, and more industries have the need to control their assets. They become a burden if the time for maintenance is not selected right and if their use is not effective. With the software and connectivity, such issues are tracked and detected on the go, making it possible to fix them before spending tons of money on repair and replanning work.
- Industrial IoT
The sensor technology is relatively cheap and flexible. It can work equally well for small and large companies. Manufacturers face challenges when it comes to making their equipment visible, and calculating operational costs. Industrial IoT solutions are taking advantage of software to enable visibility.
- Consumer IoT
Industrial and consumer needs differ when it comes to IoT. Hence, the applications and software are tailored to the needs of the target user. Consumer IoT solutions are focused on assisting businesses in the consumer sector. With technology, businesses can establish better relationships with their customers and provide more convenient services.
- SmartCity Solutions
Smart city management is a complex process. The amounts of data are large, and often some crucial chunks of information go unnoticed. SmartCity IoT solutions are designed to manage infrastructure, improve mobility, and streamline operations of sophisticated structures. One of the most important tools that proper data analysis gives is energy efficiency. In the modern environment, a smart approach to energy use is a key to success.
With the help of sensors, companies get real-time insights into their operations daily. They predict maintenance, analyze accidents, and see vulnerable points. Using that information, changes can be implemented instantly, without waiting for the monthly or annual reports.
In search of optimization and automation, companies have a lot on their hands. Some solutions are expensive and require putting manufacturing on hold. IoT solutions do not intervene in the ongoing process and do not require a drastic, costly change. They take the existing system and optimize it. The result will not keep you waiting, and soon you will observe:
- Increase of productivity
- Valuable data, presented in a convenient and structured way
- More revenue, fewer expenses
- Streamlined and controlled operations
Advantages of Operational Efficiency
In addition to improving the efficiency and productivity of the company, operational efficiency has other advantages. It gives your business transparency, visibility, streamlined reporting, and a better customer experience.
No data in the organization should go unnoticed. It is a key to streamlined functioning, but also control of the finances. Yet, it often happens that a separate department gets information related to the work, and the rest are left in the dark. With solid operational analytics channels and its structured delivery to all the teams, every manager and employee gets the big picture. It enables prevention, improvement, and growth.
Visibility & Traceability
The issue that often arises with analytical data is the quality of interpretation. Specialists from different departments do not always see the value of it on a global scale. Hence, enabling all teams to have access to the information, in a logical, structured way lets you squeeze more out of one digit in the stats. Besides, making all parts of the business visible, for example, installing sensors that track the assets, and using wearables for the employees prevents violations and ensures timely identification of the incidents.
Manual gathering of the reports from different devices, teams, and managers is a tiresome and time-consuming process. An automated reporting system, on the other hand, leaves more space for the interpretation and implementation of the received results.
Better customer experience
If the processes within the company are not well-established and controlled, the customer will feel it. To be a successful warehouse manager, you need to ensure that you always stick to deadlines. If one worker does not come to a shift it should not slow down the delivery process for the client. Logistical delay is also possible to control, for example, with automated scheduling and dispatching. The abundance of options to fix and optimize processes creates a quite competitive environment. Hence, the customers are getting used to higher and higher standards of service. Operational analytics is not only focused on intracompany data but can also give you an insight into customer behavior. Whoever your customer is, you can analyze the needs, desires, and level of satisfaction.
Use Cases of Operational efficiency
Operational efficiency is not a term that is only related to large enterprises with multiple complex processes. It’s about the valuable data in each company that exists and adds up but is often overlooked.
Manufacturers seek to optimize production, cut energy consumption costs, and prevent breaks. Investing in high-quality hardware does not guarantee smooth operations. Effective management lies in good decision-making based on operational data. Here are some examples of how and when analytics is used:
- Predicting maintenance costs
- Forecasting demand
- Managing inventory
- Increasing visibility of the supply chain
Supply Chain Management
Disruptions in the supply chain influence all operations of the enterprise. Work on streamlining all the processes is constant. Hence, automation and optimization are often on the list of desired improvements. More sophisticated ways of automation include robotization of operations. However, there are more affordable solutions to automate procurement, and inventory tracking, and increase the visibility of goods. The supply chain runs smoothly when all the goods and operators are visible. Tracking them using sensors, for example, enables real-time stats and operational analytics.
One of the data-intense industries is banking. The employees of even a small branch process thousands of messages and financial operations. Most information requires scrupulous attention and has value. It is one of the pains of the banking system to process information quicker to satisfy customers’ requests. Procedures, protocols, and regulations impose a lot of limitations on the industry, so handling operations manually slows down the process considerably. Banking enterprises look for streamlining their operations with careful attention to security and transparency. Handling paper documentation is also a huge challenge in terms of cost and time. Hence, implementing cloud-based documentation management is a cost-effective, and secure alternative, not only for banks but companies dealing with papers.
Retailers benefit from collecting and processing data on customer behavior. Product positioning, trends, and even pricing are handled much better with operational efficiency. The competition in this industry is quite fierce and requires a quick response to the dynamically changing environment. So, what can retail analytics give:
- Identification of the best-selling products
- Prediction of quantities
- Algorithm of customer behavior that leads to purchase decision
All the data flows in the company create a large chunk of information that needs to be structured. Not all teams have equal access to it, and not every team knows how to sift through it. Marketing teams require updated stats as much as financial departments. The question of how to collect, sort, and enable access to it arises. With proper tools, marketing specialists can:
- Identify marketing strategies and activities that bring more customers
- Estimate consumer buying power
- Assess customer’s relationships with the brand
Improving Operational Efficiency: How to start?
Maintaining operational efficiency on a proper level requires a holistic approach. The financial growth of the company does not only rely on the quality of the product or service delivered to the customer but on the process of creating it. Employees, assets, and customers have an equally important influence. To satisfy the needs of buyers, business owners have to ensure a smooth working process for the employees. Operational efficiency is a way to improve experiences for all stakeholders. It comes from various places and gives insights into the smallest parts of the operational environment. These couple steps will help your organization improve operational efficiency:
- Estimate: expenses vs profits
- Find all the expenditures and processes that lead to them
- Analyze the processes and optimize
- Implement software solutions to automate and gain real-time insights
Making data-driven decisions has more efficiency than using your gut feeling for planning. The blossoming technology industry allows businesses to go above their expectations and gain a competitive advantage. To be on the safe side, and avoid the stress of changes, companies can resort to the reliable technical support of software development teams. Euristiq offers expertise in implementing solutions for automation and optimization of processes, establishing data pipelines, and as a result proper, real-time updated operational efficiency.