How do you measure your operational efficiency?

Dear Md Tahminul, thank you for inviting me to answer this question.

 

According to my point of view, Operation Efficiency can be described as the input which we put in our business and the output we gain from it. Better the Operational Efficiency better the output and results.

 

To measure it we need to see the cost involved in input like Operational expenditure and capital expenses and measure the outcome such as revenue generated, the growth of the company.

Your operation efficiency is the balance between your INPUT(your operational expenses, your capital expenses and your workforce) and your OUTPUT(your revenue generated, your business' growth, the quality of your product/service, and very importantly your customer's level of satisfation). To help measure the operational efficiency you have to use your KPI(key perfomance indicators) by setting timely goals(example: to improve the time it takes for 1 x window installation by improving skill and quality levels), then meating these goals repeating the set goals or improving on them periodically. In my business(Safari Glass) using the above mentioned KPI,  the skill training of my installers not only decreased the time they took to install 1 x window and they could install more windows per day, but the quality of the work increased, leading to increased customer satisfaction, which leads to increased business. 

This measures how quickly you get paid for the goods or services you sell during the year. It shows how efficient you are at collecting credit sales. Generally, a higher turnover is related to more favorable cash flow. It is calculated by dividing net credit sales by the average gross receivable.

The receivable turnover can also be expressed in days. The fewer the days, the faster you collect what is owed. That boosts operational efficiency by having the cash on hand to pay operating expenses.

Scoring high in operational efficiency helps your small business stay in the game. That’s why it’s important to monitor inventory and accounts receivable turnover. Over time, they help you better manage your resources.

Hello, efficiency can be measured : Inputs you give. Process involved. Quality of Feedback. Feedback interval. This what I believe in correcting the measures, which would be the output operational efficiency. Finally, OE is sumation input you give, take feedback, analyse it, storming and follow ahead.. Regards, Abhijith B

You can measure it through, the unit production cost or mostly man hours required to produce one unite.

All the previous answers cover the subject, it can be summarized in measuring the output over the input, as much as you can maximize the result the better efficiency you have, and in order to achieve that a set of KPI's can be set for improving the process such as (not limited) minimizing the waste, off spec., man days, time span, .... etc. which improving the quality of your deliveries and to be more systematic.