Operations CoE Analysis & Design

How important is operational efficiency? It can cost a company the equivalent of 20%-30% of revenue annually, according to some surveys. Imagine for a moment the impact of 20%-30% on your recent financial statement’s bottom line. For most executives, even a 5%-10% increase would be more than welcome. Cost structure and operational inefficiencies can kill the bottom line and the company.

Operations tend to be over- or under-engineered. A good example is by looking at how a burger is made in two different contexts: in a fast-food restaurant and a high-end restaurant. If a customer orders a $5 burger from a fast-food restaurant, the expectation of the quality is low. The bun might be a bit sloppy and maybe a pickle is about to fall from the side. If the staff was getting trained to make the burger look a bit better, it wouldn’t significantly affect the experience there. If the customer went to a high-end restaurant and ordered a $20 burger, they would expect the burger to look great. If the staff was not trained properly and the burger looked sloppy, then this negatively impacts experience. This analogy applies to business. We want to find the operational sweet spot that gives the best possible results, without compromising time spent and quality of the results.