A Complete Guide to Process Efficiency: Importance and Key Steps

February 12, 2023
Process Management

A recent survey revealed that well over half of dissatisfied employees (57%) have stated that they are less productive as a result of their existing tech systems.

Companies must introspect themselves and evaluate the state of their business processes.

Are they contributing to fostering an environment where the workforce can thrive, hence increasing productivity and efficiency in their work?

Do they have any plans to upgrade from their reliance on time-consuming, manual methods of managing their operations, or are they content to stay with the status?

To achieve organizational objectives, it is critical to implement effective business processes and commit to continual improvement.

So, let's dig deep into several key aspects of optimizing business process efficiencies and explore the steps to achieve them. 

KPI key performance indicator increase optimisation business and industrial process.

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What is Process Efficiency?

Process efficiency is the overall productivity and efficiency levels of a particular business process that can be measured using key performance indicators (KPIs)

It determines how well an operation is carried out in terms of the resources used and the amount of time spent on it. 

The effectiveness of the company's processes has both an immediate and a tangential influence on company profitability.

For example, if someone needs 20 machinists to manufacture a few finished products, a business is not working as efficiently as it may be.

However, if the operators and workers are equipped with cutting-edge production tools, they can fulfill the raised demand for seasonal products and deliver orders within the allotted time.

A business must have efficient processes since doing so guarantees that the company will reduce the complexity of its operations and realize its full potential.

What's the Significance of Having Efficient Processes?

The realization of how significant it is to have effective processes in the business landscape can be attributed to a range of factors.

An increased level of process efficiency indicates that you have a robust business core and are capable of achieving prospective business objectives. 

Here's why having efficient business processes is so critical:

  • Boosts the Overall Business Productivity

Increasing the efficiency of business processes will assist the team in achieving the intended business goals in a more timely manner, boost their everyday productivity levels, and reduce the number of errors caused by human intervention.

The company will be able to scale the business to greater heights and handle the rising demands in the industry with ease if the workforce is efficient. 

New business opportunities, such as growing demands for the company's products and services, may be brought in by the performance efficiency of the company itself, helping it to distance itself from the competitors and produce the desired financial outcomes.

  • Improves the Overall Adaptability of the Business

The organization's employees will have a better chance of developing a solid comprehension of how operations perform in business settings if the company adopts efficient processes.

The staff will be more adaptable to the ever-changing landscape of the corporate world as a result.

If a company has the flexibility to keep a sustainable business output, it can aid in boosting the contentment of the customers. Additionally, it can enhance the utilization of your resources and optimize other related operations. 

  • Reduces Errors Dramatically

Effective business process optimization and management should result in few or no errors, whether those errors are caused by humans or the system.

Teams get a skilled hand at navigating the intricacies of the business. An effective company can ensure restoration and rectification of the bottlenecks developed, even if unanticipated faults have been encountered. 

Increasing the transparency of existing communications infrastructure can help you boost process efficiencies and reduce the likelihood of errors, both of which are benefits of improved network connectivity.

  • Helps Achieve Substantial Reduction in Operational Costs

When a company has efficient processes, it can recover from obstacles more quickly and commit fewer mistakes, which assists in reducing costs.

Teams can improve their company processes and establish more efficient workflows by integrating sophisticated task automation software solutions.

These kinds of technology solutions are designed to execute multiple redundant tasks just with the click of a mouse, which helps reduce delivery times, saves on labor costs, and results in significant savings in costs.

The systems can also improve ineffective operations and help the company achieve its goals in a streamlined fashion by ensuring that it does so.

Automation Software Technology Process System Business concept

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How to Measure Process Cycle Efficiency?

The formula for calculating the efficiency of a process cycle is as follows:

Value-added Time/Total Lead Time. 

  • The time dedicated actively to producing a product is called "value-added time."
  • The term "total lead time" refers to the amount of time required to complete the comprehensive process cycle, which encompasses both the value-added time and the wasted time (such as pausing for the subsequent step).
  • The requirements for lean manufacturing state that the amount of time spent on activities that generate value (value-added time) should constitute more than 25 percent of the total process.

The following formula has been used by organizations to determine the overall efficiency of their processes: 

(Value of outputs/Value of inputs) x 100

In most cases, the value will take the form of a monetary sum.

For illustration's sake, let's imagine that it costs a company $400,000 per day to compensate for the materials and labor needed to produce fruit candies.

The same company produces daily sales of $500,000 worth of fruit candies. In this scenario, the business would be functioning at 125% of its potential efficiency.

We say that a process has improved its value if and only if it is above 100%. In general, the larger the proportion, the more efficient the processes.

However, these figures aren't the only possible indicators of efficiency for a particular company; other metrics may also be beneficial.

The facility might be making a lot of candies, but out of every 20 pieces, one of them might not be the suitable size. When this occurs, one would need to consider several other sorts of process efficiency metrics, including the following:

  • Labor productivity
  • Capacity
  • Resource efficiency
  • Throughput
  • Profitability
  • Quality
  • Turnaround time
  • Return on investment (ROI).

A Step-By-Step Approach to Boost Process Efficiency

Efficiency in a process can be evaluated and enhanced in several ways. Here is a set of actions designed to boost the effectiveness of an organization's business operations. 

1. Analyze and Understand the Existing Processes

It's possible that employees strictly adhered to the new process when it was originally introduced. However, if the process is twisted out of proportion, it could be because of flaws in the system or the individuals in charge.

Collect information on the instances where the process diverged from the guidelines and how this happened.

Irregularities or inefficiencies in the process may have resulted from the following circumstances.

  • Unskilled employees - The employee does not possess the expertise or skills necessary to perform the job effectively.
  • Shadow processes - Sometimes the individuals in charge think they have done this a lot, so they won't bother telling others this one time, they'll do it later, or they think it's no big deal this time that the server's down. These kinds of unnoticed activities frequently result in blunders.
  • Duplicated actions - Some of the procedures involved in the process take too long without contributing anything to the outcome.
  • Lack of standardized language - Due to the absence of widely recognized business terminology for a particular technique, the situation is often misunderstood.
  • Lack of awareness - Employees are unaware of the full breadth of the process or its intended outcome.
  • Inadequate instructions or information overdose - Continual requests for clarification on the same set of directions or seeking further information.

Find out what caused people to breach the guidelines by inquiring with them. Take notes and move on to the next stage.

2. Establish KPIs and business objectives

Determine the company's current objectives. The target may be to increase the volume of products manufactured by 30% and boost the customer satisfaction score (CSAT), or the top line, all by the same time next year.

Clearly define the objectives. Once the business goals have been established, KPIs can be derived to act as benchmarks along the way.

For instance, if the company's goal is to increase revenue by 40% in the next quarter, relevant KPIs may include the number of agreements executed, annual earnings per sale, the average duration of a sales cycle, etc.

In such a scenario, teams need to speed up their communication and follow-up efforts if they want to clinch more business. Pursue leads with larger budgets today if the company wants to raise the average order value.

As a general rule, processes must always be in sync with the present corporate objectives and filter down to individual actions via KPIs.

3. Process Redesigning is Vital

To improve process efficiency, a team must take into account both the current state of the process and the business's long-term objectives and KPIs.

Finding a key decision maker or stakeholder for each KPI should be the first step in redesigning a process. It is the ultimate responsibility of these individuals to track and improve the KPI measurement that is most significant to them.

Assigning roles to stakeholders is the first step in reworking the process flow. Start by fixing each of the current steps in the process.

Is there a suitable individual to initiate it? What specifics does the subsequent party require from the initial party to proceed appropriately? Just write them down and incorporate them. 

Providing only information that is of relevance to a certain user is an excellent strategy.

In general, it's preferable to withhold information from a user if doing so would not hinder their ability to assess the situation and make appropriate decisions.

By only providing the essential data and information, you save your audience a great deal of confusion and lack of clarity on how to proceed.

After the team is done designing the workflows, think about the times when one would need to deviate from it. Keep track of any unusual occurrences during the process redesign and decide how to handle them.

Business process management and automation concept with person moving wooden pieces on flowchart diagram. Workflow implementation to improve productivity and efficiency. Management and organization.

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4. Put the Optimized Process Into Action

The time has come to deploy the improvized process into motion, and you already have it in hand. But releasing the updated procedure instructions won't solve the problem.

If that's all the teams do, the improved process will fail just like previous ones. 

The first step in an effective process implementation is securing support from the process's key stakeholders.

Demonstrate to them why it was necessary to revamp the process and illustrate how the new process will expedite the achievement of everyone's objectives.

The second step involves breaking down the process into smaller, more manageable chunks and then implementing it. It takes time for people to comprehend, readjust, and adapt.

Get them the training they need if they're lacking in any areas. The new process will be running smoothly by the time the final phase is complete.

5. Tracking, Measuring, and Optimizing

The job of a team is not finished once implementation has been completed. To observe an improvement in the efficiency of a process, it must be continuously monitored and optimized.

Any process that a team implements should be quantifiable so that actions may be taken to enhance the efficiency of the process. Maintain a close eye on all the KPIs for the entirety of a continuous process.

However, this does not imply that one should be behind every operation or process at all times. Teams can generate reports at regular intervals to facilitate their examination in manageable portions. 

Collect feedback from the various stakeholders and identify the areas in which they are experiencing problems. Bring them back into order.

After a sufficient amount of the tasks have been finished, review the reports and determine the areas in which there is room for improvement. 


To thrive in today's dynamic business climate marked by shifting consumer expectations, intensifying competition, and a plethora of new players, process efficiencies are more crucial than ever before.

Enhanced process efficiency will aid in handling the growing demand for a company's products and services and improving decision-making. 

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