12 Steps to Improving Operational Efficiencies in the Logistics Industry

Operational efficiency is an input vs output ratio that refers to the cost of producing your product or providing your service versus the revenue that selling those products or services generates. The higher your operational efficiency is, the lower your costs are to produce the same amount of products or provide the same level of service. That means the lower your costs are to generate the same amount of revenue.

Operational efficiency is a must for a business. Logistics operators understand this and are looking at ways to improve their own operational efficiency constantly. If they can improve this and their decision making, they can enjoy benefits such as:

• shorter lead times;
• reduced costs;
• fewer accidents and a lower accident rate;
• happy customers and a happier workforce;
• greater clarity for the people in the business;
• higher capacity to adapt to change.

A similar term you may hear in logistics, and in the wider world of business, is ‘operational effectiveness’. Whereas operational efficiency is about doing things right, operational effectiveness is about doing the right things for the business’s core operations to create value for customers. It’s about the work the business does. Effectiveness is how effectively the business achieves the outcomes it’s striving to produce.

If you’re looking for how to improve and increase the operational efficiency of your business, we’ve got some tips for you:

To identify where you could turn things around for the better, you have to know your operation inside out. A project manager should take the time to walk around the warehouse and note which areas of it are labour intensive or in which there’s some form of traffic congestion. In addition to this, they should conduct formal audits, metric analysis and even use business intelligence tools to spot those parts of operations that offer considerable room for improvement.

Operational efficiency creates scope for improvement in all aspects of your operation. To form a strategy, you’ll have to set measurable goals and track the business’s progression towards them. Then you’ll be able to tell much easier if something’s not quite right. For instance, if you’re a manufacturing company and are experiencing a low output and also higher levels of downtime, maintenance issues will be holding up the entire production process.

One of the big misconceptions about being transparent is that transparency will trigger feedback that slows down processes. Some leaders believe if they’re too open about big changes, business decisions and more, they won’t be able to make quick moves or swift but major business decisions.

In the long term, however, transparency will save time and improve efficiency. It’s important to be aware it’s not just a question of being transparent with information. You must be clear about the goals the transparency will accomplish, how the business will collect information and what it will do with it. Be aware, too, that transparency must be in context. Without context, the transparency can have negative impacts, such as the development of a culture of blame or of mistrust between individuals or groups, and generate resistance to change.

It’s important for different departments or different divisions to work together to meet targets and other goals. If a warehouse or other business is suffering from the silo effect, they’re also likely to be suffering from lower productivity because there’s less interaction between different areas of the business.

To reduce silos, the company must set company-wide goals and make clear to employees their role in contribution to meeting them. The purpose is to encourage a spirit of collaboration and dispense with an ‘us versus them’ mentality, which can often exist in workplaces.

No matter what the level of the business is, there will be a bottleneck of some kind. It could be on the floor or at the leadership level, but there will be one. Poor communication, human errors, a faulty piece of equipment, software, a badly managed manual process, flaws in workflows, or even a bad attitude or low staff morale can all create bottlenecks.

If one area is functioning much slower than all the others, it’s a bottleneck. To reduce bottlenecks, observe and identify the signs before the bottlenecks bring the entire process to a grinding halt. Often, it’s a question of either increasing capacity or lowering it. You may even contract out work until you’ve addressed the issue or have formed a long-term plan to stop it reoccurring.

Work on building employee morale, maintaining it and reducing their frustration. This frustration may be born out of any efficiencies that make it harder for them to perform their tasks well. Frustration and low morale are killers for any business, and employees can end up leaving, which will harm productivity. Employees who are productive, satisfied in their day to day role and stay with the business for a long time are important for operational efficiency.

Part of retaining your employees, training them and helping them to grow means recognising that relationships are important. Establish five metrics that are common ground. Reward top-performing employees and look to discourage unproductive habits.

Increase the efficiency of your customer services and sales, and you can pre-empt issues before they materialise or even prevent them altogether. If customers understand well what they’re getting before they part with their money, and if they feel you’re listening to them, you’ll win not just their business, but also repeat business and referrals.

Good automation and segmenting will boost the speed of sales responsiveness. Providing the right leads with information quickly and placing them in touch with the right sales contact is more likely to supply them with what they’re looking for. They’ll become a customer more quickly.

Seek feedback regularly because people’s wants and needs change as the market does. By asking for feedback regularly, you’re preventing your customer service and sales team members from wasting time and money on outdated methods and processes.

Bottlenecks reduce productivity, but you should also look at any other barriers stopping individuals or teams from being successful in their roles. This means speaking to employees and finding out what they enjoy about their jobs and what they don’t, what they’d like to be doing and what their ultimate goal is. Old-fashioned process requirements and unrealistic expectations (of your employees) can also stand between them and success.

Once you identify the barriers, help your employees move as closely as possible towards these goals within the business. If employees feel you’re listening to them and supporting them, they’ll invest more of themselves in their roles and in the company.

Logistics is a competitive field, and you should always be looking to improve. Your competitors will be (or should be), which makes it easy to get left behind. Continuous improvement instead of staying satisfied with how things increase your chances of outperforming your competitors. Even the smallest upgrade will have a positive impact, but until you start making changes you won’t know what the results will be.

Businesses that can conduct operations faster, better and for less succeed. New technologies have helped businesses to tighten up many aspects of their operations. Leaving behind old ways of working, such as paperwork, manual tasks and huge administrative overheads, and turning to software, artificial intelligence (AI) and other technology has allowed logistics businesses to cut costs, streamline their processes, and, ultimately, offer better products and services in a supply chain.

Operational efficiency is a logistics business’s opportunity to become more efficient, more effective and more competitive. Taking the time to understand your business and analyse processes, setting goals, putting in place measures to help you achieve these goals and monitoring progress will all enable you to up your operational efficiency.

Importantly, though, operational efficiency isn’t just a series of practical steps; it’s a business mindset, too. When seeking to make your operations more efficient, you must also ensure your employees understand their role in all this. Making this clear will help to bring everybody on board and transform your logistics business’s or department’s performance for the better.

Loading and unloading goods onto trailers and from them is one area in which you can make your operations more efficient, by investing in one of our automated solutions. We’ve designed and manufactured this equipment to help you load and unload trailers and other vehicles safely and quickly. Our three main solutions are the moving floor conveyor, the slipchain and the trailerskate.

To decide what solution would be right for you, why not get in touch on our Let's Chat page? We’ll be able to suggest the best solution for you and install it so you can make loading and unloading flatbed trailers in your operation safer and swifter.