The food and beverage industry is a very competitive space. In order to keep up with the game and stay ahead of the competition, you need to be efficient in more ways than one.
Efficiency is about getting the most out of your resources. It means your business is able to produce more with less money and less waste. It also means you can operate day-to-day without making costly errors. In today's post, we'll dig into why business efficiency really matters and why it's something that you should focus on.
BEING EFFICIENT REDUCES COSTS
Being efficient in your day-to-day operations helps you improve your productivity, increases your production output and can eliminate time-consuming admin tasks. It may also mean that you don't need to rely so heavily on external suppliers, expensive machinery or even stop-gap employees. Which in turn means you will be able to reduce your costs and reserve that cash for other business critical requirements.
So, what can efficiency in your food and beverage business look like? Well, it's about using raw ingredients more effectively, maximising your staff’s productivity, or reducing your product packaging so you can save money and lower those associated costs.
BEING EFFICIENTINCREASES PROFITS
With fewer expenses and more time, you'll be able to increase your product range and begin creating more products. You will be able to fulfil bigger orders and by making more sales you'll see an uplift of your business's profits over time. This can also help increase your profit margin, in other words you'll see an increase in the amount your sales revenue exceeds the money you spend.
Another added benefit, is that producing goods that are low on cost means you can price your products competitively without affecting your margins. This, again, results in higher profits for you.
BEING EFFICIENTHELPS YOUMEET DEMAND
Increased efficiency can also help you fulfil your customers’ retail orders quickly without having to hire temporary staff, or invest in more equipment to meet increased demand. You can solely rely on your existing staff and equipment set up as you've got them working at peak efficiency to respond to seasonal demand or urgent, unexpected orders.
What's more, your customers aren’t just after quick service, they also care about the quality of the product. By improving your production efficiency, you can create high-quality goods and fulfil orders more quickly, therefore, satisfying your current customers, increasing your repeat business and attracting a new wave of retailers.
BEING EFFICIENTHELPS YOUR BUSINESS GROW
Needless to say, having an efficient business process means you'll have greater opportunity to expand and enter new markets. Since you'll have fewer costs associated with producing your goods, you'll then have sufficient money available to make investments, expand your inventory, and set up new locations.
BEING EFFICIENT PROMOTESCOMPETITIVENESS
This is something that businesses don’t often realise. Increasing your production efficiency can have a flow-on affect for the wider market. For example, as you begin making your processes more efficient, your business will grow and your competitors will also need to become more productive to keep up with you.
Supermarket chainAldiis an excellent case study in how you can gain competitive advantage through efficiency. Since it's conception in 1913 this supermarket company has been offering competitive product pricing without compromising quality. In some instances its products are 30% cheaper than its competitors and this has been made possible because Aldi is following an efficient business processwhich enables them to minimise costs by saving time, space, effort and energy.
If you like the sound of all of the above then your next business focus really needs to be on efficiencies. By making simple tweaks to your day-to-day operations you can retain and attract new customers, reduce operational costs, and maximise your profits so you can grow your business further.
Over the coming weeks we will share with you loads of ways you can improve your production efficiency so stay tuned as we help you navigate your way through this business critical process.
In the meantime, if you’d like to read more business advice from us, just head on over to our blog.
FAQs
BEING EFFICIENT INCREASES PROFITS
With fewer expenses and more time, you'll be able to increase your product range and begin creating more products. You will be able to fulfil bigger orders and by making more sales you'll see an uplift of your business's profits over time.
Why is efficiency so important? ›
Efficiency is an important attribute because all inputs are scarce. Time, money, and raw materials are limited, and it is important to conserve them while maintaining an acceptable level of output. An efficient society is better able to serve its citizens and function competitively.
Why do businesses strive for efficiency? ›
The key to a successful business is to be efficient. Efficiency helps you improve your processes, reduce costs, and boost productivity, so you can save time and money, which increases your profit margins and chances of success.
How can efficiency improve a business? ›
How can a business improve efficiency?
- Provide the right tools. ...
- Do a daily standup. ...
- Channel your team and company focus. ...
- Know what to cut. ...
- Know what to build. ...
- Never stop improving. ...
- Use technology. ...
- Maintain high morale.
Being effective can lead to increased productivity since it involves identifying the most important tasks and doing them first. Efficiency (doing these tasks quickly) doesn't necessarily lead to productivity because you could be doing the wrong tasks.
What does business efficiency mean? ›
Business efficiency is a measure of how efficiently a business uses capital, labour, services/products, and materials to create revenue.
Why is efficiency important and how does it benefit the economy? ›
Economic efficiency is important because it allows businesses to reduce their costs and increase output. For consumers, economic efficiency leads to lower prices for goods and services. For the government, more efficient firms and higher levels of productivity and economic activity increase economic growth.
What is efficiency and effectiveness in business? ›
Efficiency is defined as the ability to accomplish something with the least amount of wasted time, money, and effort or competency in performance. Effectiveness is defined as the degree to which something is successful in producing a desired result; success.
What affects business efficiency? ›
The research results show that the four factors of firm size, growth rate of assets, receivables management, and solvency have a positive impact on business efficiency, while two factors including capital structure and ratio of long-term assets do not affect business efficiency of enterprises.
How does workplace efficiency affect business? ›
When employees are productive, they are either doing more work in less time or taking lesser hours to accomplish work. This helps in reducing operational costs. As a result, producing the same output requires less workforce, which in turn increases profitability.
In a perfect world, companies would try to be both efficient and productive. Companies should always be looking for ways to do more with what they have while doing the same amount of work with less waste. That being said, most successful companies put their primary focus on productivity, not efficiency.
What is more important efficiency or productivity? ›
Productivity may help you accomplish tasks quickly, but it does not guarantee that you completed them correctly. Efficiency is important in the workplace because it can help save time and money. In order to be efficient, it must organize and know what needs to be done.
What is meant by being efficient? ›
Efficient most often describes what is capable of producing desired results without wasting materials, time, or energy. While the word can be applied to both people and things, it is far more commonly applied to things, such as machines, systems, processes, and organizations.
How does a business measure efficiency? ›
It can be measured by dividing total net sales by accounts receivable, which is the number of receivables paid during a fixed period. An efficient business has a high turnover, meaning sales are quickly converted to cash that can be used to pay bills and grow the business.
Is efficiency more important than anything? ›
The truth is that effectiveness is far more important than efficiency. According to diffen.com, effectiveness is about doing the right task, completing activities and achieving goals. Efficiency is about doing things in an optimal way, for example doing it the fastest or in the least expensive way.
What is the real meaning of efficiency? ›
: productive of desired effects. especially : capable of producing desired results with little or no waste (as of time or materials)
How does efficiency affect work? ›
When you focus on efficiency, you focus on achieving the same using fewer resources. Companies that improve labor efficiency are reducing hours, workforce, or budget to produce the same output. This is done to save and increase profitability.
How does efficiency influence the economy? ›
To have an efficient economy, an entity often increases its productivity, reduces its waste and decreases its inputs. This is important because it maximizes the total benefit of goods and services in society, which helps people to be more productive.
How does efficiency affect productivity? ›
Productivity is the raw measure, while efficiency is the refined one. Raw productivity shows you how much was accomplished while efficiency reflects the amount of productivity that generates profit, and it should always be used as an input during productivity planning.
What is a good example of efficiency? ›
Because of her efficiency, we got all the work done in a few hours. The factory was operating at peak efficiency. A furnace with 80 percent fuel efficiency wastes 20 percent of its fuel. The company is trying to lower costs and improve efficiencies.
Efficiency is when you do the same things faster or with less waste. For example, you might find a better way to run a project status meeting so it takes 30 minutes on average rather than 45 minutes. Effectiveness is finding a way to improve outcomes, perhaps by doing something very differently.
What does being efficient at the workplace mean? ›
Efficiency in the workplace means when employees carry out the correct tasks in the right way, with the least waste of time and effort. In essence, improving workplace efficiency is about helping employees work smarter, not harder.
