The efficiency of individual departments or areas within a company does not necessarily mean high organizational efficiency. For organizational efficiency, an end-to-end view of processes—which are typically designed to span multiple departments and areas—is crucial. The definition and design of interfaces play a central role here in ensuring efficiency across departments and areas.
Implementation in medium-sized companies therefore leads to a multi-level approach that considers individual departments and their roles, as well as the interfaces, to enable each role to carry out its process steps effectively.
Below, we present some typical situations in medium-sized companies that need to be changed to improve organizational efficiency.
In administration
In a company's administration—that is, in functional areas such as order processing, purchasing, finance, etc.—the typical core processes are usually found:
- Order-to-Cash (from customer order to payment receipt)
- Purchase-to-Pay (from requirement to payment outflow)
- Record-to-Report (accounting, monthly and quarterly financial statements)
Typical findings in business practice include duplicate data entry with parallel Excel lists, unclear authorization levels, and poor master data quality.
A positive contribution to organizational efficiency can be achieved through targeted change:
- Process mapping with a focus on media discontinuities, interfaces, waiting times, missing information, the number of rework loops, and necessary follow-up queries
- Optimization of process chains with a focus on clear responsibilities, e.g., centralized entry of orders and master data, standard forms, checklists, and simplified release and approval regulations
- Support through IT and digitalization with a focus on the use of ERP (Enterprise Resource Planning) and DMS (Document Management System) and the establishment of workflows, e.g., for purchase approvals, leave requests, incoming invoices, etc.
The various interfaces are defined to ensure that all necessary information is available in the correct quality, complete, and on time. This results in requirements for both incoming and outgoing process chains within or from a department.
In production:
In production, the core process of Order-to-Delivery (order receipt to delivery) is regularly found. This gives rise to the central themes of production, including material flow, production control, setup times, inventory, and quality as well as quality control.
A positive contribution to organizational efficiency can be achieved through targeted change:
- Value stream analysis to record the flow of materials and information from order receipt to shipment, including the measurement of lead times, processing times, and inventory levels, as well as the identification of bottlenecks.
- Layout and material flow optimization by shortening distances, creating a logical sequence of workstations, and ensuring timely and quantity-accurate material provision using appropriate methods.
- Reduction of setup and processing times through SMED approaches (Single-Minute Exchange of Die) or standard operating procedures and information provision.
- Optimization of production control with clear prioritization rules and realistic planning, as well as the reduction of work-in-progress.
- Establishment of shop floor management with regular short meetings and a dashboard for key performance indicators, such as equipment effectiveness, scrap rates, on-time delivery, and setup times.
- Assignment of responsibilities to one or more team leaders with accountability for results, involving maintenance, logistics, and other production-relevant departments.
The issue of interfaces is usually much more complex in the production area. On one hand, the inflow of information must be ensured, which must contain all relevant production data. Likewise, production provides information to various departments or areas within the company to control individual orders and the company as a whole. For example, material withdrawals must be documented, and labor and machine times must be tracked by order or department, among many other things.
Success-critical factors
Efficiency improvements in end-to-end processes and across the entire organization are achieved through a holistic view of the requirements that the company must meet. The organization determines where in the company each requirement must be fulfilled and what is needed to do so. The "what" can arise from a multitude of upstream process steps. Thus, every process step must take into account what downstream process steps require.
Conclusion:
Organizational efficiency means that the entire company—including its processes, roles, structure, management, and culture—is set up so that value creation occurs reliably, within the specified timeframe, and with minimal friction. A smart mix of detailed analysis and a focus on the overall constellation ensures efficiency within the company.
THE MAK'ED TEAM develops effective, cross-industry concepts for medium-sized companies to sustainably improve organizational efficiency. We view organizational efficiency as a process management system for the holistic control of the company. Together with strategic alignment, this makes a valuable contribution to long-term competitiveness.
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