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An explanation of the difference between efficiency and (total factor) productivity is found in "An Introduction to Efficiency and Productivity Analysis". [1] To complicate the meaning, operational excellence , which is about continuous improvement, not limited to efficiency, is occasionally used when meaning operational efficiency.
Typically, supply-chain managers aim to maximize the profitable operation of their manufacturing and distribution supply chain. This could include measures like maximizing gross margin return on inventory invested (balancing the cost of inventory at all points in the supply chain with availability to the customer), minimizing total operating expenses (transportation, inventory and ...
The cost of a cable network underlies economies of scope across the provision of broadband service and cable TV. The cost of operating a plane is a joint cost between carrying passengers and carrying freight, and underlies economies of scope across passenger and freight services.
The business needs analysis contributes tremendously to the re-engineering effort by helping the BPR team to prioritize and determine where it should focus its improvements efforts. [21] The business needs analysis also helps in relating the BPR project goals back to key business objectives and the overall strategic direction for the organization.
A crude estimate is that if the capital cost for a given sized piece of equipment is known, changing the size will change the capital cost by the 0.6 power of the capacity ratio (the point six to the power rule).
Value engineering can lead to the substitution of lower-cost materials, as with the exterior cladding that accelerated the Grenfell Tower fire in London. [1] [2]Value engineering (VE) is a systematic analysis of the functions of various components and materials to lower the cost of goods, products and services with a tolerable loss of performance or functionality.
X-inefficiency underscores the importance of competition and innovation in fostering efficiency, which can reduce costs for companies, resulting in increased profits and better output and prices for consumers. However, X-inefficiency only focuses on productive efficiency and minimizing costs, not on allocative efficiency and maximizing welfare.
Business Process Analysis is an invaluable tool for any business looking to improve efficiency, reduce cost, and maximize productivity. It is a comprehensive and systematic approach to understanding how a business operates and identifying opportunities for improvement.