Business effeciency

A by product of business efficiency is cost – a highly efficient business generally have less cost than a business that is comparably less efficient.

For that, and other reasons, business efficiency, an indicator of how resources such as labor and raw materials are used and consumed in order to produce a product is an often used business KPI.

Measuring efficiency is therefore an important business activity as it can:

• Highlight areas of waste and cost
• Improve control of business activity
• Aid Benchmarking
• Accurately predict resource requirements

Effeciency can generally be calculated by dividing the output by the resource consumed so for example measuring staff productivity can be calculated by dividing the output (i.e. widgets produced) by the number of staff (check out this article for further examples)

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