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3 Best Ways To Improve Business Efficiency Amidst Financial Challenges
The rising cost of commodities and demand for higher wages continue to fuel the inflation. How can you improve business efficiency in the midst of these challenges? Read more to know the strategies you can take to continue growing.
Improving business efficiency is a good way to keep your company operating during a financial crisis. In May of 2022, the United Kingdom experienced a surge in the inflation rate. In fact, official data shows inflation has been the highest it has been since 1982. It is not only the UK experiencing high inflation, though. According to UK Chancellor Rishi Sunak, Finance Minister, “Countries around the world are dealing with rising inflation.” The numbers are driven by ever-increasing energy prices globally.
Unfortunately for the world, signs show that inflation will not be slowing down anytime soon. Factories and manufacturing companies will likely suffer the most significant setback as prices of raw goods continue to increase. In this ever-challenging time, how do you as a business prepare?
Strategies To Improve Business Efficiency Amidst Inflation
Even as countries around the world anticipate economic recoveries after the pandemic. Companies are still left to deal with increasing commodities prices, difficulty securing supplies, and high wages due to a shortage in labour. As a result, companies need to improve business efficiency to save on costs.
According to the Harvard Business Review article, “Lowering expense is a crucial part of how businesses should deal with inflation.” The report further said that for companies to prepare for this inflation, it does not only need to cut costs but also build a strategic and scalable way to grow.
Improve Business Efficiency By Spending In The Right Areas
According to Bain & Company, they analysed at least 5,700 companies around the world during previous inflation periods. The research shows that companies who made intelligent and judicious cost cuts – meaning those that do not define the company’s profitability- achieved higher returns in the process.
This means that to save and make your business grow, it does not necessarily mean that you will not be spending anything. Instead, you should be making decisions that will reduce cost but not risk how your team performs.
Businesses need to sort through activities to align their spending to nurture improved efficiency. To this process, consider answering these three questions:
• What areas of my business do I need to keep the lights on? For example, sales, marketing, and administrative expenses.
• Which areas of my business am I spending that create a difference over time and help me win in the long run?
• How do I keep the rest of my expenses as lean as possible?
One of the perfect examples of putting the spending in the right areas is to understand the total cost of ownership.
What is Total Cost of Ownership and How Does It Improve Business Efficiency?
According to Gartner, the total cost of ownership (TCO) is a comprehensive calculation of information technology, as well as, other costs across enterprise boundaries over a period. TCO will typically include software and hardware costs, communications, management and support, end-user expenses, and cost of downtime and other productivity losses.
There is a multitude of factors that contribute to TCO, many of which can be highly variable. TCO is an essential factor that every business should consider. In fact, the idea of Total Cost of Ownership (TCO) is significant for both sellers and buyers alike. Good business owners and managers should research their products so that they can effectively establish the total cost of ownership.
In our article about Total Cost of Ownership, factors that affect this number include:
• Direct costs: Initial capital outlay, number of repairs and replacements, total repair cost
• Indirect costs: lost time while devices are repaired, replacement device cover, supplier bias to replace devices early, speed of service
• 3-year expected life service: the most common expected timeframe for a business computer
• Independent industry data: failure rates for rugged and non-rugged devices over 3-years
One way to improve TCO is to choose technology that will meet your current needs and your future requirements. One perfect example is using rugged devices over regular commercial tablets. Purpose-built devices last longer. In fact, the usual lifespan for purpose-built mobile devices can easily exceed three years. On the other hand, a regular commercial device will only last about 12 months before needing a replacement or repair. Sometimes, this can even be less when used in extreme environments.
Without the aid of mobile devices, businesses will not be able to improve business efficiency. Adapting rugged mobile devices into your operations is an excellent way to streamline and automate your processes, improve efficiency by reducing errors, improve employee experience, reduce downtime, and so much more.
Without the aid of mobile devices, businesses will not be able to improve business efficiency. Adapting rugged mobile devices into your operations is an excellent way to streamline and automate your processes, improve efficiency by reducing errors, improve employee experience, reduce downtime, and so much more.
Make sure to work with a company that offers a wide range of rugged mobile & scanning devices designed to improve business efficiency. Conker offers rugged devices that last longer and are often replaced, making them a more cost-effective solution to improve TCO. Be sure to check out Conker’s list of rugged devices here.
Improve Business Efficiency By Replacing the Price Model
Many companies are now adopting new price models following the unique success of “my-product-as-service”. Since inflation directly adds to the operational costs of a business, becoming strategic in how you change your pricing model will ultimately be helpful.
Over time, thousands of companies have demonstrated how charging the correct way can bring a range of advantages for the business. When preparing your pricing model consider the following Cs:
• Customers – How crucial is price when it comes to your customers purchasing decisions? Do your customers mostly buy on price or they also love the quality of your product and services? For companies with higher price sensitivity, you might consider not implementing new pricing.
• Costs: How is inflation directly affecting the cost of your products and services? Are supplies and labour more expensive than ever? As mentioned above, inflation will definitely have an instant effect on your business costs, so consider this with thought.
• Competitors: Have your competitors increased their prices? Consider using a price match. The only exception is when your company has the ability to keep prices steady in order to gain higher margin in market share.
• Cash Flow: How is the inflation affecting your cash flow? Consider your business ability to hold prices steady even with a changing cash flow.
Adopting a new price model is more of a strategic rather than tactical decision. In the end, changing pricing model decision should never be based only upon the short-term fluctuation of inflation. Rather it should fit into the company’s long-term strategy.
Improve Business Efficiency by Eliminating Work And Adopting Automation
One of the best ways to improve business efficiency during inflation is to adopt automation. With labour shortages and demand for high wages, eliminating the need for repetitive tasks will have the greatest impact. When experiencing inflation, companies across industries should reexamine their work and determine which ones adds the most value and is absolutely necessary.
Technologies like Conker rugged wearables and rugged devices are excellent tools to use. These devices free up workers from doing the most laborious tasks and allows them to work on more strategic activities.
Usual challenges such as picking errors in a warehousing environment can easily be avoiding using rugged wearables. In an earlier article, we have highlighted the benefits of using rugged wearables including hands-free convenience for workers, improved connectivity, and increased safety.
Inflation is always a challenge for any company in any industry. However, when companies act right, it can also open doors to opportunities. Companies who respond well to inflation will be able to improve their margins, revenues, and will be equipped with future-proof tools that will prepare them for any type of problem overtime.
