What’s Operational Analysis?

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An operational analysis is a process to evaluate a business’s efficiency. It involves observing day-to-day operations, interviewing employees, and reviewing reports to identify areas of waste and inefficiency. The results are used to make recommendations for improvements.

An operational analysis is a procedure used to determine the efficiency of various aspects of a business operation. Most reports include a close look at a company’s manufacturing methods, material costs, equipment implementation, and workplace conditions. Professional consultants are often hired from outside a company to perform an unbiased operational analysis, which provides a company with hard data regarding waste issues and operational risks. Many companies use the information from this analysis to decide what changes need to be made to improve operations.

The process typically begins with an observation period: the person or team performing the analysis observes and takes detailed notes on all day-to-day operations of the business in this early stage. Some details of a company’s production and customer service can be timed or tracked during the observation period to produce statistical information for the report. Employees are commonly asked to go about their business as they normally would and try to ignore the evaluators’ presence. The on-site observation can last for one day or several weeks, depending on the size of the company.

Employees are usually brought in separately to express their opinions and concerns about the business to operations analysis personnel during the second stage of the assessment. Observation stage notes are commonly reviewed to design useful questions for employee interviews. Those conducting the analysis almost always seek out useful information and ideas from employees which they can later include in the analysis report. Workers are normally asked to fully explain their work and the level of production they maintain. Some employees fear these evaluation interviews and feel they are forced to defend their position within the company; clear communication of the purpose of the analysis can be beneficial not only for employee morale, but also in obtaining the most accurate and truthful information.

P&L statements and inventory control reports are also often searched for patterns and errors to complete the search. Reviewing these figures can give staff a big picture of what is and isn’t working for the company. Unlimited access to business reports informs operational analysis personnel about how all aspects of the business impact the bottom line on the balance sheet.

The conclusions are drawn up in a final report which is based on all the research carried out by the operational analysis staff. Changes that have the greatest impact in the least amount of time are commonly highlighted, and more often improvements are suggested for the aspects of the business that exhibit the highest levels of waste and inefficiency. Personnel, work environment and procedural changes are among the most common recommendations of an operations analysis.

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