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What is Operation Analysis?

By J. Airman
Updated May 17, 2024
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An operation analysis is a procedure used to determine the efficiency of various aspects of a business operation. Most reports include a careful scrutiny of a company's production methods, material costs, equipment implementation and workplace conditions. Professional consultants are often brought in from outside a company to perform an unbiased operational analysis, which provides a company with hard data concerning waste issues and operational risks. Many companies use the information from such an analysis to decide on what changes need to be made to improve operations.

The process typically begins with a period of observation: the person or group performing the analysis watches and takes detailed takes notes on all the day-to-day operations of the business in this initial stage. Some details of a business's production and customer service may be timed or tracked during the observational period to produce statistical information for the report. Employees are commonly asked to perform tasks as they normally would and try to ignore the presence of the evaluators. On-site observation may last a day or several weeks, depending on the size of the company.

Employees are usually brought in separately to voice their opinions and concerns about the business to the operations analysis staff during the second step in the evaluation. Notes from the observation stage are commonly reviewed to design helpful questions for the employee interviews. Those conducting the analysis almost always seek beneficial insight and ideas from the employees that they can later include in the analysis report. Workers are normally asked to fully explain their job and the level of production they maintain. Some employees fear these evaluation interviews and feel they are being made to defend their position within the company; clear communication of the purpose of the analysis may be helpful not only for employee morale, but also for obtaining the most accurate, truthful information.

Profit and loss statements and inventory control reports are often searched as well to find patterns and mistakes to complete the research. Reviewing these figures can give the staff a "big picture" view of what is and isn't working for the company. Unrestricted access to company reports provides information to the operational analysis staff on how all the aspects of the business effect the final outcome on the balance sheet.

Conclusions are drawn up in a final report that is based on all the research done by the operation analysis staff. Modifications that have the greatest impact in the shortest amount of time are commonly highlighted, and improvements are most often suggested for the aspects of the business showing the highest levels of waste and inefficiency. Staffing, working environment and procedural changes are among the most common recommendations of an analysis of operations.

About Mechanics is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
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