Operations Management at Colonial Savings Bank of Queensland - Case Study Example

Operations Management Contents Contents 2 Executive Summary 3 1.1 Introduction: 3 2.1 Change Management Strategies 3 2.1.1. Service Blueprint 3 2.1.2. Basics of operations Management 4 2.1.3. Client Integration 4 3.1 Operations Management: Literature review 4 4.1. Service profit chain 6 5.1. Recommendations 7 Conclusions 8 References 10 Executive Summary In the following report one will analyze the problems that currently characterize the operations and their management in the Colonial Savings Bank of Queensland given the nature of their processes and the current trend of feedback in their context. The report will be created keeping in mind the services blueprint and the service-profit chain, along with the basic principles that characterize the process of operations management in a bank. The idea here is simple-in an effort to remain systematic and in-sync the services of the bank are current coming across as being bureaucratic and archaic with each process being long drawn and difficult rather than being user friendly and accommodating. This will be analyzed in the report with the help of the use of the theoretical concept of the services blueprint. Each one will then be understood in the context of the process of operations management and then finally results will be reviewed and recommendations made in the context of the service-profit chain. 1.1 Introduction: Colonial Savings Bank of Queensland has seen phenomenal growth in the recent past but is now suffering from issues related to consumer feedback in the context of its operations management strategy. The following report will look a correction of this strategy against a backdrop of the theoretical issues that establish the problem and comes up with solutions for these problems in their entirety. 2.1 Change Management Strategies 2.1.1. Service Blueprint A service blueprint offers to visualize the service designer’s concept and therefore serves as the basis of a customer oriented as well as provider-oriented process organization. It portrays the service system and its processes by chronologically depicting the steps of service delivery and the activities of the customer contact points, as well as backstage activities and further supporting service elements. Not only does the service blueprint provide a helpful method for the documentation of the service by illustrating it as a picture map and thus creating process transparency. It can also be used as a tool of analysis for the identification of fail points, as well as a tool of service planning and design. A physical product cannot be manufactured without detailed construction specifications. 2.1.2. Basics of operations Management Therefore the production of goods usually involves a resource record, a product plan with material listings or a recipe formula with ingredients, components and manufacturing methods. Likewise, the production of services requires a systematic procedure that is based on process modules as the core element of services which is the purpose of a service blueprint. The services blueprint is focused on structuring all activities of a service process according to their degree of customer proximity and customer integration or speaking from a more active angle from the client’s perspective. The terms customer integration or co-production refer to the notion that services performance implies the combination of the service provider’s internal resources with the external resources from the customer’s side that is, the customer in person, information data or the right of disposal. 2.1.3. Client Integration Equally the client mostly participates in the service performance any delivering and contributing his/her resources in the service performance by delivering and contributing his/her resources (Lovelock and Young, 1979; Mills and Morris, 1986). Offering a whitewater rafting tour for instance, the service provider cannot perform the service without the presence and participation of the client. It is of particularly high relevance for service design and delivery and that the customer’s integration be taken into account in all elements of the service and throughout the service process (Brown, Fisk, et. Al., 1994). The service blueprint maps exactly where and when the customer’s integration needs to take place in this process. 3.1 Operations Management: Literature review In the core traditional sense of the term, operations management has been concerned with the management of costs, but this focus has recently changed to the management of value. The concept builds on the premise that organizations needed ideally to compete either on low cost or by providing differentiated products in order to be profitable and to avoid being stuck in the middle (Lamming and Brown, 2000). The term itself in wide in terms of the scope of its responsibilities and draws upon a range of functions within the organization and cannot be limited to a specific department. An innate and clear understanding of the nuances of strategic operations management is essential to the organization if it has to compete in the market.  Major decisions about and strategic management of core competencies, capabilities and processes, technologies, resources and key tactical activities necessary in the function or chain of functions that create and deliver product and service combinations and the value demanded by the consumer could be identified as the functional strategy aspect of the operations strategy variable  The wider value delivery aspect of the strategy on the other hand would automatically be inclusive of the major decisions that have to be made about and strategic management of the core competencies, capabilities and processes, technologies, resources and key tactical activities necessary bin any supply chain network, in order to create and deliver product and service combinations and the value demanded by a customer (Laugen et.al., 2005). The strategic role also involves the blending of these various building blocks into one or more unique, organizational specific, strategic architectures.   One of the more oft repeated and accepted definitions come from Slack and Lewis. They suggest that there are four basic operations strategy perspectives (Lewis and Slack, 2003): 1.     A top-down reflection of what the whole business wants to do 2.     a bottom-up activity whereby operations strategy improvements build business strategy 3.     A translation of market requirements into operational decisions and 4.     Exploitation of the capabilities of operational resources into chosen markets. One would have to agree to a certain degree each operations strategy is unique and individual to the firm. Furthermore, research seems to suggest that many of these operations strategies utilize similar building blocks. One would have to even then have to understand the fact that operation strategy for any given firm in order to be effective would have to employs unique strategies.   4.1. Service profit chain Heskett, Jones, Loveman, Sasser and Schlesingere proposed the idea of the service profit chain. It proposed that there are direct and strong relationships between business profitability and customer loyalty on one side and employee satisfaction, loyalty and productivity on the other. The service profit chain demonstrates the links between these elements. It is suggested that in service businesses, the relationships proposed in the chain are self-reinforcing. In early studies aimed at validating the links among elements of service profit chain, strong relationships were suggested between profits and customer loyalty; employee loyalty and customer loyalty besides employee satisfaction and customer satisfaction. The idea here is simple. First that profit and growth of business are stimulated primarily by customer loyalty; customer loyalty is a direct result of customer satisfaction, customer satisfaction is largely influenced by the value of services that the firm is being able to provide to the consumer; satisfied loyal and productive employees can create value. Finally, employee satisfaction is determined by the quality of support services and support services and policies of the firms that enable them to delivered a certain sense of value add to the consumer in the overall tally of services provided by the company vis-à-vis services provided by the competition. The very starting point in the analysis of the service profit chain is the encouragement of internal service quality. Human resource issues like the workplace design, job design, employee selection and development, employee rewards, recognition and tools for serving customer influence the internal service quality. This highlights the importance of people in driving business results. The internal people and the customer should all be at the centre of the management concern. The new service paradigm calls for investments to be made in people especially frontline employees who directly interact with customers and move towards the ultimate prospect of value creation. Internal quality in its entire refers to the feelings that the people in the form have towards their jobs, colleagues and the organization, this would relate to questions about how they feel about their jobs, whether or not they take pride and enjoy what they do or do they feel otherwise, whether or not systems and technology equip them to perform what they are expected to do or are they not fully equipped along with the kind of attitude that they have towards each other. People link up in the system to form a chain in which one has to serve the other in order to finally create value for the external customer. The logic of customer satisfaction must pervade internally. One link must aim to create satisfaction at the next link; employees within the system must identify their customers and try to satisfy them. 5.1. Recommendations The customer in the case of the above mentioned banks has the following problems. It is indeed from these problems that one could arrive at the operational challenges that currently ail the bank. The problems arise primarily from the fact that the employees work in a manner that are more rule bound as opposed to them trying to be consumer friendly. Therefore, each consumer has a feeling that he or she has to go around in circles in order to accomplish even the smallest of tasks. The problems could be classified in the following ways: First, there is no categorization of a customer, no integration of the transactions that he has with the bank. The idea is that the consumer should be able to operate a loan, a credit and a debit card on the basis of the same account in an integrated manner saving effort, time, and money, while making the process of interaction from within the bank a pleasure rather than a task. This could be achieved with the implementation of a process that encourages more and more internal quality by way of more coordination within the team and a better exploitation of the technology that is now at the bank’s disposal. Second, Logistics and distribution occupy a position of supreme importance in all businesses across the world most of all in banking. A successful and well managed logistics and distribution operations are the basic keys behind a business that hopes to thrive and do well (Brewer, Button and Hens her, 2001). Logistics and distribution management experts manage the transportation and distribution of goods, materials, labor and other commodities right from the source to the market. Computer software, communications networks and other technologies are used to bring the distribution process to order. Here the idea will be that the logistical management of the incoming invoices in terms of paper work and its management needs to be more coordinated and helpful to the ones that need it. The role of the staff and the structure is very important thus ensuring that its functioning is carried out in an efficient manner. The fact that everything has to be written could be swapped with the consumer having to work through a process of voice based commands and help on the call. This will achieve two purposes, first it will help the consumer feel more in touch and in sync with the bank and it will allow for a quicker more hassle free transaction. The requirement in the case would be a team of trained professionals that would be able to take the call while being able to assist the customer with as little hassle as is possible. Good Service is pretty hard to measure and difficult to quantify and in fact the contribution of logistics at the national level is almost impossible to document. Logistics and distributions help in the creation of time, place and even form utility, through the management of processes that enable companies to get goods to get to the right places at the right time in the right condition at the right costs (Rushton, Croucher and Baker, 2006). Again tasks cannot be passed around for there is often no worse feeling for a consumer than to have to go around in circles trying to figure out the person that would be best equipped to deal with his problem. The solution is the creation of a single kiosk to deal with a multitude of problems that could possibly face a given consumer. This again would mean a team where each member has the autonomy and the expertise to single handedly deal with the issues arising to a person’s banking needs. Conclusions In conclusion therefore one could reiterate the fact that there is the need for the bank to instate some quick institutional, structural and procedural changes within the workings of the organization in a bid to first and foremost keep the growth momentum from slowing down and second for retaining the consumers that the bank has thus far been able to create. The core values that will be promoted by the organization include the following points which it aims at upholding: 1. The focus will be on sustainability and stability of the organization; 2. Ensuring the management of the various resources takes place in an economic manner; and 3. Ensuring that the various needs of the customers are addressed efficiently. References Lovelock, C. H. & Young, R. F. (1979). Look to Consumers to Increase. Productivity. Harvard Business Review, 57 (May-June), 168-178. Mills, P. K., and Morris, J. H.,, (1986). “Clients as “Partial” Employees of Service Organizations : Role Development in Client Participation”. Academy of Management Review 11(4). 726-735 Lamming, S., and Brown, R., (2000). Strategic operations management. Elsivere Books. p6  Laugen, B. T., Boer, H., and Frick, J., (2005). “Best Manufacturing Practices: What do the best performing companies do?”. International journal of operations & production Management. 25(2). Pp131-151  Lewis, M., and Slack, N., (2003). Operations Management: Critical Perspectives on Business and Management. Routledge Heskett J.L., Jones T.O., Loveman G. W., Sasser Jr W.E., Schlesinger L. A., Harvard Business Review, Mar-Apr 1994, Pg 164 – 174. Brown, S.W., Fisk, R.P and Bitner, M.J. (1994), "The development and emergence of services marketing thought". International Journal of Service Industry Management, Vol 5 No. 1, pp. 21-48 Rushton, A., Croucher, P., Baker, P., (2006). Handbook of supply and logistics management.  Kogan Page. p9 Read More