Various Operations Management Tools - Assignment Example

Executive Summary Operations management deals with process improvement in terms of both effectiveness and efficiency. Any process whether it involves services or manufacturing has to serve basically two important purposes. Firstly it should achieve the end result for which it is intended. This qualifies the process to be effective. Secondly it should use optimum resources at its disposal. This qualifies the process to be efficient. This assignment endeavors to highlight process value analysis while analyzing the case given. It will first highlight the issues involved in the case and then will analyze it from the perspective of Operations Management. This assignment will also take resort of various operations management tools and techniques like value stream mapping and flowcharts to analyze various value and non-value adding process parameters. It will be easier then to eliminate the wastes and make the whole process lean and agile. Key Words: Value Stream Mapping, Flow Chart, Waste elimination, Lean & Agile process, Process Mapping. Table of Content S.No. Topic Page 1 Objective of the case analysis 3 2 Context of the case 3 3 Case highlights 5 4 Issues Involved and analysis 6 5 Recommendations 9 6 Managerial Learning 9 7 References 10 1. Objective Of The Case Study Analysis a. Highlight and discuss the operations management tools involved with process waste elimination. b. Carry out value stream mapping to make the whole process leaner and agile. c. To put forward an effective and efficient loan disbursing & financing operation process model for banking and allied activities. 2. Context Of The Case The given case has to be analyzed and discussed in the context of services operations management. Detection of wastes in any process is not an easy task as they are unidentifiable in nature. Thus they keep taking toll on the scares resources be it time, money or manpower. Though there are various mathematical, statistical tools at the disposal of operations management which will help not only in identification of such waste but will also help in optimizing it. This case presents the customer perspective which is of prime concern for any process improvement. The customer satisfaction is the prime goal of any business. Else there is very likelihood that customer and producer gap can creep in into the whole affaire. This has been dealt with great detail in research work conducted by Parasuraman, Zeithaml, and Berry (1985). Every service oriented business as like banking given in the case study has certain parameters which must be taken care off. These parameters are also dealt in the above study. They are as follows. Key aspect of service/performance Description Tangibles Appearance of physical facilities, equipment, personnel, and communication material; quality of materials and products. Reliability Ability to perform the promised service dependably and accurately. Responsiveness Willingness to help customers and provide prompt service. Assurance Competence, knowledge and courtesy of employees and their ability to convey trust and confidence. Empathy Caring, individualized, and professional attention the service provides its customers. Table 1: Service Performance Parameters Gap 1 Management perceptions of client/customer service expectations VS Actual or perceived service levels Gap 2 Management perceptions of client/customer service expectations VS Service specifications (mandatory requirements/standards) Gap 3 Service specifications (mandatory requirements/standards) VS Service delivery Gap 4 Service delivery VS External communications to clients Table 1: Service Performance Gaps The above can be used at a macro level, such as in an organisation wide service level review, or in a more specific application, as in a review of building requirements or a particular service activity. By clearly identifying gaps in service delivery or asset performance, the process of devising and prioritising solutions is made more objective and quantifiable. 3. Case Highlight a. The Gold Coast Savings Bank is handling bulk refinance requests. b. From front end facing the customers till back end, the bank has been divided in five distinct departments. c. There is no parameter to evaluate success or failure of the whole system. d. It is very evident from the customer response that there is clear cut communication gap among the various departments. e. It can be warrentedly inferred from the given case that there is no standardization of the various processes and tasks involved. f. The bank seems to be following functional approach in spite of process approach. g. Customer database management is poorly handled. h. Customer is subjected to undue hustle during the process which is apparently not recognized by the bank. i. Taking note of this situation, the bank has decided to adopt operational solution and for that it needs a professional approach to analyze and put forward recommendation to the top management. 4. Issues Involved And Their Analysis There are various issues involved with the present state of affairs which need to be tackled for the concerned bank. Following are those issues to be dealt with. a. Functional approach in spite of process approach: The bank has been divided among five departments in order to facilitate to whole process of loan disbursement. But there seems a clear cut lack of communication and feedback among these departments. Thus the functions concentrate on theirs own watertight department and its performance. The lacking foresight restricts the whole process to cut across the functions. Bank need to get rid of this shortsightedness and adopt process approach (O'Connor & McDermott (1997)). For this the bank needs higher level of coordination among the various departments. The process must be viewed from start to end and accordingly accountability should be established for the various departments. In this way the successive departments will become internal customer to their predecessors. Thus the final outcome will be shared by all departments. This will increase early error detection and its timely resolution. Moreover there will more likelihood of end customer delight. b. Lack of process standardization: It is clear from the case study that at micro level there is no standardization practiced by the bank. There is no standard for time required for various tasks involved in the process. Moreover there is no standard practiced adopted for loan disbursement process. Though the kind of service that a bank provides needs a great deal of customization but still there should be a standard process for that too. Considering the quantum of business handled by the bank, this trade off between customization and standardization calls for mass customization (Tseng & Jiao (2001)). This will call for great deal of involvement of information technology tools. c. Non value adding activities: The whole process described in the given case study has some non value adding activities (Shigeo, 1985). These must be eliminated to optimize the whole process. The following gives an over view of the process adopted. Figure 1: Flowchart for various activities and persons involved In the above flowchart the various activities involved in the process has been depicted along with the criticality to the customer as well as bank. Now in order to eliminate waste this process mapping must be used. Though the time frame for each activity is not given, else that is also the integral part of the value stream mapping. As a matter of fact waste can be anything among the followings (Shigeo, 1989). a) Internal movement b) Over Processing c) Over Production d) Inventory e) Motion f) Defects g) Wait or Queue h) Unused Creativity All those activities which are critical to both customer and Bank must be given due diligence. All those activities, which are critical to bank, but not to the customer, must be optimized. And all undue waiting time and delays must be eliminated. Figure 2: Improved process chart d. Lack of process performance Measures: The bank seems having no process performance evaluation tool in place. It is because of this reason, that the bank got too late in process recovery. The end customer satisfaction level has already gone down. The concept of metric parameters emphasize on the philosophy that until something is measured, it cannot be achieved (Briscoe, 2005). Metrics for the process in terms of quantifiable parameters will help in evaluation of the end result. 5. Recommendation a. Bank should ascertain interdepartmental free flow of communication. It should also put in place customer feed back mechanism. b. Waiting and delay period to be minimized by standardizing the whole process. c. The bank should adopt process approach and should shed off its functional silos structure. For this top management should bring in performance based incentive schemes. It should also establish accountabilities of every department and provide required autonomy. d. There should be performance evaluating metrics for the process to gauge the end result. e. The bank should endeavor in developing customer database in order to speed up the process of refinancing. 6. Managerial Learning Quite often the volume of business takes toll on the quality of the services provided. But any firm should never loose its sight from the satisfaction level of the end customer which in turn is the function of quality. The system should have inbuilt error detection mechanism. The end results until shared by all cannot bring prosperity for the company. Thus free flow of information is of paramount importance. The company should try to make customer as a partial employee as it will help customer understand the process. Moreover it will also optimize the expectations. 7. References a. Parasuraman, A, Berry, L.L, Zeithaml, V.A. (1988): SERVQUAL: A Multiple Item Scale for Measuring Consumer Perceptions of Service Quality, Journal of Retailing, 64:1, p.12-40. b. Tseng, M.M.; Jiao, J. (2001), Mass Customization, in: Handbook of Industrial Engineering, Technology and Operation Management (3rd ed.), New York, NY: Wiley, p. 65. c. O'Connor, J. & McDermott, I. (1997). The Art of Systems Thinking: Essential Skills for Creativity and Problem-Solving. San Francisco: Thorsons Publishing. p. 11. d. Shingo Shigeo, 1985, A Revolution in Manufacturing: The SMED System, , Productivity Press, p.5. e. Shigeo Shingo, 1989, A study of the Toyota Production System, Productivity Press, p.236 f. Simon Briscoe, 2005, The trouble with targets, OECD Observer, No. 246-247. g. Skyttner, Lars (2006), General Systems Theory: Problems, Perspective, Practice, World Scientific Publishing Company. h. John Gall (2003), The Systems Bible: The Beginner's Guide to Systems Large and Small. 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