Production and Operations Management: Blueprint of Current Service Components - Case Study Example

Name Tutor Title: Blueprint of the Current Service Component. Case Study: Colonial Savings Bank. Institution Date Table of Contents Table of Contents 2 Introduction 3 Case study analysis 4 Blue print analysis of the case 5 The new refinancing system 9 Service profit chain concept 9 Blue printing concept 11 Diagrammatic Representation of the Current Blue print service interaction 11 Conclusion 14 Bibliography 15 Introduction Service blue printing and service chain profit concepts are the widely used methods of analyzing a service delivery procedure with the effort of improving the service value and at the same time reducing the expenses that are used on procedures that do not add value to profitability and growth (Siau & Loo, 2006). For the case of Colonial saving bank of Queensland the two methods have not been used effectively for the optimal service delivery procedure. It is very vital that the current service blue print is analyzed and a new one developed. In this paper the current refinancing procedure is analyzed in details and a new one is also proposed. It will do the bank good to adopt the new blue print and service profit chain concept. Case study analysis The current blue print analysis of refinancing procedure of Retain Banking at the colonial saving Bank is as follows depicted in a blue print diagram; According to Frauendorf (2006), the total activities that bring together satisfaction of customer through service delivery in service blue printing is broken down into visible/on stage employee contact, action of the customer, backstage/invisible employee contact and the support system or processes. The employee actions are the activities that the employee does without interaction with the employee. Onstage or visible employee contact involves the interaction of the customer with the employee of the organization. Backstage/invisible contact employee involves the activities done by the employee in the absence of the customer. In this case it would include property appraisal, loan processor and loan agent advice. The physical evidence are the physical forms that are present such as the agent, the bank, customer home, lawyer, account or the loan agent. These represent different activities take place. The current blue print of the bank refinancing process contains so many activities that have been outlined in the figure. The activities are many and tedious that requires reducing and redirecting in order to achieve efficiency (Frauendorf, 2006). Blue print analysis of the case The current financing procedure is very burdensome if the complaints by the customer are anything to by. The customer uses the same bank that had given him loan previously confidently thinking that the procedure will be much easier. Laws (2004) notes that in the current service blue print, there is no consideration given for the people who had acquired loan from the same bank so that they skip other procedures that should only be subjected to first timers. The longer the procedure of obtaining the loan, the higher the charges incurred and consequently the monthly repayment amount is bound to go up. The support system that should process the repayment direct from the customer account is not up to date. There is a procedure that is being skipped that makes the bank to call the customer claiming that the mortgage repayment was overdue when they are only supposed to deduct the amount from the customer account direct and it is not the customer who is taking the payments to the bank. The bank should deduct the amount due every month from the customer account without having to call (Laws, 2004). The support system should be automated in such a way that some of the activities that are done manually can be combined to enhance the efficiency and effectiveness of the process. The system should be automated in such a way that the stopovers to the customer are minimized to an extent of enhancing the workability of the process. The appraisal of the property is done over and over again to the frustration of the customer, the client just wonders if there could be another way of keeping in touch with his progress instead of doing manual appraisal every time he wants to get a loan from the bank (ACM, 2007). Backstage activities that lead to the loan application and confirmation process being long are very many. The customer has his case handled by the loan agent, loan specialist and the other financial institutions working in the support system. The interaction between the loan specialist, the loan agent and the lawyer are very many to extent of stalling the whole process or slackening it to a snail pace. The longer the process of obtaining the loan; the higher the charges it draws during for repayment. The cost of obtaining the loan goes up as the process drags on. This concern is also raised by the customer; there are so many people working on his file to extent of making him bewildered (Bitneret al., 2008). As the customer gets enquiries from different quarters this makes him to be of concern why there is no one person that should deal with him throughout so that if something happens there will be one individual to explain the case and it will be easier to track the path through which the process went sour. In this case the customer does not know whom to call in case of anything due to many referral points within this case. If he needs any classification, the process is so diversified that he will get confused who to enquire about the money matters or the process of repayment, is it the loan specialist or is it the loan agent? According to Dickson (2006), it is appalling that the loan approval procedure takes so long to an extent of the termite inspection, credit appraisal and appraisal report getting expired. It is not the fault of the customer that the process for the approval of the loan takes so long that the reports expire and consequently the customer should not be made to pay for them. The new reports should be catered for by the bank as explained by the customer. Loaning at the process through blue print, the customer document has to go to the loan specialists several times. It should a point where the specialist role is played once but he performs all his functions to fast track the process to the benefit of the consumer. The customer has to go all the way taking the lawyers papers to the bank to be signed. At the bank he is turned away with the news that the person concerned would not be available until the next day. The lawyer should have dealt directly with the loan agent to avoid the customer being dragged into the tedious process. The customer should not take a day off from work only to be wasted due to lack of services. Whoever is in charge of the signing of the lawyers papers should ever be present in the bank. More importantly there should be a system that is automated that should take care of the verification without physically requiring the customer to be present. The loan payment specialist has to complete the verification case before he goes to another case and there fore it is absurd that he should writing a letter to the customer asking how the customer is going to repay the mortgage. The customer is worried about double payment if the said practices are to be repeated over and over again (Dickson, 2006). After the customer has completed the forms for loan application the other activities that are backstage should follow immediately. The appraisal of the property and the verification of the financial options plus coordinating with other financial institution to find out if at all the customer has another mortgage to pay, should be done simultaneously as the customer awaits approval from the bank. With the current system it very possible that an approval can easily be cancelled at the last minutes following mistakes at the various stages due to the fact that they are done so independently from each other (Echeverri, 2005). The current closing of the case is not very definite and where the customer may relax and erroneously think he is done with the process, it may be the process is not even half way through which may make some of the customers to lose hope. The physical evidence that are present are the lawyer, the bank, the loan specialist, the loan agent, the customer account, the customer mail box and the letters he receives from the bank. The onstage activities include the discussion of the financing options, the discussion with the lawyer and the explanation of any discrepancies that occurs during the process. The backstage activities include qualification verification, property appraisal, and final approval of the bank agent, agent-lawyer interaction, and the loan specialist’s verification. The support process include the credit check, customer filing system, loan payment system, termite inspection by the lawyer, and mortgage verification system. The new refinancing system Service profit chain concept Using the profit chain concept, it should be noted that efficiency is the key to customer satisfaction and loyalty. The customer will be contented if he gets the loan in time to cater for the mortgage financing without having to incur additional costs. Every step that the bank and its agents make should move the customer close to his target as opposed to far away from his target. The procedure should be aimed at reducing the cost as well as adding value to the service being provided to the customer. The customer should feel contented that the procedure is non-bias and it is customer centered. The interaction between various activities should add value to the whole process without dragging the customer backwards. If there will be efficiency in the service the service the interactions between the different layers of the activities should be shortened to include the only activities that add value to the whole process. The point of service profit chain concept is to make the whole process as brief as possible not to allow overlapping of actions that do not benefit the organization growth and profitability (Echeverri, 2005). Service value should link the efficiency of the service and the customer satisfaction and loyalty that leads to more profit and growth being realized. It is appropriate to view the whole organization as a whole and try as much as possible to reduce the activities that delay the customer from attaining satisfaction in the long run. There are activities that overlap each other that should be merged or done away with if they are not beneficial to the profitability of the bank. If a certain activity has no direct benefit and only makes the whole process to be long and tedious then it should be removed or merged with another activity that will make it more interesting for the customer and the employee of the bank (Hauser & Tellis, 2004). Blue printing concept In the current service interaction with the customer there are many occasions between the loan specialist, loan agent and the lawyer that can make the morale of the customer to go down. The customer can be kept waiting for a long time and in the end it is not guaranteed that his application will be successful. In the new blue print of service after the customer applies for the loan; loan processing precedes property appraisal and credit check. The customer is able to tell within a short time as possible if his loan application was successful or not. This is very important for the notification about the successful of the loan or failure to come quickly so that the customer does not remain groping in the dark as the process drags own before he knows his fate. Diagrammatic Representation of the Current Blue print service interaction In the new blue print the three activities will be done at almost the same time to allow the customer to get the feed bank as soon as possible. It will be very disheartening for the customer to wait for a long time and there after he is informed that his loan application was not successful. The verification of the details provided by the customer should be done as soon as possible so that if there is any adjustment that can be done to salvage the problem it is soon as possible. In the new blue print the loan processing has included the lawyer’s part of termite inspection to cut down on the many processes that had jammed the whole system. After the credit check is done and the property appraisal is completed it should be possible to determine the eligibility of the client of getting the loan. It should not take the whole process and in the end a negative verdict is hurled at him (Berry & Parasuraman, 2008). The loan processing stage should be able to give the customer verdict of the success or failure of his application. It is very mind blogging to use a period of two months applying for a loan which one will know if he is successful after a period of six months. The feedback stage in the system should be as soon as possible and the other stages have been merged to reduce the number of stoppages that the whole request of the customer has to go through before being approval. The customer should be able to monitor the process and if need be call for fast tracking the process so that there is no time wasted between one activity and the next (Fisk, Grove, & John, 2007). The lawyer’s verification should come after loan processing to finalize the small details that are remaining before the customer is eventually given loan. In the verification process the lawyer should discuss with the loan specialist about repayment and also conclude the deposition of the loan in the account of the customer by the loan agent. So long as all these are accomplished the customer should be sent an approval letter letting him know that his application for loan has been approved. Berry and Parasuraman (2008) argue that the loan agent should check to verify financing approval and through the repayment support system be able to determine the amount that the customer is supposed to pay each month and for how long. It is the responsibility of the loan agent to verify with the lawyer that the correct figures are given in the process. The customer should be notified from time to time about the development of the loan application through the loan agent or an automated system that allow the customer to access any information about the stage of his loan without much of a problem. The loan allocated should be deposited in the account of the customers account and the customer informed about it immediately so that he prepare himself on repayment of the loan. In case there was a hitch in the application process the customer should be informed as soon as possible so that he provides the explanation of loan denial without feeling that he has been led into a wild goose chase. Automation of many of the stages as opposed to dealing with them manually is the best way of solving the problem at retail banking at the colonial saving bank. The number of the service activities has to greatly reduce to allow only the value adding activities to be maintained (Fisk, Grove, & John, 2007). According to Richard and Fred (2006), profitability will only be realized if there is reduction in the service expense and addition of value to enhance the satisfaction and loyalty of the customer. If the customer will feel alienated will the process they end up looking for new banks that will well cater for their needs without having to spend a lot of time and money? This will be suicidal on the part of the company. Conclusion Blue printing and service profit chain concept have been used widely in making the service delivery of companies efficient and up to date. In this context the current blue print at the retail banking at the Colonial Saving Bank has been thoroughly looked at and moreover the service profit chain concept has been used to explain the current situation. The proposed efficient blue print has also been provided to enhance service efficiency at the bank through addition of value to the service and increasing customer satisfaction. The refinancing procedure can be looked upon in the new light. Bibliography Siau K. &. Loo, P., 2006, Identifying Difficulties in Learning UML, Information Systems Management, pp. 43-51. 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Echeverri, P., 2005, Video-based Methodology: Capturing Real-Time Perceptions of Customer Processes, International Journal of Service Industry Management, 16/2 pp. 199-209. CACM Journal. Fisk, R.P., Grove, S.J., & John, J. 2007, Interactive Services Marketing, Cengage Learning, New Jersey. Read More