Matching Supply with Demand - Case Study Example

Analytical Report: Operations Management Name Institution Executive Summary The business report herein, analyses the case of Community bank of Perth with specific reference to its loan service activity. The drive to prepare the report came from the realization that the bank has had problems matching quality service provision in line with the boom in business and demand for finances. The analysis is based on an operations management perspective and applies the concept of service blueprint. The analysis starts with an in depth literature review based on past research exercises and view of scholars on the subject area. The reviewed literature is applied to analyze the case of Community Bank of Perth. The first bit in the analysis involves explaining possible reasons for the design of service provision to be initially designed in this manner. The problems of the service procedures and activity are identified and explained. The evaluation of the problem areas is based on the concept of service blueprinting as well. A recommendation is formulated in light of the current problems and needs of the bank and the industry at large. A new service design is crafted that suggestively should replace or rather improve the current system. An implementation plan is the scheduled specifying the lead responsibility and duties of various personnel. Finally, a conclusion is made in light of the discussion and matters identified as relevant in the subject area of operations management. Introduction Modern managers have made numerous attempts in an effort to improving service delivery of their entities. They have done so by application of the various operations management philosophies such as theory of constraints, six sigma, total quality management, supply chain management among others. The concept of operations management demands that cross-functional process be followed in making decisions. Major areas of business; from marketing to finance, organizational behavior to strategy formulation is majorly based on theory development. Operations management has come in to facilitate the concept of theory building, testing and refinement. Theory building has been noted by scholars as probably the most significant part of operations management. Subsequently, the theory of constraints has popped up as the central theory upon which this whole concept is built (Blackstone 2001). Modern economies have witnessed a rapid demand in service provision industry and investors have responded to this call. In fact, today even the strongest economies USA included derive much of their revenues from the service sector (Schroeder 2008). Despite this, it becomes interesting to acknowledge that in practice, development and modernization in services is less robust as compared to other areas like manufacturing sector. Many attributes can be associated with this state of affairs one of them being that the age of industrial revolution saw the mankind concentrate more on tangibles more than anything else. The drift in the structure of modern economies has called for other dimensions in the service sector that has earned it the attention that it now enjoys. There is more drive to make the practice in a much more disciplined and creative manner in an attempt to create specialized customer experiences that he/she can perceive as being meaningful and can retain memories not only for the service itself but also for the entity that provided the service. This is the way to transform business. There is a widespread notion, today, more than ever before, that each business transaction whether involving a tangible item or not involves one aspect of service provision or the other. This new notion has necessitated the innovation of more enthusiastic techniques of service provision, service blueprinting being one of them (Bitner et al. 2008). The concept of service blueprint is a method of service improvement that is customer focused. It is a technique particularly applicable in situations hence a service provider realizes that loyal customers are changing their perceptions. It checks the problem of customers wanting to dissolve their relationship with their current service provider following constant dissatisfaction (Blackstone 2001). This would be an awkward situation to be in by any player in the industry and hence the need to write this report. Literature Review Initially, service blueprinting was introduced as technique to model the process of service provision from the perspective of the customer. This was the intention of its inventor, Lynn Shostack. She applied the principle of theater production to organize the service activity. According to this system, service provision is categorized into stages, starting with the onstage area, where special attention is paid to what the customer is sees and is already aware of from past experiences with the service provider. The other area is the backstage entails the undertakings that the provider executes behind the curtain and hence the customer does not see. This area is crucial since it goes along with the provider’s line of duty and specialization. The aspect of service blueprinting as an approach to service improvement enable the designers to define their goals ad intentions in a visual way. It provides for a viable way to link their intentions with the customer needs and perceptions in the service provision process (Shostack 1984). The traditional service blueprint has integral features relating to evidence of service delivery and support services. Service evidence refers to the tangible attributes of the service activity that the customer can use to base his/her judgment and creates perception out of that judgment. It entails anything physical that is used in the process of service activity. Support services are back office operations that enable the service to function. These include the data bases and other knowledge based systems (Bitner et l. 2008). Service blueprinting provides a reliable means of evaluating the efficiency of events at the customer server contact points. The moments of such interaction must have clearly organized events that show ahead of time the activities that should take place and the order they should follow. In a layout drafted for the purpose, lines should be drawn to separate events of the interactions. The frequency of interactions should be enough from the customers’ perspective. The outcome of each interaction need to meet the customers value expectations. Laying out a format of the service activity enables the operations manager identify areas of flaws or weaknesses and provides him/her with a chance to make timely corrective action (Finch 2008). According to Carbone, Lewis it is services that create experiences. The main point of focus for the management should be devising means of properly managing that experience through quality service provision framework. This requires designing of the set of clues that operate holistically to satisfy customer demands. Organizations should be ran in such a manner that objectives are laid down and the whole process of customer service activity is broken down into stages that should follow one another chronologically and without duplication of effort. Properly designed service process should entail creating an integrated valuable customer experience that will ensure old memories by the customer that act as a drive for another transactional relationship with the same service provider (Jacobs & Chase 2008). Attention to service has been accorded casual deal with majorly due to the fact that services are intangible. People usually use words to explain them. Service blue printing provides a simple graphical representation of service improvement framework. All stakeholders can easily comprehend the system since it is not as formal or complex like services such Business Process Modeling Notation (Bitner et al. 2008). Analysis of Case Study Operations management requires that activities be grouped in stages and each departmental responsibility to be clearly defined and distinct from the other (Meredith & Shafer 2002). This seems to be the idea held by the designer of the current service activity at Community Bank of Perth. Specification of duties is given high regard with the duties almost executed by different officers of service functions. The five stages are designed systematically such that the completed work of one department becomes the first activity function of the immediate department. For instance, once the loan agent facilitates the loan application by the customer the details are immediately passed on to the loan processor to evaluate the details specified in the documents. The works of each service function complements the work of the other department. This is done in the spirit of integration of the banks sum total of service delivery framework. In other words different services work independently but their functions are interrelated and each section benefits from the efforts of the other (Davis & Heineke 2005). This is the case between the loan processing stage and loan application. In this case, if there are any discrepancies or problems in the information given by customer, at the loan processing stage, the officer consults with the loan agent for advice, including seeking verification from the customer if need be. There is special attention paid to service evidence. This is exemplified in the level of documentation that is involved is the whole process of loan issuance. The process begins with the customer filling the loan application form, and signing of papers showing to authorize the loan check. The process continues with different documentation being applicable for each stage. All this is done as proof of the existence of some business relationship between the bank and their client. Formal papers act as a go ahead for execution of activities, with the papers acting as the sanction that the process is legal. Problems Accruing to the Current System A major weakness with the whole process of loan application is the lack of defined time frame that the customer should wait before getting the loan processed. This can be, and is actually is a major source of dissatisfaction for the customers of Community Bank of Perth. Under normal circumstances, waiting is strenuous, but waiting indefinitely is even more hectic. One of the laws of the theory of constraints holds that indefinite waiting time seems longer than when the waiting time is defined. Also, waiting time off service seems longer than waiting time in the process of being served. The process illustrated herein does not have a defined time frame between the point of customer’s first contact with the loan agent and the time when the customer’s account is credited with the money. This can be very tricky for a customer who wants to plan his/her financial affairs in advance. The process has some aspects of duplication of efforts. This is a case where the same duty is done twice but by different officers (Davis & Heineke 2005). The process demonstrated by the bank points to high level of unnecessary caution by the bank management. For instance, the loan closing agent performs calculations to ascertain the payment rates. Similarly the loan application does the same calculations when assessing the viability of the customer to be able t service the loan. These are two activities that are closely interrelated. It would be prudent therefore, to save time and effort by integrating these activities under one department and assigning their execution to one single officer. This move would shorten the process and reduce unnecessary customer contact. Finally, the system lacks properly defined roles for some stages. For example, the exact role of the loan servicing specialist at the new account establishment stage is not clear. What the lay out purports to be the work of this officer, looks to be the exact duty that the loan payment specialist. There exists no clear line between these two responsibilities. If is undefined where the duties of stage four ends and where the duties of stage five begins. Under the normal way of working, verification for settlement of all previous loans of the client would be settled at the stage of the loan closing stage. It is imprudent to close the loan deal before the verification of the affairs of past loans. In the light of this, that the rationale of the fourth stage becomes unnecessary. Instead the duties of maintenance of the new loan account should fall under the responsibility of the loan payment specialist in stage five. Recommendation Redesigning the process would call for the application of the service blueprint concept to eliminate flaws and enhance the key functional areas. The numerous ideas are integrated in line with specified problems in an effort to align the business processes. The design should be sensitive to the organizational needs and particularly customer perceptions. The views of the customers must be analyzed keenly and form part of the information to be considered in formulating the design set up. The results of the system must be clearly forecasted and the time duration for each process properly ascertained (Bitner et al. 2008). Design of the process The new process will be divided into four distinct but integrated processes. These will follow the following procedure. Stage 1 – Loan Application The customer upon approaching the loan application agent is given due advice concerning all the loan packages and the details of each package. The advice will involve giving direction that would best suit the requirements of the customer needs in question. He/she is fed with the details in respect to duration of the loan application process to completion. When the client chooses an option, he/she I provided with a loan application form for filling. The loan agent acting on the information provided by the client undertakes to calculate the rates and repayment details should the loan be approved. If the client is comfortable with the rates and mode of payment he/she signs the papers that authorize the loan approval. All along the interaction, the loan agent should refer past data regarding the client to enable an early assessment of his/her viability. This would further help to advise the bank on some verification procedures that need not be redone. Stage 2 – Loan Processing This step would entail verification of the document presented by the client to support his/her bid as well as the information given on filled forms. An ascertainment is also made for the past loan resettlement deals. Once all the information is verified as the true representation of facts, the loan is approved and the process is allowed to pass to the next stage. Stage 3 – Loan Closing The client’s lawyer is invited to forward the loan packet. The lawyer and the closing agent verify all the repayment details. The lawyer arranges for termite inspection and then prepares the closing papers. Finally the lawyer signs all the final formal document on behalf of the client and the contract now exists. The customer can now access the finance at the start of the next available business day. Stage 4 – Loan Payment Set up The loan payment specialist creates a new loan account for the client. The loan account is placed in its contextual category and handled by officers under that specific sub-branch. The grouping is based on the repayment period as well as the method of repayment. The loan payment specialist monitors all the payments to ensure compliance with the agreement. The specialist enforces all the accompanying penalties for default in payment either on grounds of late payment or/and lower than agreed installment due. A customer service contact is created for each category of the loan. This section receives complaints from clients and directs them to the relevant officers for consideration. The section is also used for all communications that the bank may want to make with the clients. Each client is advised on the category that he/she falls to save him/her the confusion of not kowing who to contact for what. Implementation of the New Plan Implementation of the process of the service blueprinting should be distinguished from that business reengineering. While the later involves a fundamental rethinking and radical redesign of the existing system, the former entails refining the system of service provision activity such that customers’ expectations are satisfactorily met if not actually exceeded. Designing the system requires that the designer tries as much as possible to consult widely from all the stakeholders and ensure that their inputs are appropriately incorporated in the final blueprint. This approach enhances acceptance of the new service system and reduces resistance from the very employees who will be called upon in the implementation of the system. The major aim of crafting the design is to ensure that service delivery at all areas of customer-service provider contact point leaves good memories and the experience of the customer with the service provider is persuasive to instigate new interactions (Boyd & Gupta 2004). The system also ensures that the finer details of each section and sub-section of the service provision process are entered in the final documentation set up. The final blueprint henceforth acts as a common reference point for all the parties who participate in one way or the other in the service activity. The blueprint also acts as the guiding foundation for subsequent changes or refinements. The designing and implementation process will take a period of eighteen months to ensure that the system becomes fully embedded in the bank’s work procedures. The implementation process will occur in stages as stipulated below: Step 1 – Drafting the pilot design The top management brainstorms on the suggested design integrating it into the organization’s term strategy. The strategy involves creating a completely new work process in the loan service provision that promotes customer satisfaction and particularly addresses the needs of clients. Primarily the management designs the new organizational structure by eliminating some positions and creating the suggested new ones. The plan spells out individual and departmental responsibilities and time frame for each function. Step 2 – Preliminary Testing A select team is established comprising of representatives from various departments to work out on finer details of the grand framework. The team should come up with suggestions that can guide the process of implementation. For example they can draft a number of organizational layouts with a view to selecting the best from the many. They should also design the job description or each position including the limits of authority. Step 3 – Communication The whole plan is communicated to all workers, allowing them to air their input and concerns through the select team. For example, a number of process lay outs can be distributed to workers and be requested to select the one they most prefer. Communication helps to minimize resistance. Step 4 – Actual Implementation Implementation takes course. This follows inclusion of workers’ views into the system and final approval by the top management. Officers and specialists start taking their new duties, others leave their assignments while new arrivals are oriented in light of the new system. All staff members start being designated by their new titles. Step 5 – Monitor and Review This is usually a continuous process that should fall under an independent function to promote openness. The monitoring evaluates the progress and milestones that the company makes over time and suggests corrective actions in case of deviations from plan. Review should focus on getting the perceptions of all parties and an independent evaluation of whether all officers at each level are complying with the new procedures. Conclusion In today’s business environment competition is almost the major challenge to business. Any prudent manager will be better positioned to enhance service provision by applying the most satisfying service to clients. Today, customer retention is the tone of business. This fit will not be realized until the proper customer experiences are created at the service point through quality service. It is imperative that the system adopted for customer service be directed towards creating good customer memories in an effort to solicit future relationship with the same client. Unique competitive advantage can be created by designing strategic customer interaction points. Banking industry, being a totally service oriented area cannot afford to be left behind in the field of crafting modern and effective service delivery frameworks. The path to designing a service blueprint for an activity is a multitasking undertaking. The initial step involves identifying the vital features or elements of the entire service activity. Over the time the designer understands interconnections between the various elements. Then a special attention is paid to the problem areas subsisting in the process. A strategy to address the issues is formulated that should involve corrective actions as well as new additions that can help to improve the process. Finally, the lead strategist and top management create empathy with the users of the new system. An ascertainment should be made that all stakeholders fully understand the need for the new system and that they appreciate and identify themselves with the new set up of activities (Bitner et al. 2008). There are many factors that guide the perceptions of customer towards a service. Service providers need to probe further to identify the specifics of customer determinants. Executives of modern times need to come up with methods on how best the onstage and backstage operations should be linked to maximize customer memories created out of the service activity (Boyd & Gupta 2004). 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