Importance of Operational Efficiency in an Organization

Importance of useable Efficiency in an Organization1. executive summaryOperational efficiency and its quality of providing wait on is most meaning(a) f shamor whatever arrangement either harvest-homeion or serve. That is most important part in any company movements whether it is blood oriented or nonprofit oriented organizations also argon highly concern their organizational growth and local and regional expansion of their operations. in the main operational efficiency and performance is depending on the external milieu drivers. Those external drivers argon creating competition and lifelike of the among the indus sample dissolutioner. thence future st respectgic planning, contingency plan, operation strategy is most important and playing vital role to face forthcoming removes. If the organization is not be able to mold those changes that happening in the originations and outside organization directly affect on operational efficiency of the organization. To face thos e environment changes most prudent strategies make adjustment in organization operating style and strategies. That does will help to achieve organizations collective accusings as planned. Mainly manufacturing table service organizations are performing functions such(prenominal) asSales MarketingHuman resourceOperationAccounting Finance or treasuryIT/Information surgical incisionLogistic/ weapon prudenceChannel focusingInternal auditingRisk forethoughtSo c e real(prenominal)ed functions linking each(prenominal) other and having inter dependencies, no one grass override those operational activities. Everybody work in the must focus on very well on operational activities. Because, at the end of year shareholders (investors) are raising questions at AGM, how much of fall of return generate by businesses and whether business operations went smoothly, what will be the future plans to deliver high rate of return for our investment and what type of operational strategy going to carryout to face the completion. So on frequently raise the questions by shareholders. Production and operation management was begun with industrialization. But it play vital role in the service sectors. In the contemporary world named it as Operation Management. Contribution of this subject is making big differences for business functions. Multinational local companies have established independent department to manage their operational activities very well. For an instance nowadays emerging business is argoting monetary service company name called Nation Trust Bank. That bank routine operations are making huge impact on their business performance. That is because bank performance is driven by its operational potentiality style. Mainly employees and guests satisfaction are most important element to show outstanding performance and to cast the new(a) customers. In this industry is driven by managing effectively whole operations of the business. Lack of operation managemen t delivers poor performance. To provide remarkable service wider range of service related compulsion to have well defined operations strategy to uplift business. This assignment chronicle mainly focused on up-to-the-minute practice of operation management banking industry and assignment contain the followings.Define operation management, its characteristic and playing role in banking financial service industry.Evaluate the goals and objectives are achieved in operation management objectives.Define organisations in operations in coitus to service and routine activities.Major resource, tools and strategys that are keep operations and to support quality of service of the bank.Analyzing importance of quality audit and utensilation of quality management system in bank.Major weakness and search opportunities to improve the bank service to satisfy the stake holders of the business. Making recommendation to capitalize the opportunities and avoid weakness of the bank.Conclusion of assignment2. Define term of operations managementAccording to literature production operation management are considering as one subject but in the current situation totally expert says round it asOperation management is subject that Design, execution and control firms operations that converts it resources into desired goods and service, and implement its business strategy and its define as another wayThe maintenance, control and improvement of organizational activities that are required to produce good or service. trading operations Management deals with design and management of products, emergence, services and supply chains. It considers the acquisition, development, and physical exertion of resources that firms motive to deliver the goods and services their client wants.First definition can be related the following diagram is simple operation of any organization.Feed BackInputinputs ServiceProcessservicing processOut putMaximize customer satisfactionEmployeesMoney (local f oreign)savings accountsInformationSystemsOpen up Bank A/CCashiering computer address card advancementMortgagingGenerate bank statementsBuying selling of foreign currenciesHappiest or loyal customerThe above diagram we can see operations different operations in the input level, process level and output level. therefore we can conclude that2.1. Operation management from aspect of Nation Trust BankTo add up analyze importance of operations of the bank the vision relegation and encourages is helping out itVision Making life simple by being the benchmark of convenienceMission Be innovative in continuously developing customer centric solutions. Unleash the talent of our team to be the best in the industry. Consistently grow grocery share and be the most profitable and respected Sri Lankan bank by 2015.ValuesInspirational leadershipIntegrity in all our trafficOpen communication development focusedMeritocracyPrudent happen managementRespect for allInnovation and continuous impro vementNurture relationshipsSocially and environmentally responsibleVision, mission and grade are Nation Trust Bank (NTB) operational objectives in relation to corporate objective. Organization chart shows hierarchy of the departmentsChairmanDeputy Chairman venire of managing directorsCEOCorporate managementSenior managementBranch managementManagersOperation managementCorporate management autocratic the follwing functionsDirector/CEODGM sell BankingDGM SME BankingDGM Cards, Consumer Assets and Strategic MarketingDGM Corporate and Institutional BankingChief Operating onwardicer mental capacity of Legal and Company SecretaryChief Financial OfficerHead of Human ResourcesHead of extension and Market Risk ManagementHead of Internal AuditConsultant/Head of TreasuryConsultant/Head of Operational Risk and ComplianceSenior management overlooking functions areTrade ServicesBranches and PBCAlternate ChannelsSME Banking and FactoringCards and Consumer AssetsBranch trading operations a nd quoteWholesale BankingConsumer Credit Risk and CollectionsConsumer SalesTreasury ServicesLeasingCorporate BankingLeasing OperationsManagement Information and PlanningCards MarketingCollectionsCentral OperationsFixed Income SecuritiesLeasing Zone 2Leasing RecoveriesMarketing ServicesRetail Banking CreditDelivery ChannelsNations Insurance BrokersTechnologyLegalCredit OperationsCredit RiskCorporate BankingDelivery ChannelsLeasing Zone 1Internal AuditInfrastructure and Administration occupation BankingCompliance and Financial ReportingBusiness SolutionsDelivery ChannelsCredit Risk Leasing and FactoringBy looking at the above orgnization chart and that functions, can initiate clear idea about the how its importace of the operaton mangement in the NTB operations. Here in the chief oprating officer and head operational assay is paly vital role of for the baking operations. They are responsible for the bank oprations as whole. Operational scope No of branches 40, No of leasing cen ters 9, No of ATM 43 , 6 personal banking centers as well as Internet Banking2.2. SWOT abbreviation of NTBStrenghtIt is subsidiary of Jhon Keels group, idirectly they can gained group strenght.Reputed coporate brand name Coporate brand value is very highHas selected well profitable segment to provide the banking serviceWider product portfolioStrong IT net work lag in every layer having expericeMore than 20yers experaince in that perticualr field.Carryingout more promotionRespect corporate governance superb Internal auditing peril managementWeaknessFaliures in th the IT systemdefine nigh operations wrong manner forgetful promotion newly introdce gurnateed invetment paln will be fail because of it is irrational plan.More customer complins prices and products qualityFew brach and ATMSuboptoimization is happening Employee discriminationPoor advertising in relation to market leader.Employee selections very static do not willing to new comers and do recruitment ground on the pe rsonal contact.Poor strategic implication. stress to do mass scale promotion, it has failedAlways try todepend group strenghtPoor opertations of mini brach in the supermrketsOpportunitiesexpansion opportunity in further in sri lanka in norht south ( war affected areas)Can be offered more differntiated Service by giving well traning for the staff.Customer driven promotion.Customer feed rachis system over the phone or by SMS,by mail.Rewarding system for employeesThreatHigh competition in the banking industry.Overriding tax ruels and regulation by bank.may have legal bump for business.New management is do not more concern on the operationsPaying high premius to get new business without cinsidering future feasibility.2.3. Importance of operations management NTBTo satisfy the share holders objectivesInvestors are expecting return by investing money on the banking business. If the bank is not generated sufficient of amount of return on the shareholders will not invest in the bank. Ther efore its corporate objectives must design and link with operations.To defense the market share face the competitionAnother main importance area of the operation management is developing strategy to face the competition.To managing the risk of the businessMainly banks facing the following riskCredit riskMarket riskAsset Liability management risk.Operational RiskWhen look at all the risk are related with the operation with banking business, if bank the bank stopped their business operations there is no any risk to manage for them. Therefore, managing risk of the banking business should have smooth plan to manage the operations.To fulfill rules and regulation of governed by Central bank of the countryTo fulfill rules and regulation of governed company act and banking actsSupporting decision makingOperational instructions are giving support to make the decision making. As example to advertising effectiveness pass judgment brand saving accounts can be used no of accounts opened up b y customers on daily.To adapt new changes on technological information scientific environment is rapidly changing to adopt those changes ATM came into apply to summation banking operational efficiencies.2.4. Performance analysis of the operations in relation to organization goals and objectiveExternal process changes (customer satisfaction)Personal banking service providing branchesNew investment plan offered by bank24 hours banking facilityOpen mini branch in supermarket location.Online bank account scuttle systemsSMS banking systemDoor step banking systemBilling payment system via their mobile phoneInternal process changes (to quick-witted internal customers)new auditing system to analyze the business riskMake contract with the international HR consultancy firm for training development of staff.Policies have been changes when take loansTransferring staff between branches to trim downGiving good training for newly recruited employees regarding bank operations.To reduce bottl enecks IT system training was provided.To prevent hacking introduced new system gloam by IT3. Routine banking operation and related resources, tool and systems in support to improve operation quality.As banks it having so many business process, that can be divided into twoExternal business process Customer focused processUnder this process defined that banking service which they provide to the customers. Those service are divided into 3 categoriesCorporate bankingPersonal bankingTreasuryIssue Letter of creditCurrent , saving and fixed depositForeign exchange dealingsShipping other guaranteesCredit cardForward exchange bookingImport export financeDebit cardsCommercial paper alert facilityBranded Savings accountsForeign currency swapsSyndicate loansCertificate of depositInterest rate swapsProject financingAdvice on foreign current market movementSecuritizationSalary remittance packageStructuring , managing and underwriting of initial public offering and private placement of equity Housing loansCompany valuation restructuringE exchange money transfer facilityStructuring of Corporate debt instrumentsHoliday banking systemsWorking capital financingRed carpet banking systemBullion tradingOff shore banking facilityLeasingInternal business process Internal operation centric processWhere mainly internal functions related process can be analyzedMarketing Management Ex. process of introduce of new productThis the huge process from the idea generating and to launch to customers is having certain approval to procedure such asIdea generating new service based productsEvaluating feasibility with the market conditionGetting approval from the Head of the marketingHead of the marketing and Director of the Marketing, brand manger discussing pros and cons of the product, brand name selection, effect of existing products and competitor responseFinalized the approvalbrand name Registeringto launch the product preparing budget and get approval for thatbrochures designing and making agreement with the ad agencyPrinting pass booksCommunicating to customers regarding the product via adGet feed back from the customerCompare budgeted deposit or account to measure whether branches have achieved budgeted sales.Human resources management Opening new Branch fill the staff requirement fortune telling staff requirementAdvertise regarding the vacancyapplication sorting and short listed candidates forestall for the interview1st interview for them and short listed for second interviewCall for the second interviewSelect the right candidate for the jobGiving the appointment letterFamiliarizing for the organization via inductionsTraining for that candidatePermanent those staffInternal auditing systemHere try to ensure that bank staff follow the procedure as planned and prescribed the accounts and finance. Here they evaluate analyse search Fraud and errorsManagement auditingSystem auditing (IT)Accuracy of accounting entriesAnalyze search Ineffective accounting procedu resAssets auditingDeposit managementUnder this category try to manage the deposit level with liquidity and profit. By equilibrise rules and regulations which are governed by central bank.Channel Development SystemThis is described regarding new branch operation and development of customer service.Managing Assets LiabilityThis also very important business process and functions in the banking operations managing their assets and liabilities. If these two are not balancing each other, the bank balance sheet will show impact on assets and liabilities. It should be managed by well qualified management account or fianc disciplined person. Otherwise bigger impacts made on the corporate image as well as destroy the customers relationship and may have business office go out of the business. Ultimately it will makes huge impact banking system in the economy.Risk Management Systemmajor different risk factor those are making bigger impact on the business continuation. According to bank info rmation major risk rating as followsRisk Areas office of the riskCredit riskDefault riskSecurity riskSectoral exposure riskLegal riskCounterparty riskCross border riskSovereign riskMarket riskandAsset Liability management risk.Interest rate riskLiquidity riskExchange rate riskInvestment riskGroup financial riskShare price decline riskCountry riskOperational RiskEmployee behavioral risk such as omission, fraud, judgmental errors, negligence, etc.Disaster related riskTrained staff turnover riskInsider dealing riskSensitive information leakage riskLack of creativity and innovativenessRisk on MIS and IT related risksPlanning Budget related risksShortcoming in the organizational structureCredit rating falling riskMoney launderingRisk of technological obsolescesRisk failing business volume and market shareRisk is being overinterpreted and losing the leadership positionOvertrading risk and risk of financial disintermediationWhen look at overall risk, high risk show by operational risk e xamine to other risk areas. Therefore, to analyze any type of these risks, need to have solid information to mitigate those risks in business operation.Operation managementOperations managements are looking after following areas. Those areBank or branch opening procedureThis is very important part in opening branches and head office. Opening must be done without authorized population. If not that is considered as misused of operational rule on the other hand it taken as illegal act. Therefore those rules regulation must very well.Cash handling process by silveriersMain cashier hand over cash to the counter cashierGet it signed on the log bookCashier log on the computerCarryout the day today operation (saving, withdrawals)Handover cash to main cashier after countingFill the cash summary by using officeMain cashier reconcile the cash with slipCash put into the safe boxManaging bank electronic dataData management is major important part of business process. Bank decisions are makin g process based on this process. If there is an error in the data, outcome (information) is will be inaccurate, ultimately, made decision are delivering risk picture. undermentioned the appropriate tool for quality assurance of the data applied by the banksDescribing data that is in the warehouseSpecifying what In and out of data is warehousebusiness events scheduling extract basedDocumenting and monitoring data synchronization requirementsMeasuring validity quality of dataData process management and security management system for databuilding Capacity of the bankTo improve productivity of service that providing process by bank need improve existing capacity in terms of ATMs, Branch and staff.Loan Management systemThe following process is involved in under the loan managementAnalyzing suspension of the loan and advanceThen made reservation or taking legal action to receiver those loansManaging the Finance of the bankFinancial management process overlooking low cost funding sources and mainly following procedure also looking after by fiance managerWorking capital managementCorporate tax planningAnalyzing InvestmentsDebentures and Share issueCorporate planning BudgetingBank corporate planning and budgeting strategies are followed by operations, main step that is following certain steps in the corporate, business and operations levels.Analyze the Vision, Mission, Goals and objectives of the bankCarryout position audit (SWOT) and environment analysis (PESTEEL)Generate strategic optionsAnalyze strategic options are generatedAnd Develop functional strategies such as finance, marketing, HR, operation, and IT to achieve corporate objectives. Such asProfitability (Profit before tax)return on capital employ of the bankGrowth and Market share of the bankCustomer satisfaction and value addition for service Quality of service3.1. Analyzing and evaluating resources, tools and system to support in the quality operationBank or any other business resources, tools and syste m can be divided into 3 categories based on value platform. Those areCustomer capitalStructured (organizational) capitalHuman capital (Human ResourcesCustomer loyaltyCorporate brand name and it reputationBusiness coactionIntellectual propertyPatents copy rightsDesign rightService markTrade markInfrastructure assetsManagement philosophy ,Corporate culture, Management process ,Information systems, net working systems ,Financial relationshipKnow how (serving offering process)Education level of employee, Vocational qualification, Work related knowledge, Proactive and reactive abilities, Changeability, Occupational assessment3.2 Define and implement quality management for bankQuality management defined by American Society for Quality Quality is the totality of features and characteristic of product or service that bear on its ability satisfy stated or implied needs. Banks can focus on their quality the following way. Quality of services or business can be measure by using the followin g methodsSix dimensional performance matrixBalance Score card systems generic wine measurement3.2.1. Six aspect or dimensional performance matrixDimension of the performanceType of measuresCompetitivenessRelative market share pecker of customer baseDeposit growthFinancial performanceProfitabilityLiquidityCapital structureMarket ratiosQuality of serviceReliability reactivityAesthetic/appearanceComfortFriendliness mannersFlexibilityVolume flexibilityDelivery speed flexibilitySpecification flexibilityResource utilizationProductivityEfficiencyInnovationPerformance of the innovation processPerformance of the individual performance3.2.2. Balance scorecard (BSC) systemBSC is identifying financial and non financial measures to evaluate quality of service. 4 pillars are representing by BSC. Those areCustomer perspectivesSatisfaction of the customersFinancial perspectives Satisfaction of Share holdersInternal business processTo satisfy both(prenominal) party what must be offeredLearning and growth Improving, developing, changing process and procedures to satisfy all the parties in the organization to improve efficiency of the organizations continuously.3.2.3. Generic measures systemTo evaluate service efficiency the following generic measures can be implementGeneric cadencysType of measurementService of QualityAccess aristocratic to find out supermarketAppearance Staff appearance, well groomedAvailability products availabilityCleanness Gondolas and shelf must free from dustCompetence Speed of cashieringCourtesy CSA must polite and respect to customersResponsiveness Response any queriesSecurity personal security3.3. Implementing quality management system (six sigma model)Improve any process performance either production process or service providing process. This model can be implemented and it has 5 steps.Step Define measuresStep MeasureStep AnalyzeStep ImproveStep Control4. Identifying Weakness and opportunities in the process4.1.Weakness analysis and strategic implicationWrongly define some operationsTo collect the deposit banking assistant are sending to the outide banking premises, that is very risky because the rob or theft money.Faliures in th the IT systemBanking industry one of the key driver is IT systms in those suystmens failutre affect couters, ATM or brnach operation. Therefore IT deparment need to take relavent action to prevent this kind of situations.Poor promotionNewly introdce gurnateed invetment paln will be fail because of it is irrational plan.We the customers are get calcualte benefit of the invesment plan, relizing bank try to make fool the new customerss. Therefore NTB need to evaluate that promotion of investment plan.Few brach and ATMTo satisfy customers need exiating ATMs and branch are not adequate. Therefore top management need to increase number of ATMs and mini brach increse the customer service.Suboptoimization is happening Employee discriminationThis always happen in the top management and they d ont allow come with new ideas and try discriminte those people as headche for the bank. This is not acceptable level of pracite because of new ideas are helping to develp the bank service. That culture must changed by HR department.Poor advertising in relation to market leaderCommercial bank is market leader in the banking industry but problem is that NTB is not spend sufficient amount of cost on advertising and they have selected brand ambassder as sport star that is not reflect imporatnce of the bank service.cost of staff training is very high and cust down other costNTB has made an agreement with interanationl HRM consultancy firm to get trian the satff. But it is very cost. There are experianced firms are availble in locall to get bank staff training at resonable cost. That must be changed.Employee selections very static do not willing to new comers and do recruitment based on the personal contact.Junior and senior level staff recruitment is made via personal contact, that is no t good practice, it will leads poor operational perfornances.That is need to be chaged by HR department.Poor strategic implicationCompetition of the banking inductry is very high and NTB strategies not capable enough to cope the competition.Try to do mass scale promotion, it has failedPromotion that made by using brand ambassader was not successful. Even the NTB advertising fail to highlight their major benefit of the each of bank accounts. That has already capitalized by other players of the industry.Always try todepend group strenghtJKH is large conglomarate bunines group, therfore NTB try use the those group of companies money in their accounts as corporate accounts. But it will not be successful strategy, if any buisness will fail that will directly affect o on the bank operations.Poor opertations of mini brach in the supermrketsIn the supermarket bank service expecting customers are very high, but mini branch is included 3 staff members they cant manage rush time banking operat ions.4.2. Opportunities analysis and strategic implicationExpansion opportunity in further in sri lanka in norht east ( war affected areas)There is an opportunity to open up new brach north east. Because of those areas high ended customer is having desire to get good banking service. Therefor NTB could capitalize that chance.Can be offered more differntiated Service by giving well traning for the staffNTB staff always having an attitude as most prestige bank, but they need change that attitude and need do differentiated bank service for the customers.Customer driven promotion.By analyzing most valuable customer, NTB must offer rewarding system such asInterest excemeptionsGift vouchersSeasonal promotions on the minor accounts,Customer feed back system over the phone or by SMS,by mail.This will help to increase the customer satisfaction efficicny of the bank by merging with new technological development.That will help to increase the number of customers and reduce operational failur es.Rewarding system for employeesTo motivate the employees need to have proper and stimulus arisen rewardign system to increase the sales and productivity5. ConclusionAccording to the report and based on practical application of operation management, can be make the following conclusionsImportance of the operations management will be increase in futureThis subject will be more developed and that knowledge need put into practice.Operation manager role of will highly important.HR department must play as supportive department in managing people to implement operational strategyMarketing department is play a bigger role when comes to the sales management or branch level operation.To improve the business performance and quality benchmarking need be practise by any company. Most effective bench marking practice is industry based bench marking.