ICICI Bank Small Operations Management

ICICI standard bank Ltd is most significant private sector loan company in India. ICICI lender offers large range of financial product and services. Retail bank portion of ICICI loan company is departmentalised into three units namely branch bank, sales and operations. Regional handling centre (RPC) under functions unit is in charge of processing and implementation of products and services offered by bank or investment company for allocated physical region.

With huge customer basic and large numbers of services offered, procedures unit must frequently face fluctuation in control volume. As lenders are dealing with huge amount of orders under controlled environment the capability management need to be put in place carefully while preserving required quality benchmarks. The essay is focused on retail responsibility operations product of ICICI loan company. The goal of this article is to critically analyse the ICICI bank's procedure for handling its capacity and dealing with fluctuating quantity or somewhat fluctuating demand with same quality.

EXECUTIVE Summation:

ICICI Loan company has been introduced and the sphere of evaluation has been limited to retail responsibility section of functions unit. Overview of process at businesses unit is defined by using Slack's (2009) model of "Input-Transformation-Output". Capacity and demand for Regional processing centre is discussed. Method use by ICICI standard bank to calculate the capability of operations product and individual tool at operation product is explained and also shown in mathematical form. Idea of effective and potential capacity is briefly introduced.

Demand -capacity mismatch is described. Forecasting of demand is discussed by divided it into permanent and short-term demand forecast, the demand can either be predictable as well as unpredictable. Few illustrative samples are given to show how forecast about surge in volume level can be given from events that may be predicted.

Capacity management methods suggested by scholars are discussed and the existing situation at bank is analysed in light of literature. It really is deduced that chase demand plan is utilized by bank to control capacity in short term. Usage of manage demand plan by loan company at certain departments under RPC is advised.

Quality issues related to fluctuation in demand and capacity has been elevated and implementation of coping strategies at bank has been discussed. Finally recommendations get to manage capacity of RPC for high demand and suggestions receive to keep up quality under fluctuating demand and capacity.

It is figured capacity management can affect the quality of service provided to customer under high demand and how capacity planning reinforced by demand forecast can help to address the problem of demand capacity match while preserving quality of service provided

PROCESS Information:

As per (Slack et al, 2009), under "Input-Transformation-Output" model branches and sales product provide insight to regional control centre(operations device) by means of customer service get and processing submission of financial product sold to customer. Now these inputs are refined at RPC and outcome is by means of service provided to customers. For example account opening forms, term deposit submission and negotiable devices etc. processed at RPC supplies the services and facility provided by lender to customer.

Though operations unit at ICICI standard bank is not generating business straight but effective working of the unit ensures customer satisfaction, compliance with central lender regulations and elimination of frauds

CAPACITY AND DEMAND: Facet of Procedures at ICICI Bank

According to Hill (2005) capacity of operations product at ICICI lender can be explained as resources to process customer submission in limited timeframe and desired quality. The resources at RPC are combination of staff, systems and facility necessary to produce desired end result. For example quantity of negotiable instruments refined each day with given resources is the capacity of payment and settlement department of RPC. Demand is certain requirements of the clients to avail the service and products offered by bank.

Now, when it's clear that capacity has time dimension the variation in end result is damaged by all type elements to the RPC. Therefore the variety of products and service deals offered by bank bring about variations in the source and demand positioned on the operations unit. Another facet of the formula is to know about demand and its own duration. This in turn is enclosed in a knowledge of the volume, variety, and variance in demand and in the nature of that demand (Armistead et al, 1991).

As per Slack et. al (2009) ICICI bank or investment company need to find out its capacity to meet demand. If capacity is low loan company will not be able to meet the demand ensuing into customer dissatisfaction if capacity is more that demand lender is paying for extra capacity. ICICI bank or investment company has a proper defined solution to calculate the capability of RPC (operations product) as well as specific personnel at RPC. Standard bank use the technique of productivity computation to identify the capacity to meet demand produced. Handling of services at RPC is further split into department and shaped the teams to perform specific job such as obligations and settlement deal departments, account beginning team, risk containment unit, purchase team. Overall activity of the team is further divided into series of small jobs, which is formalised and same for any RPC's. After collating the inputs taken from line staff and team leads from all RPC's bank or investment company has prepared extensive list of all the task performed at RPC and the average time necessary to complete particular process. Time requires to complete a particular task is referred to as "Hot time". Productivity of the average person staff is determined as per solution

Productivity = Hot time - Quantity handled

Summation of production of each staff in RPC is the production of RPC. It can be used as means to compute capacity of RPC to handle demand generated.

Capacity of RPC won't be frequent even if demand is constant. The fluctuation of demand on hourly to daily basis may be so that it can be difficult to meet demand. At ICICI loan company clearing of advanced negotiable instrument must be done in small time windowpane of four time from opening time of lender. For such small timeframe, with fluctuation of amount it could be difficult to take care of demand with existing capacity. The capability to change capacity to handle changes popular increases questions of the overall flexibility of the capability (Slack et al, 2009). The interesting part is to discover that how an individual can increase its capacity. It could be by working hard, putting extra hours. But, as RPC is working with financial business deal well worth Rs 150 million on daily basis standard of quality is essential to be managed to avoid wrong credits and compliance with regulation guideline.

To cope with the fluctuation of capacity, the idea of effective and potential capacity pays to (Lockyer et al. , 1988). Effective capacity is the capacity which is open to the administrator, whereas potential capacity is the capacities that can be used if manage can provide additional preparations to increase capacity. Both are short term decisions and pertain to the team and specific level somewhat than to the organisation all together. Long term boosts or lowers in capacity such as starting of new RPC and it'll have impact on entire branch network under that RPC.

DEMAND FORECAST:

According to Slack et al (2010) understanding of demand and capacity fluctuation is essential to plan for future situations, else it is only to respond. For capacity planning forecast is a very important input. Demand forecasting can be permanent and short term. Demand can either be predictable or unpredictable. At ICICI bank short-term forecasting for procedures activity is done by particular team at RPC. Unpredictable variant in demand at RPC needs to be address with well planed capacity management scheme to fulfil the distance between demand and capacity. Short term forecast is employed to plan the allocation of resources to meet the expected surge in demand. Short term variation in demand at banks is mainly predictable though not with exact numbers but a fair assumption of demand can be produced by analyzing historical data and styles as well as prevailing market situation. Exemplory case of negotiable instrument control team is taken to illustrate the probable factors influencing fluctuation popular, factors can be

Holiday for couple of days in row-It will increase demand

Natural calamity- It'll decrease demand

Financial calendar year opening-closing- It'll increase demand

Launch of popular IPO- It will increase demand

Monthly payment cycle for repayment of advances- It will increase demand

Though this isn't intensive list but it provides the rough notion of factors influencing fluctuation popular. Similarly, at the time of campus recruitments lender can get surge in salary account opening activity, upsurge in rate of interest on deposits increase demand for term first deposit requests and increase in workload at exchange department finally week of the month for salary credit process.

Volume can be used as affirmation of the craze in demand over a period of time. Long-term forecast of demand is dependant on different standard forecast models. These forecast models are based on different group of assumption (Hill, 2005). Apart from these assumptions there are few more factors such as macroeconomic factors, planning to use new technology etc. Forecast can never be correct all the changing times. Over estimation of demand in forecast can result in unnecessary costs on increasing capacity (Slack et al, 2009)). At ICICI lender long term estimation of demand is done at centralised unit keeping in mind the execution of new technology, expected market show, change in regulation by central standard bank (Reserve bank of India) and quality of service proposed by rivals etc.

CAPACITY MANAGEMENT:

"Capacity management is concerned with the matching of the capacity of the operating-system and the demand placed on that system. " (Crazy, pg304, 2002). Capacity management is the way to balance demand from customers and the capability of the RPC to meet the demand. Capacity management gives high emphasis on understanding the type of demand by forecasting and on managing capacity to meet demand (Lovelock, 1984). Demand capacity mismatch is the issue which operations unit at bank must handle frequently. According to Slack et al (2009) there are three programs available to handle the issue of demand capacity mismatch, the majority of the organisations use mixture of all the ideas according to requirement of business. The ideas are

Level capacity plan

Chase demand plan

Manage demand plan

Level capacity plan:

In the level capacity plan capacity remains same throughout the planning period even if demand forecast is fluctuating (Slack et al, 2009). In case there is ICICI loan company if capacity level is managed uniform of course, if demand is high quite high from foundation level capacity. Bank will not be in a position to fulfil the service level guaranteed to customer. In case of low demand bank or investment company will end up paying extra for underutilised resources. ICICI loan company cannot find the money for level capacity plan, as opportunity cost for standard bank for not rewarding demand may lead to breach of central standard bank regulations.

Chase demand plan:

Chase demand designs try to match the capability with change in demand. This plan can be reactive as well as proactive. If fluctuation in demand is unstable then change in capacity would be the reactive measure to complement the demand. Chase will be proactive or well organized if fluctuation in demand can be predicted. Degree of capacity can be handled by changing the degree of resources by

Sharing of capacity between different departments at RPC.

At ICICI standard bank, increase in size at one office is managed by sharing the responsibility with people of other department handling comparatively low level. This set up is recommended to be most effective by Slack et al (2010).

Using seller support for less critical service: complying with banking regulation.

At times of high quantity at payments and settlement office activity like data admittance of negotiable tool and image capturing and encoding can be given to existing sellers in market. As banking is highly controlled sector, critical activities like credit and debit verification can't be outsourced and it needs to be done by lender public above certain specified grade.

Shifts designed to cater peak volume of the day

Working time at ICICI standard bank is 12 time, whereas working hour for each worker are nine hours. Each team at RPC has different maximum time. For example payments and pay out division has peak amount at two different time first at around 10A. M. when high value cheques are confirmed and dispatched for clearing at around 11 A. M and another at around 3 P. M when all negotiable instrument collected throughout the day are verified. Two shifts are so set up that each person in team is present at office to take care of both peak hour volumes.

Changing result rate.

To increase result by wanting each personnel at RPC to be more successful by working fast than his normal acceleration. This process can be used as temporary strategy. Prolong use of the method will deteriorate the quality of work and create dissatisfaction among staff (Slack et al, 2009)

The solution recommended above for taking care of demand- capacity distance is utilized at ICICI lender, but posting of use resources in other department can be possible if resources in other team are well trained to work in virtually any department. Guideline given by central bank need to be updated to all or any employees in all departments at RPC to make certain about that employee comply with legislation and adhere to quality standard.

The reason for chase demand plan is to maintain capacity closely in line with effective capacity in so doing trying to attain maximum efficiency and service quality.

Manage demand Plan

According to Slack et al, (2009)demand management plan is utilized to improve the structure of demand to match it with available effective capacity. This method is utilized at ICICI bank for activity in which timeframe is not really a limiting factor for example obtain term deposit can be processed on later date by providing value dated credit.

QUALITY ASPECT:

According to Slack et al, (2009), quality needs to be recognized from customer's point of view since it is described by customer's anticipations. At bank or investment company quality of control is grasped from customer's viewpoint as well as from regulatory authority's point of view. Managers use capacity management as an instrument to minimise the trade-off between capacity to meet demand and quality of service offered.

Quality of service, quality of processing and learning resource capacity are essential in the tactic perspective as they interrupt the ability of the bank to achieve its competitive technique described by the blend of added value and price (Bowman 1990). The importance of either quality or efficiency will to a huge extent is powered by the competitive position of the lender. If competitive advantages is gained by providing quality of service provided at comparatively high price then you will see more propensities to indulge in redundancy of capacity sometimes. If the lender is rivalling more on price then to increase capacity then is more likely that quality will need backseat. However with increasing targets of customer for quality services ICICI lender is forced to keep quality of service at lower prices in times of monetary slowdown where bank need to keep reputation.

The crucial proportions are those which win customers or those that if deteriorate could cause into loss of customers (Armistead 1991). ICICI bank or investment company was not capable to look after this factor at that time to highest development at that point bank was handling very high volume hence with mentality to control higher demand with existing capacity back actually neglected the product quality aspect of services offered. Bank or investment company soon realised that it's losing customers more than creating new customers. In 2009 2009 ICICI loan company followed the plan to reconciliation by not choosing aggressively to increase market share but rather focused on increase operations quality and cost lowering, Standard bank actually used capacity management techniques for cost reducing. To increase the quality benchmarks at bank RPC's has launched memo system where each error will be documented at length with proper root cause evaluation and particular quantity of memo will lead to termination of staff.

IMPLEMENTATION OF COPING STRATERGY:

As the understanding of capacity management increased among service businesses managers they started to balance capacity with demand. At ICICI bank or investment company operations manager started to focus on capacity near breakeven point and this is the capability where things start to go wrong. Drop in quality is seen when working near breakeven point. We desire a coping strategy which can be relevant on the short term inability to match effective with capacity and demand. As a sign to develop a coping strategy it is necessary that RPC should find its combo of the chase and level plan by

Improving its capacity to forecast

Quality target should be well identified and monitored

Setting clear capacity aim for for team and fluctuating output target for individual employee

To understand critical and hygiene sizes of its quality (Armistead and Clark, 1991)

To understand the possible failure points in procedures unit (Armistead and Clark, 1991)

To cope with demand capacity mismatch there are number of activities possible in the few coping cases

Chasing demand plan with High Demand

In this scenario capacity is chasing demand and demand is high. With frequent extended working hours for personnel at lender to meet demand it is highly probable that personnel will commit problem. Risk here is that quality of the service provided to customer will decrease. Whereas staff frequently working under such condition will dropped stressed and may give up job which is bad for workplace as time and money has been spent to train the employee. To boost situation we can make comprehensive plan to deal with situation of fluctuating popular by figuring out particular dates which high demand is certain and allocating resources to concerned team appropriately.

Chasing demand plan with Low Demand

It is situation when demand is low and as capacity is running after demand capacity may also be reduced. Since bank rules in India does not allow part time workers in lender hence each tool is regular staff. As convenience of particular process has been reduced with decrease in demand targets are in risk. The possible actions are

Accept it as period to rest and recover, this can help staff to be stress free.

Complete other tasks like cleaning and arrange maintenance of computer or cheque encoding machine.

Finish the jobs which don't have time limit but necessary to be completed.

Arrange interdepartmental training so that resources can be developed to support other office.

Level demand plan with High Demand

In this circumstance it isn't been possible to limit demand to match effective capacity. As capacity is set high demand will not be fully satisfied. In this case customer should be notified at time of receiving customer need that bank will not be in a position to process this get on time

Level demand plan with Low Demand

It is the scenario when it is not possible to stimulate sufficient demand to complement effective capacity. In cases like this bank should make use of the spare resources.

Transfer of resources to other maintenance duties.

Complete the backlog produced from period when demand Is high.

RECOMMENDATIONS:

For Short term fluctuation in demand resources cannot be increased at RPC. According to Indian banking regulation banks aren't permitted to recruit in your free time personnel though they can outsource the experience of data entrance and image capturing and encoding of negotiable tools. The theoretical solution given for the problem of high demand under chasing capacity plan is to transferring resources typically between again office and front side office. This solution is yet not applied by ICICI bank. Sales and branch bank product are also part of lender, using these resources in times of popular would be the maximum use of resources available within the lender. At time of low demand interdepartmental training can be organised within the RPC, one member of each team can be nurtured to be buffer source that can fill the place in any team in times of high demand. The recommendations given will be beneficial to totally utilise the source of information capacity available within the lender.

For quality maintenance concern it is suggested to perform an audit on daily basis by firmly taking few samples from all processed lots. As loan company has began to concern memos to recorded errors, employees will try to avoid any negligence off their part as certain number of memo's can result into termination of worker from job.

CONCLUSION:

ICICI standard bank has separate operations unit. So the volume treated by RPC (functions product ) is quite high and the fluctuation in demand is also high. The positive part is the fact RPC has many departments. The capacity of the departments can be utilized in case there is surge in demand. Proper forecast for fluctuation popular can be attended to by planning the capacity the pitching up the resources trained to tackle the volume surge of any division. Quality of the service will not be affected as loan provider is keeping an extra check by mean of concurrent audit and issuance of memo on problem committed by employee will keep him vigilant while performing the task. Hence demand resource match can be acquired with maintained service quality can be done with proper capacity management.

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