INTRODUCTION AND OBJECTIVE:
ICICI bank Ltd is largest private sector bank in India. ICICI bank offers big scope of fiscal merchandise and services. Retail banking subdivision of ICICI bank is departmentalised into three units viz. branch banking, gross revenues and operations. Regional processing Centre ( RPC ) under operations unit is responsible for processing and execution of merchandises and services offered by bank for allocated geographical part.
With immense client base and big figure of services offered, operations unit has to often confront fluctuation in processing volume. As Bankss are covering with immense sum of minutess under regulated environment the capacity direction demand to be implemented carefully while keeping required quality criterions. The essay is focused on retail liability operations unit of ICICI bank. The intent of this essay is to critically analyze the ICICI bank ‘s attack for pull offing its capacity and get bying with fluctuating volume or instead fluctuating demand with same quality.
Executive Summary:
PROCESS DESCRIPTION:
As per slack ( 2009 ) , under “ Input-Transformation-Output ” theoretical account subdivisions and gross revenues unit provide input to regional processing Centre ( operations unit ) in the signifier of client service petition and treating petition of fiscal merchandise sold to client. Now these inputs are processed at RPC and end product is in the signifier of service provided to clients. For illustration history gap signifiers, term sedimentation petition and negotiable instruments etc. processed at RPC provides the services and installation provided by bank to client.
Though operations unit at ICICI bank is non bring forthing concern straight but efficient working of this unit ensures client satisfaction, conformity with cardinal bank ordinances and bar of frauds
CAPCITY AND DEMAND: Facet of Operations at ICICI Bank
Harmonizing to Hill ( 2005 ) capacity of operations unit at ICICI bank can be explained as resources to treat client petition in limited clip frame and coveted quality. The resources at RPC are combination of staff, systems and installation required to bring forth coveted end product. For illustration figure of negotiable instruments processed per twenty-four hours with given resources is the capacity of payment and colony section of RPC. Demand is the demands of the clients to avail the service and merchandises offered by bank.
Now, when it is clear that capacity has clip dimension the fluctuation in end product is affected by all input elements to the RPC. So the assortment of merchandises and service bundles offered by bank give rise to fluctuations in the input and demand placed on the operations unit. Another facet of the equation is to cognize about demand and its continuance. This in bend is enclosed in a cognition of the volume, assortment, and fluctuation in demand and in the nature of that demand ( Armistead et al, ? ) .
As per Slack at. EL ( 2010 ) ICICI bank demand to cognize its capacity to run into demand. If capacity is low bank will non be able to run into the demand ensuing into client dissatisfaction and if capacity is more that demand bank is paying for excess capacity. ICICI bank has a good defined method to cipher the capacity of RPC ( operations unit ) every bit good as single staff at RPC. Bank use the method of productiveness computation to place the capacity to run into demand generated. Processing of services at RPC is farther divided into section and formed the squads to execute specific undertaking such as payments and colony sections, account opening squad, hazard containment unit, dealing squad. Overall undertaking of the squad is farther divided into series of little undertakings, which is formalised and same for all RPC ‘s. After collating the inputs taken from line staff and squad leads from all RPC ‘s bank has prepared extended list of all the undertaking performed at RPC and the mean clip required to finish peculiar undertaking. Time requires to finish a peculiar undertaking is termed as “ Hot clip ” . Productivity of the single staff is calculated as per expression:
Productivity = Hot clip A- Volume handled
Summation of productiveness of each employee in RPC is the productiveness of RPC. It is used as agencies to cipher capacity of RPC to manage demand generated.
Capacity of RPC will ne’er be changeless even if demand is changeless. The fluctuation of demand on hourly to day-to-day footing may be such that it can be hard to run into demand. At ICICI bank glade of high degree negotiable instrument has to be done in little clip window of four hours from opening hours of bank. For such little clip frame, with fluctuation of volume it can be hard to manage demand with existing capacity. The ability to alter capacity to get by with alterations in demand raises inquiries of the flexibleness of the capacity ( Slack, 2009 ) . The interesting portion is to happen out that how an person can increase its capacity. It can be by working hard, seting excess hours. But, as RPC is covering with fiscal dealing worth Rs 150 million on day-to-day footing criterion of quality is necessary to be maintained to avoid incorrect credits and conformity with ordinance guideline.
To get by with the fluctuation of capacity, the thought of effectual and possible capacity is utile ( Lockyer et al. ? ) . Effective capacity is the capacity which is available to the director, whereas possible capacity is the capacity which can be used if manage can supply extra agreements to increase capacity. Both are short term determinations and pertain to the squad and single degree instead than to the administration as a whole. Long term additions or lessenings in capacity such as gap of new RPC and it will hold impact on whole subdivision web under that RPC.
Demand FORECAST
Harmonizing to Slack at EL. ( 2010 ) apprehension of demand and capacity fluctuation is necessary to be after for future events, else it is merely to respond. For capacity planning prognosis is a valuable input. Demand prediction can be long term and short term. Demand can either be predictable or unpredictable. At ICICI bank short term prediction for operations activity is done by several squad at RPC. Unpredictable fluctuation in demand at RPC needs to be address with good planed capacity direction strategy to carry through the spread between demand and capacity. Short term prognosis is used to be after the allotment of resources to run into the expected rush in demand. Short term fluctuation in demand at Bankss is largely predictable though non with exact figures but a just premise of demand can be made by measuring historical informations and tendencies every bit good as predominating market state of affairs. Example of negotiable instrument processing squad is taken to exemplify the likely factors act uponing fluctuation in demand, factors can be
Vacation for few yearss in row-It will increase demand
Natural calamity- It will diminish demand
Fiscal twelvemonth opening-closing- It will increase demand
Launch of popular IPO- It will increase demand
Monthly payment rhythm for payment of advances- It will increase demand
Though this is non extended list but it provides the unsmooth thought of factors act uponing fluctuation in demand. Similarly, at the clip of campus enlistings bank can anticipate rush in salary history gap activity, addition in rate of involvement on sedimentations will increase demand for term sedimentation petitions and increase in work load at dealing section at last hebdomad of the month for salary recognition procedure.
Volume can be used as statement of the tendency in demand over a period of clip. Long term prognosis of demand is based on different criterion prognosis theoretical accounts. These prognosis theoretical accounts are based on different set of premise ( Hill, 2005 ) . Apart from these premises there are few more factors such as macroeconomic factors, be aftering to utilize new engineering etc. Prognosis can ne’er be accurate all the times.Over appraisal of demand in prognosis can take to unneeded outgo on increasing capacity ( Slack, 2009 ) . At ICICI bank long term appraisal of demand is done at centralized unit maintaining in head the execution of new engineering, expected market portion, alteration in ordinance by cardinal bank ( Reserve bank of India ) and quality of service offered by rivals etc.
CAPACITY MANAGEMENT:
“ Capacity direction is concerned with the matching of the capacity of the operating system and the demand placed on that system. ” ( Wild, pg304, 2002 ) . Capacity direction is the manner to equilibrate demand from clients and the capacity of the RPC to run into the demand. Capacity direction gives high accent on understanding the nature of demand by calculating and on pull offing capacity to run into demand ( Lovelock, 1984 ) . Demand capacity mismatch is the issue which operations unit at bank has to manage often. Harmonizing to slack ( 2009 ) there are three programs available to undertake the issue of demand capacity mismatch, most of the administrations will utilize mixture of all the programs harmonizing to demand of concern. The programs are:
Level capacity program
Chase demand program
Manage demand program
Level capacity program:
In the degree capacity program capacity remains same throughout the planning period even if demand prognosis is fluctuating ( Slack 2009 ) . In instance of ICICI bank if capacity degree is maintained unvarying and if demand is high rather high from base degree capacity. Bank will non be able to carry through the service degree promised to client. In instance of low demand bank will stop up paying excess for underutilised resources. ICICI bank can non afford degree capacity program, as chance cost for bank for non carry throughing demand may take to transgress of cardinal bank ordinances.
Chase demand program:
Chase demand programs try to fit the capacity with alteration in demand. This program can be reactive every bit good as proactive. If fluctuation in demand is unpredictable so alteration in capacity will be the reactive step to fit the demand. Chase will be proactive or good planned if fluctuation in demand can be predicted. Degree of capacity can be controlled by altering the extent of resources by:
Sharing of capacity between different sections at RPC.
At ICICI bank, increase in volume at one section is handled by sharing the duty with members of other section managing relatively low volume. This agreement is suggested to be most efficient by Slack ( 2009 ) .
Using seller support for less critical service: complying with banking ordinance.
At times of high volume at payments and colony section activity like informations entry of negotiable instrument and image capturing and encryption can be given to bing sellers in market. As banking is extremely regulated sector, critical activities like recognition and debit confirmation can non be outsourced and it has to be done by bank functionary above certain specified class.
Shifts planned to provide peak volume of the twenty-four hours
Working hours at ICICI bank is 12 hours, whereas working hr for each employee are nine hours. Each section at RPC has different peak clip. For illustration payments and colony section has peak volume at two different clip foremost at about 10A.M. when high value checks are verified and sent for uncluttering at around 11 A.M and another at around 3 P.M when all negotiable instrument collected during the twenty-four hours are verified. Two displacements are so ordered that each member of squad is present at office to manage both peak hr volumes.
Changing end product rate.
To increase end product by anticipating each staff at RPC to be more productive by working fast than his normal velocity. This attack can be used as impermanent step. Prolong usage of this method will deteriorate the quality of work and create dissatisfaction among staff ( Slack, 2009 )
The solution suggested above for pull offing demand- capacity spread is used at ICICI bank, but sharing of work with resources in other section can be possible if resources in other squad are good trained to work in any section. Guideline given by cardinal bank demand to be updated to all employees in all sections at RPC to do certain about that employee comply with ordinance and adhere to quality criterion.
The intent of chase demand program is to keep capacity closely in line with effectual capacity thereby seeking to achieve maximal efficiency and service quality.
Manage demand Plan
Harmonizing to Slack ( 2009 ) demand direction program is used to alter the form of demand to fit it with available effectual capacity. This method is used at ICICI bank for activity in which clip frame is non a confining factor for illustration petition for term sedimentation can be processed on later day of the month by supplying value dated recognition.
Choice ASPECT:
Harmonizing to Slack ( 2009 ) , quality demands to be understood from client ‘s position because it is defined by client ‘s outlooks. At bank quality of processing is understood from client ‘s point of position every bit good as from regulative authorization ‘s point of position. Directors use capacity direction as a tool to understate the tradeoff between capacity to run into demand and quality of service offered.
Quality of service, quality of processing and resource capacity are of import in the tactic position as they interrupt the ability of the bank to achieve its competitory tactic described by a combination of added value and monetary value ( Bowman 1990 ) .The importance of either quality or efficiency will to a big extent is driven by the competitory place of the Bank. If competitory advantage is gained by supplying quality of service provided at relatively high monetary value so there will be more leanings to indulge in redundancy of capacity at times. If the bank is viing more on monetary value so to increase capacity so is more likely that quality will take backseat. However with increasing outlooks of client for quality services ICICI bank is forced to keep quality of service at lower monetary values in times of economic lag where bank demand to keep repute.
The important dimensions are those which win clients or those which if deteriorate may do into loss of clients ( Armistead 1990 ) . ICICI bank was non able to take attention of this factor at the clip to highest growing at that point bank was managing really high volume hence with outlook to pull off higher demand with bing capacity back really neglected the quality facet of services offered. Bank shortly realised that it is losing clients more than making new clients. In 2009 ICICI bank followed the policy to rapprochement by non traveling for sharply to increase market portion but instead focused on addition operations excellence and cost film editing, Bank really used capacity direction techniques for cost film editing. To increase the quality criterions at bank RPC ‘s has introduced memo system in which each mistake will be recorded in item with proper root cause analysis and peculiar figure of memo will take to expiration of employee.
IMPLEMENTATION OF COPING STRATERGY:
As the apprehension of capacity direction increased among service operations directors they started to equilibrate capacity with demand. At ICICI bank operations director started to work on capacity near breakeven point and this is the capacity where things start to travel incorrect. Drop in quality is observed when runing nigh breakeven point. We need a header scheme which can be applicable on the short term inability to fit effectual with capacity and demand. As a mark to develop a header scheme it is necessary that RPC should happen its ain combination of the pursuit and degree program by:
Bettering its capableness to calculate
Quality mark should be good described and monitored
Puting clear capacity mark for squad and fluctuating productiveness mark for single employee
To understand critical and hygiene dimensions of its quality ( Armistead and Clark, 1991 )
To understand the possible failure points in operations unit ( Armistead and Clark, 1991 )
.
To get by with demand capacity mismatch there are figure of actions possible in the few header instances:
Chasing demand program with High Demand
In this scenario capacity is trailing demand and demand is high. With frequent extended on the job hours for staff at bank to run into demand it is extremely likely that staff will perpetrate mistake. Hazard here is that quality of the service provided to client will travel down. Whereas staff often working under such status will fell stressed and may discontinue occupation which is non good for employer as money and clip has been invested to develop the employee. To better state of affairs we can do extended program to undertake state of affairs of fluctuating high demand by placing peculiar day of the months on which high demand is certain and allocating resources to concerned squad consequently.
Chasing demand program with Low Demand
It is scenario when demand is low and as capacity is trailing demand capacity will besides be reduced. Since banking ordinance in India does non let portion clip workers in bank hence each resource is full clip staff. As capacity for peculiar undertaking has been reduced with lessening in demand marks are at hazard. The possible actions are:
Accept it as clip to rest and retrieve, this will assist staff to be stress free.
Complete other undertakings like cleansing and arrange care of computing machine or check encoding machine.
Complete the undertakings which do non hold clip bound but necessary to be completed.
Arrange interdepartmental preparation so that resources can be developed to back up other section.
Flat demand program with High Demand
In this scenario it is non been possible to restrict demand to fit effectual capacity. As capacity is fixed high demand will non be to the full satisfied. In this instance client should be notified at clip of having client petition that bank will non be able to treat this petition on clip
Flat demand program with Low Demand
It is the scenario when it has non been possible to excite sufficient demand to fit effectual capacity. In this instance bank should use the trim resources.
* Transfer of resources to other care undertakings.
* Complete the backlog generated from period when demand was high.
Recommendation:
For Short term fluctuation in demand resources can non be increased at RPC. As per Indian banking ordinance Bankss are non permitted to enroll portion clip staff though they can outsource the activity of informations entry and image capturing and encryption of negotiable instruments. The theoretical solution given for the state of affairs of high demand under trailing capacity program is to reassigning resources typically between back office and front office. This solution is yet non applied by ICICI bank.
Gross saless and subdivision banking unit are besides portion of bank, utilizing these resources in times of high demand will be the optimal usage of resources available within the bank. At clip of low demand interdepartmental preparation can be organised within the RPC, one member of each squad can be nurtured to be buffer resource who can make full the topographic point in any squad in times of high demand. The recommendations given will be helpful to to the full use the resource capacity available within the bank.
