Importance of Operational Efficiency within an Organization

1. Executive summary

Operational efficiency and its quality of providing service is the very first thing whatever organization either creation or service. That is most important part in any company operations whether it is business focused or nonprofit focused organizations also are highly concern & their organizational growth and local and regional expansion of their operations. Mainly operational efficiency and performance is depending on external environment motorists. Those external individuals are creating competition and intense of the among the industry player. Therefore future strategic planning, contingency plan, operation strategy is most important and playing essential role to handle forthcoming changes. If the organization is not be able to manage those changes that going on in the originations and external organization directly have an effect on on functional efficiency of the organization. To face those environment changes most wise strategies make modification in organization functioning style and strategies. That will will help to achieve organizations commercial objectives as organized. Mainly manufacturing & service organizations are executing functions such as;

Sales & Marketing

Human resource

Operation

Accounting & Money or treasury

IT/Information department

Logistic/branch management

Channel management

Internal auditing

Risk management

So called functions linking each other and having inter - dependencies, no person can override those operational activities. Everybody work in the must focus on very well on functional activities. Because, at the end of year shareholders (traders) are boosting questions at AGM, how a lot of amount of come back generate by businesses and whether business operations went smoothly, what will be the near future plans to deliver high rate of go back for our investment and what type of operational strategy heading to carryout to face the completion. So on frequently improve the questions by shareholders. "Production and procedure management" was started with industrialization. But it play essential role in the service industries. In the contemporary world named it as "Operation Management". Contribution of the subject matter is making bigger dissimilarities for business functions. Multinational & local companies have established independent department to control their functional activities very well. For an instance nowadays emerging business is banking & financial company name called "Nation Trust Bank". That bank or investment company routine operations are making huge effect on their business performance. That's because; loan provider performance is motivated by its functional capacity & style. Mainly employees and customer's satisfaction are most important element to show outstanding performance also to attract the new customers. In this industry is motivated by managing effectively whole operations of the business. Lack of procedure management offers poor performance. To provide exceptional service wider selection of service related need to have well defined procedures technique to uplift business. This project report mainly focused on current practice of procedure management bank industry and project support the followings.

Define procedure management, its quality and playing role in banking & financial service industry.

Evaluate the goals and objectives are achieved in operation management aims.

Define systems in procedures in relation to service and regular activities.

Major source, tools and systems that are promoting operations also to support quality of service of the bank.

Analyzing importance of quality audit and execution of quality management system in bank or investment company.

Major weakness and explore opportunities to increase the bank service to meet the stake holders of the business. Making recommendation to capitalize the opportunities and avoid weakness of the lender.

Conclusion of assignment

2. Define term of businesses management

According to literature creation & procedure management are considering as one subject matter but in the existing situation totally expert says about it as

"Procedure management is subject that Design, execution and control organizations operations that turns it resources into desired goods and services, and use its business strategy" and its own define as another way

"The maintenance, control and improvement of organizational activities that must produce good or service".

"Functions Management deals with design and management of products, process, services and supply chains. It considers the acquisition, development, and utilization of resources that organizations need to deliver the goods and services their consumer wants.

First explanation can be related the following diagram is simple operation of any business.

Feed Back

Input

inputs Service

Process

servicing process

Out put

Maximize customer satisfaction

Employees

Money (local & overseas)

Savings accounts

Information

Systems

Open up Loan company A/C

Cashiering

Credit greeting card promotion

Mortgaging

Generate lender statements

Buying & selling of overseas currencies

Happiest or loyal customer

The above diagram we can easily see operations different operations in the input level, process level and outcome level. Therefore we can conclude that

2. 1. Operation management from facet of Country Trust Bank

To get analyze importance of operations of the bank the vision objective and worth is aiding out it

Vision - Making life simple when you are the benchmark of convenience

Mission - Be ground breaking in continuously producing customer centric alternatives. Unleash the ability of we to be the best in the industry. Consistently develop market share and be the most profitable and well known Sri Lankan lender by 2015.

Values

Inspirational leadership

Integrity in all our dealings

Open communication

Learning focused

Meritocracy

Prudent risk management

Respect for all

Innovation and ongoing improvement

Nurture relationships

Socially and environmentally responsible

Vision, quest and value are Nation Trust Bank (NTB) operational targets in relation to corporate objective. Corporation chart shows hierarchy of the departments

Chairman

Deputy Chairman

Board of Directors

CEO

Corporate management

Senior management

Branch management

Managers

Operation management

Corporate management overlooking the follwing functions

Director/CEO

DGM - Retail Banking

DGM - SME Banking

DGM - Cards, Consumer Possessions and Strategic Marketing

DGM - Commercial and Institutional Banking

Chief Operating Officer

Head of Legal and Company Secretary

Chief Financial Officer

Head of Man Resources

Head of Credit and Market Risk Management

Head of Internal Audit

Consultant/Mind of Treasury

Consultant/Mind of Operational Risk and Compliance

Senior management overlooking functions are;

Trade Services

Branches and PBC

Alternate Channels

SME Banking and Factoring

Cards and Consumer Assets

Branch Operations and Credit

Wholesale Banking

Consumer Credit Risk and Collections

Consumer Sales

Treasury Services

Leasing

Corporate Banking

Leasing Operations

Management Information and Planning

Cards Marketing

Collections

Central Operations

Fixed Income Securities

Leasing - Zone 2

Leasing Recoveries

Marketing Services

Retail Bank Credit

Delivery Channels

Nations Insurance Brokers

Technology

Legal

Credit Operations

Credit Risk

Corporate Banking

Delivery Channels

Leasing - Zone 1

Internal Audit

Infrastructure and Administration

Business Banking

Compliance and Financial Reporting

Business Solutions

Delivery Channels

Credit Risk - Leasing and Factoring

By taking a look at the above mentioned orgnization chart which functions, can get clear idea about the how its importace of the operaton mangement in the NTB operations. Here in the principle oprating official and head operational risk is paly essential role of for the cooking operations. These are responsible for the lender oprations as entire. Operational scope No of branches - 40, No of leasing centers - 9, No of ATM - 43, 6 personal bank centers as well as Internet Banking

2. 2. SWOT research of NTB

Strenght

It is subsidiary of Jhon Keels group, idirectly they can gained group strenght.

Reputed coporate brand Coporate brand value is very high

Has determined well & profitable segment to provide the banking service

Wider product portfolio

Strong IT net work

staff in every level having experice

More than 20yers experaince for the reason that perticualr field.

Carryingout more promotion

Respect corporate governance

Good Internal auditing & risk management

Weakness

Faliures in th the IT system

define some procedures wrong manner

Poor advertising - Newly introdce gurnateed invetment paln will be fail because of computer is irrational plan.

More customer complins prices and products quality

Few brach and ATM

Suboptoimization is happening & Employee discrimination

Poor advertising with regards to market leader.

Employee choices very static do not prepared to new comers and do recruitment based on the non-public contact.

Poor strategic implication.

Try to do mass level promotion, it has failed

Always try todepend group strenght

Poor opertations of minuscule brach in the supermrkets

Opportunities

expansion opportunity in further in sri lanka in norht & south ( warfare affected areas)

Can be offered more differntiated Service by giving well traning for the staff.

Customer driven campaign.

Customer feed back system over the phone or by Text, by mail.

Rewarding system for employees

Threat

High competition in the banking industry.

Overriding duty ruels and regulation by bank. may have legal risk for business.

New management is do not more matter on the operations

Paying high premius to get home based business without cinsidering future feasibility.

2. 3. Importance of functions management NTB

To meet the talk about holders objectives

Investor's expect return by spending money on the bank business. If the bank is not made sufficient of amount of come back on the shareholder's will not invest in the bank. Therefore its corporate and business aims must design and link with functions.

Another main importance area of the procedure management is expanding strategy to face the competition.

To managing the chance of the business

Mainly bankers facing the following risk;

Credit risk

Market risk

Asset & Liability management risk.

Operational Risk

When look at all the chance are related with the operation with bank business, if standard bank the bank halted their business procedures there is no any risk to control to them. Therefore, managing risk of the bank business should have smooth intend to manage the operations.

To fulfill rules and regulation of governed by Central bank of the country

To fulfill guidelines and rules of governed company function and banking acts

Supporting decision making

Operational information's are giving support to consider making. As example to advertising efficiency evaluate branded saving accounts can be used no of accounts exposed by customers on daily.

To conform new changes on scientific information

Technological environment is swiftly changing to look at those changes ATM came into connect with increase banking operational efficiencies.

2. 4. Performance research of the procedures with regards to firm goals and objective

External process changes (customer satisfaction)

Personal bank service providing branches

New investment plan proposed by bank

24 hours bank facility

Open mini branch in supermarket location.

Online bank-account opening systems

SMS banking system

Door step bank system

Billing payment system via their mobile phone

Internal process changes (to happy interior customers)

new auditing system to investigate the business risk

Make contract with the international HR consultancy organization for training & development of staff.

Policies have been changes when issuing loans

Transferring staff between branches to reduce

Giving good training for newly recruited employees regarding standard bank operations.

To reduce bottlenecks IT system training was provided.

To prevent hacking created new system PIN by IT

3. Routine banking procedure and related resources, tool and systems in support to boost operation quality.

As banking institutions it having so many business process, that may be split into two

External business process - Customer focused process

Under this process defined that bank service that they provide to the customers. Those service are divided into 3 categories

Corporate banking

Personal banking

Treasury

Issue Notice of credit

Current, saving and set deposit

Foreign exchange dealings

Shipping & other guarantees

Credit card

Forward exchange booking

Import & export finance

Debit cards

Commercial paper

SWIFT facility

Branded Cost savings accounts

Foreign currency swaps

Syndicate loans

Certificate of deposit

Interest rate swaps

Project financing

Advice on overseas current market movement

Securitization

Salary remittance package

Structuring, managing and underwriting of preliminary general public offering and private keeping equity

Housing loans

Company valuation & restructuring

E exchange - money transfer facility

Structuring of Corporate and business debt instruments

Holiday bank systems

Working capital financing

Red carpet bank system

Bullion trading

Off shore banking facility

Leasing

Internal business process - Internal procedure centric process

Where mainly inside functions related process can be analyzed

Marketing Management - Ex girlfriend or boyfriend. procedure for introduce of new product

This the huge process from the idea generating and also to launch to customers is having certain authorization to procedure such as;

Idea creating new service founded products

Evaluating feasibility with the market condition

Getting endorsement from the top of the marketing

Head of the marketing and Director of the Marketing, brand manger speaking about pros and cons of the merchandise, brand selection, aftereffect of existing products and competitor response

Finalized the approval

brand name Registering

to launch the merchandise getting ready budget and get authorization for that

brochures creating and making arrangement with the advertisement agency

Printing move books

Communicating to customers about the product via ad

Get feed again from the customer

Compare budgeted first deposit or accounts to assess whether branches have achieved budgeted sales.

Human resources management - Beginning new Branch load the personnel requirement

Forecasting personnel requirement

Advertise regarding the vacancy

application sorting and short listed candidates

Call for the interview

1st interview for these people and short detailed for second interview

Call for the second interview

Select the right candidate for the job

Giving the appointment letter

Familiarizing for the organization via inductions

Training to the candidate

Permanent those staff

Internal auditing system

Here make an effort to ensure that loan provider staff follow the procedure as planned and approved the accounts and fund. Here they evaluate

Analyze & search Scams and errors

Management auditing

System auditing (IT)

Accuracy of accounting entries

Analyze & search Inadequate accounting procedures

Assets auditing

Deposit management

Under this category try to manage the deposit level with liquidity and earnings. By balancing rules and regulations that are governed by central loan company.

Channel Development System

This is defined regarding new branch operation and development of customer support.

This also very important business process and functions in the banking operations controlling their assets and liabilities. If both of these are not controlling each other, the lender balance sheet will show effect on possessions and liabilities. It should be supervised by well licensed management bill or fianc disciplined person. Otherwise bigger influences made on the corporate image as well as destroy the customer's romance and could have position walk out the business. In the long run it'll makes huge impact banking system in the economy.

Risk Management System

major different risk aspect those are making bigger impact on the business enterprise continuation. Relating to loan company information major risk score the following;

Risk Areas

Component of the risk

Credit risk

Default risk

Security risk

Sectoral publicity risk

Legal risk

Counterparty risk

Cross border risk

Sovereign risk

Market risk

and

Asset & Responsibility management risk.

Interest rate risk

Liquidity risk

Exchange rate risk

Investment risk

Group financial risk

Share price decrease risk

Country risk

Operational Risk

Employee behavioral risk such as omission, fraud, judgmental errors, negligence, etc.

Disaster related risk

Trained staff turnover risk

Insider working risk

Sensitive information leakage risk

Lack of creativeness and innovativeness

Risk on MIS and IT related risks

Planning & Budget related risks

Shortcoming in the organizational structure

Credit rating dropping risk

Money laundering

Risk of scientific obsolesces

Risk failing business volume level and market share

Risk is being overtaken and getting rid of the management position

Overtrading risk and threat of financial disintermediation

When take a look at overall risk, high risk show by functional risk compare to other risk areas. Therefore, to investigate any kind of these risks, have to have solid information to mitigate those hazards in business procedure.

Operation management

Operations managements are looking after following areas. Those are;

Bank or branch starting procedure

This is very important part in beginning branches and head office. Opening must be done without certified people. If not that is considered as misused of operational rule on the other palm it taken as illegal action. Therefore those guidelines & rules must perfectly.

Cash controlling process by cashiers

Main cashier give cash to the counter cashier

Get it authorized on the log book

Cashier log on the computer

Carryout the day today operation (cutting down, withdrawals)

Handover cash to main cashier after counting

Fill the cash conclusion by using slip

Main cashier reconcile the cash with slip

Cash put into the safe box

Managing bank digital data

Data management is major important part of business process. Lender decisions are making process predicated on this process. If there is an error in the info, end result (information) is will be inaccurate, in the long run, made decision are providing risk picture. Following the appropriate tool for quality assurance of the info applied by the banking companies;

Describing data that is in the warehouse

Specifying what In and out of data is warehouse

business events scheduling extract based

Documenting and monitoring data synchronization requirements

Measuring validity & quality of data

Data process management and security management system for data

building Capacity of the bank

To improve productivity of service that providing process by loan company need improve existing capacity in conditions of ATMs, Branch and staff.

Loan Management system

The following process is involved in under the loan management;

Analyzing suspension system of the loan and advance

Then made reservation or taking legal action to receiver those loans

Managing the Finance of the bank

Financial management process overlooking low cost money resources and mainly pursuing procedure also looking after by fiance manager

Working capital management

Corporate taxes planning

Analyzing Investments

Debentures and Share issue

Bank corporate planning and budgeting strategies are followed by businesses, main step that is pursuing certain steps in the organization, business and businesses levels.

Analyze the Eye-sight, Mission, Goals and targets of the bank

Carryout position audit (SWOT) and environment evaluation (PESTEEL)

Generate tactical options

Analyze strategic options are generated

And Develop useful strategies such as fund, marketing, HR, operation, and IT to attain corporate goals. Such as

Profitability (Revenue before tax)

return on capital employed of the bank

Growth and Market show of the bank

Customer satisfaction and value addition for service Quality of service

3. 1. Analyzing and assessing resources, tools and system to aid in the quality operation

Bank or any other business resources, tools and system can be split into 3 categories predicated on value system. Those are;

Customer capital

Structured (organizational) capital

Human capital (Individuals Resources

Customer loyalty

Corporate brand and it reputation

Business collaboration

Intellectual property

Patents & copy rights

Design right

Service mark

Trade mark

Infrastructure assets

Management philosophy, Corporate culture, Management process, Information systems, Net working systems, Financial relationship

Know how (serving offering process)

Education level of employee, Vocational certification, Work related knowledge, Proactive and reactive ability, Changeability, Occupational assessment

3. 2 Define and implement quality management for bank

Quality management defined by American World for Quality "Quality is the totality of features and quality of service or product that carry on its ability satisfy mentioned or implied needs". Banks can give attention to their quality the next way. Quality of services or business can be strategy utilizing the subsequent methods;

Six dimensional performance matrix

Balance Score greeting card systems

Generic measurement

3. 2. 1. Six aspect or dimensional performance matrix

Dimension of the performance

Type of measures

Competitiveness

Relative market share

Measure of customer base

Deposit growth

Financial performance

Profitability

Liquidity

Capital structure

Market ratios

Quality of service

Reliability

Responsiveness

Aesthetic/appearance

Comfort

Friendliness

Courtesy

Flexibility

Volume flexibility

Delivery quickness flexibility

Specification flexibility

Resource utilization

Productivity

Efficiency

Innovation

Performance of the development process

Performance of the average person performance

3. 2. 2. Balance scorecard (BSC) system

BSC is determining financial and non financial procedures to judge quality of service. 4 pillars are representing by BSC. Those are;

Customer perspectives

Satisfaction of the customers

Financial perspectives - Satisfaction of Share holders

Internal business process

To meet both get together what must be offered

Learning and progress - Improving, growing, changing process and steps to gratify all the people in the business to improve efficiency of the organizations continually.

3. 2. 3. Generic measures system

To evaluate service efficiency the following generic steps can be implement

Generic Measures

Type of measurement

Service of Quality

Access - Easy to find out supermarket

Appearance - Staff appearance, well groomed

Availability - products availability

Cleanness - Gondolas and shelf must free from dust

Competence - Rate of cashiering

Courtesy - CSA must polite and respect to customers

Responsiveness - Response any queries

Security - personal security

3. 3. Utilizing quality management system - (six sigma model)

Improve any process performance either production process or service providing process. This model can be put in place and it offers 5 steps.

Step - Define measures

Step - Measure

Step - Analyze

Step - Improve

Step - Control

4. Identifying Weakness and opportunities in the process

4. 1. Weakness evaluation and tactical implication

Wrongly establish some operations

To collect the deposit banking assistant are sending to the outide banking premises, that is very high-risk because the rob or fraud money.

Faliures in th the IT system

Banking industry one of the main element driver is IT systms in those suystmens failutre affect couters, ATM or brnach operation. SO THAT IT deparment need to take relavent action to prevent this type of situations.

Poor promotion

Newly introdce gurnateed invetment paln will be fail because from it is irrational plan. We the customers are get calcualte benefit for the invesment plan, relizing lender make an effort to make fool the new customerss. Therefore NTB need to evaluate that advertising of investment plan.

Few brach and ATM

To fulfill customers need exiating ATM's and branch are not enough. Therefore top management need to increase variety of ATM's and mini brach increse the client service.

This always happen in the most notable management and they don't allow include new ideas and try discriminte those people as headche for the bank. This isn't acceptable level of pracite because of new ideas are assisting to develp the bank service. That culture must evolved by HR office.

Poor advertising with regards to market leader

Commercial standard bank is market innovator in the bank industry but problem is that NTB is not spend sufficient amount of cost on advertising plus they have preferred brand ambassder as sport celebrity that's not echo imporatnce of the lender service.

cost of personnel training is very high and cust down other cost

NTB has made an contract with interanationl HRM consultancy firm to get trian the satff. Nonetheless it is very cost. You will find experianced firms are availble in locall to get bank staff training at resonable cost. That must be changed.

Employee options very static do not ready to newbies and do recruitment predicated on the personal contact.

Junior and mature level staff recruitment is manufactured via personal contact, that is not good practice, it will leads poor operational perfornances. That is have to be chaged by HR section.

Poor strategic implication

Competition of the bank inductry is high and NTB strategies unable enough to cope the competition.

Try to do mass scale promotion, they have failed

Promotion that made by using brand ambassader had not been successful. Even the NTB advertising fail to identify their major benefit for the each of loan company accounts. That has already capitalized by other players of the industry.

Always try todepend group strenght

JKH is large conglomarate bunines group, therfore NTB try use the those band of companies profit their accounts as commercial accounts. But it will never be successful strategy, if any buisness will fail that will directly influence o on the lender operations.

Poor opertations of minuscule brach in the supermrkets

In the supermarket standard bank service expecting customers are incredibly high, but little branch is included 3 staff members they can't manage rush time bank operations.

4. 2. Opportunities research and tactical implication

There can be an opportunity to start new brach north & east. Due to those areas high concluded customer is having aspire to get good bank service. Therefor NTB could capitalize that chance.

Can be offered more differntiated Service by giving well traning for the staff

NTB personnel always having an frame of mind as most prestige bank, but they need change that attitude and need do differentiated bank service for the clients.

Customer driven advertising.

By analyzing most valuable customer, NTB must offer rewarding system such as;

Interest excemeptions

Gift vouchers

Seasonal offers on the minor accounts,

Customer feed back again system over the phone or by Text message, by mail.

This will help to increase the customer satisfaction efficicny of the lender by merging with new technical development. That will assist to improve the volume of customers and reduce operational failures.

Rewarding system for employees

To inspire the employees have to have proper and stimulus arisen rewardign system to raise the sales and productivity

5. Conclusion

According to the article and predicated on practical application of procedure management, can be make the following conclusions

Importance of the functions management will be increased in future

This subject could be more developed and that knowledge need apply.

Operation director role of will highly important.

HR section must play as supportive division in managing visitors to implement functional strategy

Marketing division is play a greater role when comes to the sales management or branch level operation.

To increase the business performance and quality benchmarking need be practiced by any company. Most effective bench marking practice is industry founded bench marking.

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