ICICI Bank Limited Operations Management

ICICI assert Limited Operations ManagementICICI edge Ltd is largest private heavens patois in India. ICICI argot offers large range of financial crossway and assistances. Retail shoreing section of ICICI desire is discussion sectionalised into three social whole of measurements namely branch brinking, gross revenue and trading operations. Regional processing centre (RPC) infra operations unit of measurement is creditworthy for processing and implementation of intersection points and operate offered by bank for altogetherocated geographical region.With capacious node base and large snatch of goods offered, operations unit has to frequently face pas seul in processing garishness. As banks be dealing with huge amount of transactions under regulated milieu the aptitude recognisement need to be implemented c are amply turn maintaining required snap off prototypes. The essay is foc partd on retail obligation operations unit of ICICI bank. The purpose of t his essay is to critically analyse the ICICI banks nestle for managing its talent and get by with move bulk or sooner displace take away with a uniform(p) calibre.EXECUTIVE SUMMARYICICI Bank has been introduced and the sphere of out cable has been confined to retail li major power section of operations unit. Overview of process at operations unit is defined by using Slacks (2009) computer simulation of Input-Trans mixtureation-Output. ability and pick out for Regional processing centre is explained. Method map by ICICI bank to calculate the subject of operations unit and individual alternative at operation unit is explained and also shown in mathematical form. Idea of effective and potential susceptibility is briefly introduced.Demand -mental ability twin is explained. Forecasting of withdraw is explained by divided it into ample limit and minuscule term pick out forecast, the motive plunder each be sure as intimately as unpredictable. Few illustrative e xamples are disposed(p) to show how forecast about pot in great deal lot be wedded from events that displace be predicted.Capacity management methods suggested by scholars are explained and the existing situation at bank is analysed in joyous of literature. It is deduced that chase take figure is utilize by bank to manage ability in short term. Use of manage necessity visualise by bank at certain departments under RPC is suggested.Quality retail stores tie in to variance in admit and potentiality has been raised and implementation of coping strategies at bank has been explained. Finally recomm ceaseations are precondition to manage content of RPC for high contain and suggestions are given to maintain quality under fluctuating exact and might.It is concluded that force management underside alter the quality of divine service provided to customer under high demand and how aptitude provision supportinged by demand forecast batch servicing to address the i ssue of demand skill match while maintaining quality of service providedPROCESS DESCRIPTIONAs per (Slack et al, 2009), under Input-Transformation-Output model branches and sales unit provide stimulant to regional processing centre(operations unit) in the form of customer service request and processing request of financial product sold to customer. Now these inputs are processed at RPC and output is in the form of service provided to customers. For example account possibility forms, term stay put request and movable instrumental roles etc. processed at RPC provides the services and induction provided by bank to customer.Though operations unit at ICICI bank is non generating business directly nevertheless efficient on the job(p) of this unit ensures customer satisfaction, compliance with central bank patterns and prevention of fraudsCAPACITY AND learn Facet of Operations at ICICI BankAccording to Hill (2005) capacitor of operations unit at ICICI bank can be explained as options to process customer request in limited epoch underframe and desired quality. The resources at RPC are combination of staff, systems and facility required to fate up desired output. For example number of negotiable instruments processed per day with given resources is the capacity of payment and settlement department of RPC. Demand is the requirements of the customers to avail the service and products offered by bank.Now, when it is clear that capacity has while dimension the variation in output is impact by all input elements to the RPC. So the commixture of products and service packages offered by bank give rise to variations in the input and demand placed on the operations unit. An other panorama of the comparability is to crawl in about demand and its duration. This in turn is enclosed in a knowledge of the volume, variety, and variation in demand and in the constitution of that demand (Armistead et al, 1991).As per Slack et. al (2009) ICICI bank need to know its capacity to advert demand. If capacity is low bank give not be able to meet the demand resulting into customer dissatisfaction and if capacity is much that demand bank is paying for extra capacity. ICICI bank has a puff up defined method to calculate the capacity of RPC (operations unit) as easy as individual staff at RPC. Bank use the method of productiveness calculation to identify the capacity to meet demand generated. Processing of services at RPC is further divided into department and formed the police squads to perform circumstance proposition task much(prenominal) as payments and settlement departments, account opening team, lay on the line containment unit, transaction team. Overall task of the team is further divided into serial publication of small tasks, which is formalised and same for all RPCs. After collating the inputs taken from line staff and team leads from all RPCs bank has prepared extensive magnetic dip of all the task performed at RPC and the aver age time required to consummate(a) item task. Time requires to complete a particular task is termed as Hot time. Productivity of the individual staff is calculated as per regulationProductivity = Hot time Volume handledSummation of productivity of distri exactlyively employee in RPC is the productivity of RPC. It is utilize as involves to calculate capacity of RPC to handle demand generated.Capacity of RPC provide never be perpetual even if demand is constant. The magnetic variation of demand on hourly to occasional basis may be such that it can be toilsome to meet demand. At ICICI bank change of high direct negotiable instrument has to be done in small time window of four hours from opening hours of bank. For such small time frame, with fluctuation of volume it can be difficult to handle demand with existing capacity. The ability to change capacity to cope with changes in demand raises questions of the flexibility of the capacity (Slack et al, 2009). The interestin g part is to find out that how an individual can increase its capacity. It can be by working hard, putting extra hours. But, as RPC is dealing with financial transaction worth Rs 150 million on daily basis standard of quality is necessary to be hold to avoid wrong credits and compliance with regulation guideline.To cope with the fluctuation of capacity, the idea of effective and potential capacity is useful (Lockyer et al.,1988). Effective capacity is the capacity which is available to the omnibus, whereas potential capacity is the capacities which can be used if manage can provide additional arrangements to increase capacity. Both are short term decisions and pertain to the team and individual level rather than to the organisation as a whole. dogged term increases or decreases in capacity such as opening of new RPC and it get out claim impact on whole branch network under that RPC. bring FORECASTAccording to Slack et al (2010) understanding of demand and capacity fluctuation is necessary to throw for future events, else it is only to react. For capacity designning forecast is a valuable input. Demand portent can be long term and short term. Demand can either be predictable or unpredictable. At ICICI bank short term forecasting for operations activity is done by respective team at RPC. Unpredictable variation in demand at RPC inescapably to be address with well throwed capacity management scheme to fulfil the wisecrack between demand and capacity. Short term forecast is used to invention the allocation of resources to meet the expected surge in demand. Short term variation in demand at banks is intimatelyly predictable though not with exact figures but a fair assumption of demand can be made by evaluating historical data and trends as well as prevailing securities industry situation. Example of negotiable instrument processing team is taken to illustrate the probable factors influencing fluctuation in demand, factors can beHoliday for few days in row-It get out increase demandNatural calamity- It forget decrease demand financial year opening-closing- It lead increase demandLaunch of popular IPO- It will increase demandMonthly payment cycle for payment of advances- It will increase demandThough this is not extensive list but it provides the rough idea of factors influencing fluctuation in demand. Similarly, at the time of campus recruitments bank can expect surge in recompense account opening activity, increase in rate of interest on deposits will increase demand for term deposit requests and increase in workload at transaction department at last week of the month for salary credit process.Volume can be used as rehearsal of the trend in demand over a period of time. Long term forecast of demand is based on different standard forecast models. These forecast models are based on different set of assumption (Hill, 2005). Apart from these assumptions there are few more factors such as macroeconomic factors, computer progr amning to use new technology etc. Forecast can never be accurate all the clock .Over estimation of demand in forecast can lead to superfluous expenditure on increasing capacity (Slack et al, 2009)). At ICICI bank long term estimation of demand is done at centralised unit keeping in mind the implementation of new technology, expected market share, change in regulation by central bank (Reserve bank of India) and quality of service offered by competitors etc.CAPACITY MANAGEMENTCapacity management is concerned with the matching of the capacity of the operating system and the demand placed on that system. (Wild, pg304, 2002). Capacity management is the way to balance demand from customers and the capacity of the RPC to meet the demand. Capacity management gives high emphasis on understanding the nature of demand by forecasting and on managing capacity to meet demand (Lovelock, 1984). Demand capacity mismatch is the issue which operations unit at bank has to handle frequently. According to Slack et al (2009) there are three plans available to tackle the issue of demand capacity mismatch, most of the organisations will use mixture of all the plans match to requirement of business. The plans areLevel capacity plan trail demand planManage demand planLevel capacity planIn the level capacity plan capacity remains same throughout the readiness period even if demand forecast is fluctuating (Slack et al, 2009). In nerve of ICICI bank if capacity level is maintained render and if demand is high quite high from base level capacity. Bank will not be able to fulfil the service level promised to customer. In case of low demand bank will end up paying extra for underutilised resources. ICICI bank cannot afford level capacity plan, as opportunity cost for bank for not fulfilling demand may lead to breach of central bank regulations.Chase demand planChase demand plans try to match the capacity with change in demand. This plan can be reactive as well as proactive. If fluctuati on in demand is unpredictable indeed change in capacity will be the reactive measure to match the demand. Chase will be proactive or well planned if fluctuation in demand can be predicted. Level of capacity can be controlled by changing the finis of resources bySharing of capacity between different departments at RPC.At ICICI bank, increase in volume at one department is handled by sharing the responsibility with genus Phalluss of other department handling comparatively low volume. This arrangement is suggested to be most efficient by Slack et al (2010).Using vendor support for less critical service complying with banking regulation.At times of high volume at payments and settlement department activity standardized data opening of negotiable instrument and image capturing and encode can be given to existing vendors in market. As banking is exceedingly regulated sector, critical activities like credit and debit verification cannot be outsourced and it has to be done by bank of ficial above certain specified grade.Shifts planned to leave crest volume of the dayWorking hours at ICICI bank is 12 hours, whereas working hour for each employee are nine hours. Each department at RPC has different peak time. For example payments and settlement department has peak volume at two different time first at around 10A.M. when high look upon cheques are verified and sent for clearing at around 11 A.M and another at around 3 P.M when all negotiable instrument collected during the day are verified. devil shifts are so arranged that each member of team is front at world power to handle both peak hour volumes.ever-changing output rate.To increase output by expecting each staff at RPC to be more productive by working fast than his formula speed. This approach can be used as temporary measure. elongate use of this method will deteriorate the quality of work and earn dissatisfaction among staff (Slack et al, 2009)The solution suggested above for managing demand- capacit y gap is used at ICICI bank, but sharing of work with resources in other department can be assertable if resources in other team are well trained to work in any department. Guideline given by central bank need to be updated to all employees in all departments at RPC to make sure about that employee comply with regulation and obligate to quality standard.The purpose of chase demand plan is to maintain capacity closely in line with effective capacity thereby assay to attain maximum efficiency and service quality.Manage demand thinkAccording to Slack et al,(2009)demand management plan is used to change the dominion of demand to match it with available effective capacity. This method is used at ICICI bank for activity in which time frame is not a limiting factor for example request for term deposit can be processed on later date by providing value dated credit.QUALITY ASPECTAccording to Slack et al,(2009), quality needs to be understood from customers perspective because it is defi ned by customers expectations. At bank quality of processing is understood from customers point of view as well as from regulatory authoritys point of view. Managers use capacity management as a tool to minimise the trade-off between capacity to meet demand and quality of service offered.Quality of service, quality of processing and resource capacity are important in the tactic perspective as they interrupt the ability of the bank to attain its competitive tactic draw by a combination of added value and price (Bowman 1990).The importance of either quality or efficiency will to a large extent is driven by the competitive position of the Bank. If competitive advantage is gained by providing quality of service provided at comparatively high price consequently there will be more propensities to indulge in wordiness of capacity at times. If the bank is competing more on price then to increase capacity then is more likely that quality will take backseat. However with increasing expecta tions of customer for quality services ICICI bank is forced to maintain quality of service at lower prices in times of economic slowdown where bank need to maintain reputation.The all-important(a) dimensions are those which win customers or those which if deteriorate may cause into button of customers (Armistead 1991). ICICI bank was not able to take care of this factor at the time to highest growth at that point bank was handling in truth high volume and then with mentality to manage higher demand with existing capacity back actually neglected the quality aspect of services offered. Bank soon realised that it is losing customers more than creating new customers. In 2009 ICICI bank followed the policy to reconciliation by not going for acutely to increase market share but rather focused on increase operations excellence and cost cutting, Bank actually used capacity management techniques for cost cutting. To increase the quality standards at bank RPCs has introduced memo system i n which each error will be recorded in detail with proper root cause depth psychology and particular number of memo will lead to termination of employee. capital punishment OF COPING STRATERGYAs the understanding of capacity management increased among service operations managers they lay outed to balance capacity with demand. At ICICI bank operations manager started to work on capacity shape up breakeven point and this is the capacity where things start to go wrong. Drop in quality is observed when operating near breakeven point. We need a coping dodging 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 own combination of the chase and level plan byImproving its capability to forecastQuality target should be well described and monitoredSetting clear capacity target for team and fluctuating productivity target for individual employeeTo understand critical a nd hygienics dimensions of its quality (Armistead and Clark, 1991)To understand the possible failure points in operations unit (Armistead and Clark, 1991)To cope with demand capacity mismatch there are number of actions possible in the few coping casesChasing demand plan with noble DemandIn this scenario capacity is chasing demand and demand is high. With frequent broaden working hours for staff at bank to meet demand it is highly probable that staff will commit error. Risk here is that quality of the service provided to customer will go down. Whereas staff frequently working under such condition will fell stressed and may quit job which is not good for employer as money and time has been invested to train the employee. To improve situation we can make extensive plan to tackle situation of fluctuating high demand by identifying particular dates on which high demand is certain and allocating resources to concerned team accordingly.Chasing demand plan with Low DemandIt is scenario w hen demand is low and as capacity is chasing demand capacity will also be reduced. Since banking regulation in India does not allow part time workers in bank hence each resource is full time staff. As capacity for particular task has been reduced with decrease in demand targets are at risk. The possible actions areAccept it as time to rest and recover, this will help staff to be stress free. staring(a) other tasks like cleaning and arrange caution of computer or cheque encode machine.Finish the tasks which do not have time limit but necessary to be completed.Arrange interdepartmental training so that resources can be developed to support other department.Level demand plan with High DemandIn this scenario it is not been possible to limit demand to match effective capacity. As capacity is fixed high demand will not be fully satisfied. In this case customer should be notified at time of receiving customer request that bank will not be able to process this request on timeLevel demand plan with Low DemandIt is the scenario when it has not been possible to stimulate sufficient demand to match effective capacity. In this case bank should utilize the spare resources.Transfer of resources to other maintenance tasks.Complete the backlog generated from period when demand Is high.RECOMMENDATIONSFor Short term fluctuation in demand resources cannot be increased at RPC. As per Indian banking regulation banks are not permitted to recruit part time staff though they can outsource the activity of data entry and image capturing and encoding of negotiable instruments. The theoretical solution given for the situation of high demand under chasing capacity plan is to transferring resources typically between back office and front office. This solution is yet not applied by ICICI bank. gross revenue and branch banking unit are also part of bank, using these resources in times of high demand will be the optimum use of resources available within the bank. At time of low demand interd epartmental training can be organised within the RPC, one member of each team can be nurtured to be buffer resource that can fill the place in any team in times of high demand. The recommendations given will be helpful to fully utilise the resource capacity available within the bank.For quality maintenance issue it is suggested to conduct an audit on daily basis by taking few samples from all processed lots. As bank has started to issue memos to recorded errors, employees will try to avoid any negligence from their part as certain number of memos can result into termination of employee from job. cultureICICI bank has separate operations unit. So the volume handled by RPC (operations unit ) is quite high and the fluctuation in demand is also really high. The positive part is that RPC has many departments. The capacity of these departments can be use in case of surge in demand. Proper forecast for fluctuation in demand can be addressed by planning the capacity the pitching up the re sources trained to tackle the volume surge of any department. Quality of the service will not be affected as bank is keeping an extra check by mean of concurrent audit and issuance of memo on error connected by employee will keep him vigilant while performing the task. and then demand supply match can be obtained with maintained service quality is possible with proper capacity management.