Operations_Strategy_and_Management

Operations are to take inputs from resources and transform them to outputs, including products and services, and then supply them to customers. All organizations have operations that produce products, services or some mixture of both. And the total operations are made up of individual processes. Processes are component parts of operations and smaller version than operations. Its function is also to arrange resources that transform inputs to output. (Slack, 2009; Greasley, 2009) This essay will discuss about ‘counter service operation’ in Lloyds TSB, which deals with the daily transactions in bank counter. Lloyds TSB is one of the biggest retail banks in the UK with a great number of branches and cash points across England and Wales. It was found in 1995 by the merge of Lloyds Bank with the TSB Group. After the acquisition with HBOS in 2008, Lloyds TSB group is renamed to Lloyds Banking Group in 2009. It makes Lloyds TSB have domination in the banking market with 30% of market share. In particular, this essay will analyze the ‘counter service operation’ with its processes in Lloyds TSB Banking Groups. First, we determine its inputs, outputs. Then we analyze the transformation, process mapping and control systems. Finally, potential improvement practices will be suggested. Operation Banking services has many complex operations, namely ‘counter service operation’, ‘managing accounts operation’, ‘advising service operation’, ‘managing human resources operation’ and so on. This essay will analyze ‘counter service operation’ in Lloyds TSB. It is also called as ‘doing transactions operation’ and typed in exchange operation. This operation deals with daily transactions from customers’ orders on counter. The main transforming resources inputs of this service are tellers, computers, information systems and banking network systems. Its transformation is to transfer, collect or deposit money, to pay bills or direct debit periodically and process cheques according to customers’ orders. Outputs of this service are the amount of money transacted and the satisfaction of customers. Processes As talking above, both processes and operations have transformation of inputs to outputs. However, processes are components of operations. ‘Counter service operation’ consists of many individuals processes, such as process of transferring money to other people, process of depositing, withdrawing, saving, processing cheques, paying bills, making direct debit periodically. These processes transfer inputs including bank staff, tellers, money in transactions, facilities, and customers’ orders to the outputs which are the satisfaction of customer, completed transactions, money transferred and changes in bank account positions. Boundary Boundary of ‘counter service operation’ in banks is quite clear compared with other operations. The aim of this operation is to do transactions of customer requirements, and it is worked by tellers. It is different with ‘advising operation’, ‘customer service operation’ which give customers advices on choosing accounts, making decisions on loan, saving… Boundary between processes in this operation can be identified by considering the ‘end-to-end’ set of activities that satisfy customer needs. It is also the only way of drawing identifies the boundaries between processes. When looking at the customer needs, and activities to satisfy them in bank Lloyds, we can see the boundaries between processes in countering operation. Strategic implications: It is very important for organizations and Lloyds TSB to study their operations because operations keep responsibility for important issues like cost base, organization’s capacities, and ways it provides service to customers. When operations and processes are managed well, they can contribute to the strategic impact of the business in four ways: cost control, revenue, investment and capacities. The operations function can also provide a competitive advantage to their organization at five competitive objectives, including quality, speed, dependability, flexibility and cost. Through operations studying, Lloyds can recognize their competitive advantages to their other competitors and some kinds of questions, like: have they done well and fast enough' The cost is productive or not' Could they able to change' … After that, Lloyds can improve their weakness and use their strength to compete in the banking market and receive their objectives. For example: - Lloyds TSB has skillful staff with high motivation and experience. - They also have new technology, qualified facilities with modern computer, high information systems. - They offer internet banking service, mobile service to their customers. Input-transformation-output Now this part of the essay will focus on analyzing the input, output and transformation. All processes are input-transformation-output systems. Inputs can be divided into 3 types: primary inputs, secondary inputs and tertiary inputs. In counter service operation, the primary inputs, defined as the resources that a process directly transformed are customers, customer orders and the money in transactions. Secondary inputs are the resources which help to facilitate the transformation of primary resources into output. Here, secondary inputs include bank staff, tellers, information systems, e-business systems, call centers, facilities, branches, technology and banking network systems. Tertiary inputs are the information needed to plan, execute and control the use of primary and secondary resources so that the primary transformation can be carried out. So, it includes service feedback, datum and information. Output of counter service operation is to transfer money, complete transactions, the satisfaction of customers and bank improvement through feedback. Inputs Transformation Processes Outputs Primary, secondary and tertiary input/output Process mapping After having analyzed the component inputs, outputs of the operation, the next part of the essay will use process mapping to outline transformation processes and describe flows of steps and the interaction of each activity within the process. Process mapping helps to identify the different types of activities, kind of steps, and the involvement of materials, people and information through the process. It is created by the combination in order, in series or in parallel of different symbols which each represent a kind of activities. There are two sources of process mapping symbols, one from ‘Scientific Management’ and one from ‘System Analysis’. The definition of each symbol is described in the figure below: [pic] Process mapping symbols from ‘Scientific Management’ and ‘Systems Analysis’ However, in this essay, the process map of counter service operation in Lloyds TSB will be drawn by common symbols, which shows in figure below: [pic] As we know that counter service operation in bank is very complicated with many individual processes, for example process of withdrawing money from bank account in the UK or oversea, process of sending money to bank account, process of paying other account by cash or by customers’ bank accounts, or process of dealing with a cheque and so on. The process mapping below will analyze one of these processes, which is to withdraw money from bank accounts in the UK as orders of customers. Process of each transaction takes around 7-15 minutes. The average is 10 minutes each transaction. Process mapping of process of withdrawing money from bank accounts in the UK in Lloyds TSB [pic] Here are the details of the process mapping above: - Step 1: First, when bank staffs, tellers are available to work and the systems operate, they start receiving orders from customers (Step 2). The orders are to withdraw cash from their bank accounts within the UK. - Step 3: After receive customers’ requirements, tellers will give suitable forms to their customers. - Step 4: It takes about 2-4 minutes to wait for customer fill in the forms. - Step 5: Then, tellers are given information in the forms, and papers enclosed, for example passport, bank card if required. - Step 6: After receiving information, tellers need to check that information for some questions, like: Is this enough and regular information' Is this right terms and conditions' Do customers have enough money in bank to withdraw' In Lloyds TSB, customers can not withdraw more than £2000 cash per day as in their policy. This activity takes around 2-5 minutes, depends on skills and experience of tellers. - Step 7: Next, tellers need to decide whether the information is eligible or not. - Step 8a: If the information is not eligible, tellers can ask customers for additional information or doing other deal. For example, when a customers want to withdraw £5000, but it is not in right terms and condition because customers can not withdraw more than £2000 cash per day , tellers can ask customers withdraw a part this time, and withdraw the remain in other day. - Step 9a: Then, they receive responses from customer or additional information. - Step 10a: After that, they need to decide the response are acceptable and the additional information is eligible or not. Step 11a1: If it is acceptable then come back to step 7 to check addition information again. Step 11a2: If it is unacceptable, tellers will inform customers that the transactions are rejected and reasons for it. It could be because of insufficient datum, so tellers can require customers brings additional papers next time or give them advices. Or it could be because customers do not want to do other transactions which replace their initial aim, but it is not regular in terms and conditions. The transaction was ended but not completed yet. However, data and information will be recorded by other ‘managing operations’ through this operation. Then managers can analyze and make change or decision in the future. As we can see, the boundary of doing transaction operation is clear to ‘managing operation’, however, these operations overlap each other to work. - Step 8b: Continue step 8, if the information are eligible, tellers will put customers’ transaction information in their accounts and bank network system in the computers. This step takes around 2-5 minutes, depends on skills and experience of tellers. - Step 9b: Then, the information is transformed and recorded automatically in bank network and in customers account. The position of customers account will decrease as the money customers want to withdraw. - Step 10b: Documents, receives are created. Also cash is withdrawn. Step 9b and 10b are worked automatically by computers and technology. - Step 11b: Next, tellers will put document, receipts and records for bank in safe - Step 12b: Then, tellers need to give back documents (passport, bank card), receives records and cash to customers. - Step 13b: Tellers check one time again to make sure that every thing is done well. - Step 14b: Output: Finally, transaction was done, customers receive money they are ordered and satisfied with their needs. Information are recorded, position of bank accounts are changed. Control systems In large and complicated operations in bank, it is very important to ensure that all the processes are doing well and effectively and reflects to their customer demand. Therefore, one issue is that how Lloyds TSB can control their operation, how they can ensure that they work effectively. To solve this issue, organization can use resource planning and control which is concerned with managing the ongoing allocation of resources and activities. Control is the process of monitoring and coping with changes in the operations resources when processes worked not as in the plans. So, it helps to adjust, modify ongoing plans and directly intervene if necessary to bring things back on track and receive its objectives. The key elements of a resource planning and control system are the interface with the consumer, the supply, and the core mechanics of planning and control. (Slack, 2007; Greasley, 2009) [pic] The interface with individual consumers or the market in Lloyds TSB include customer negotiation, order entry, demand forecasting, order promising, updating customers, keeping customer histories. This element is very important and need to be paid more attention because counter service is the public face of Lloyds TSB, which affects directly to customers’ experience and perceptions. Lloyds can improve their customer experience and customers’ satisfaction by minimizing the queuing time, reducing transaction time but still keeping high quality and safety of the transaction. Interface with suppliers also are an element part of control system, which enhance or inhibit the ability of its suppliers to support delivery effectiveness. Core mechanics Core mechanics of planning and control system include scheduling, loading, sequencing, and monitoring and control. [pic] In detail, loading is to allocate work to individual processes or stages in the operation. It is a capacity-related issue which reconciles how much the operation can do and how much the operation expected to do. Through loading activities, Lloyds can calculate how many transactions, orders per day or per a period as in demand and how many transactions Lloyds TSB can do as their capacities. After that, they can use monitoring and control to decide the numbers of employees and facilities they should have. The next core mechanic is the requirement of order or sequence of steps, showing which steps need to do first, which need to do after. This depends on some rules: the customer priority, due date, last in first out (LIFO), first in first out (FIFO), longest operation time first (LOT) and shortest operation time first (SOT). In counter service, customers are first in, first served and it may not change in long-term in the future. After sequencing, control need to have scheduling activity to product a detailed timetable, showing the time activities should start and end. Finally, monitoring and control help to determine errors, then re-cope and re-plan to solve them. For instance, when there are overload in the counter, Lloyds TSB has to make some changes to solve that problem by nominating more employees and reviewing schedule to make higher productivity. These four core mechanisms have to interact with each other or the operation can not work effectively if each of them works independently. Improvement It is quite difficult to measure productivity in service operation, not as in manufacturing operation. Also, the chance to correct and improve quality in service production is lower than in product service. However, any operations have ways to improve its performance. To improve the operation, first organization need to measure their performance by using some performance objectives, such as quality, speed, dependability, flexibility and cost. Also, organization needs to determine the gap between their current and required performance so they can made plans and strategies to solve their problems and improve their position. For example, when Lloyds recognize that they have more demand than they could serve, it is important to recruit more employees and buy computers, or they need to change some strategies to adapt with the current market. Because in banking service, the processes depend much on humans, employees, so to improve the operation, Lloyds TSB should pay more attention to their staff, such as training, motivating. So employees could have enough skills and experience to deal quickly and effectively with customers’ orders. We can see the contribution of tellers in step 6 and 8b of process mapping above. If they have skills and motivation, the process can do faster. Also counter service operation is affected greatly by the technology and banking network systems. To improve the operation, Lloyds also should improve network systems, keep update new technology. Moreover, Lloyds also can improve their internet banking, facilities, deposit machines, cash points and e-business systems. Through internet banking, customers can make transactions by themselves using computers and do not need to go to branches, so it reduces loading and keeps convenience for both bank and customers. In addition, bank can arrange the transaction forms in queue, so customer can choose the forms they need for their transactions, fill in it while waiting in queue. By this way, it also reduces the waiting time in step 4 of process when tellers need to wait their customer fill in the form. Summary Service operations are very different with the product operations. While the main inputs of product operations are materials and machines, the main inputs of service operation are staff. Also, the output of product operation are tangible while in service are intangible. As in Lloyds TSB, outputs of doing transaction operation are the satisfaction of customer needs and the completed transaction. The operation of doing transactions in Lloyds is very complicated. It is not a rigid form, it is quite flexible, not as a production process, which each step need an exact budgeted time, stable steps. Also this operation includes many individual processes with many steps. However, doing transaction is just one of operations. There are many other operations flowing in bank Lloyds, such as advising customer operation, help them to choose, make decision and so on. To studying the operations, bank Lloyds can see, identify inputs, outputs, steps in transforming service, their control system and potential way improvement. IV. Reference: • Gounaris, S., 2005. International Journal of Bank Marketing For The Financial Services Sector Product Portfolio Management And Corporate Performance In The Banking Sector. Emerald. • Greasley, A., 2009. Operations Management. The Cromwell Press, Trowbridge, Wiltshire, Great Britain. • Lloyds Banking Group, 2009. Available at: http://www.lloydsbankinggroup.com/home.asp [Accessed 1 December 2009]. • Lloyds TSB, 2009. Available at: http://www.lloydstsb.com/ [Accessed 1 December 2009]. • Shim, J. K. and Siegel, J. G., 1999. A streamlined course for students and business people. Operation Management. Barron’s educational series, Inc. • Slack, N., Chambers, S., 2007. Operations Management. 5th edition. Pearson Education Limited • Slack, N., Chambers, S., Johnston, R., Betts, A., 2009. Operations and process management. Principles and practice for strategic impact. 2nd edition. Pearson Education Limited ----------------------- TRANSFORMATION PROCESSES • Receive customers’ orders • Interact with customers, send, transfer, collect cash from customers • Changing position in customers’ bank accounts • Manage E-business processes • Records transactions Primary input: • Customers • Customers’ requirements • Money Primary and Secondary outputs • Transactions are done (money are transacted as orders) • Changing in customers’ bank accounts • Satisfaction of customers • Records for company, number of customers, transactions, total of moneys are transacted in a period Secondary input: • Bank staff, tellers • Information systems • E-business systems • Call centers • Facilities (branches, technology, computers) • Baking network systems Tertiary outputs • Improvement of services through feedback • Analysis of market demand • Effectiveness of system Tertiary input: • Feedback • Information