Top Content Archives. What Banks can do? Customers also will leave an institution for another based on getting the services they want and the best price available for it, so relationship pricing and product bundling become ever more important. Banks should look at products and pricing based upon a total customer view and respond to the value that customers bring to the bank across the spectrum of rates, fees, features and services.
Many banks are now-a-days bundling identity theft alerts and credit score reports with a checking account which provides increased account sales because of the attractiveness of the bundled features. This knowledge enables organizations to precisely target products and services to current customers, ac quire more profitable customers, reduce marketing costs, improve customer satisfaction and maximize lifetime value.
Sophisticated customer segmentation is the key to cater to individualized needs and should be based on standard banking metrics — tenure with the bank, number of accounts, balances of accounts and loans, frequency of interaction with the bank, channel preferences along with psychographic values, attitudes, lifestyles , behavioral usage rate, price sensitivity, brand loyalty, and benefits sought and demographic variables occupation, income, and family-status. They need to design a system which let profitable customers enjoy premium benefits and redeem rewards points easily and in various ways for gift cards, merchandise, events and experiences, or cash.
Celebrity Cruises has joined with MBNA America Bank to create a comprehensive rewards credit card offering both cruise and non-cruise vacation benefits, including travel, merchandise and cash rewards. Automating customer care — In the digital age, customers demand more self-service options and any-time, anywhere service. So expanding customer self-service, case management, dispute management and event-based decision-making can be perceived as better customer care, while lowering operational costs and increasing effectiveness.
However, banks should continue to make compelling offers as incentives for customers to use lower cost channels. Digital Revolution — Well…it might just be feasible that what social media is really doing today is more than socializing the web. It might be possible that this drive towards great usability, human interaction design, multi-touch, augmented reality, geo-location and connectedness is actually creating a digital service platform that could revolutionize the ability of an organization to look after customer.
Banks should try to engage consumers through digital channels and advance its leadership in the digital space as well as expand its social media engagement on Facebook, Twitter, Pinterest and LinkedIn. Though there can be several roadblocks and complications — like online account opening is expensive on per-account bass - however, prices for new delivery channels always commoditize as usage grows.
It is a myth that importance of branches will diminish as the digital channel usage will increase on the contrary, if branches are tightly integrated with other channels, that promote and support them and that quickly finish transactions started there will be more successful than ever. Big Data — The big data is the new disruptive technology for changing the game. Big data capabilities provides banks the ability to understand their clients at a more granular level and more quickly deliver targeted personalized offers.
Being able to anticipate customer needs and resolve them before they become problems allows banks to deliver timely, concise and actionable insight to contact center agents. This can lead to increased sales, improved customer satisfaction and a reduction in operating costs.
Fighting fraud, financial crimes and security breaches, in all forms, is among the most costly challenges facing the finance industry. Big data technologies provide a scalable, integrated, secure and cost effective platform to more quickly prevent, detect and mitigate internal and external frauds. Multi-Channel Seamless Experience — Banks should seek to attract and retain customers with a compelling multi-channel experience across all touch points branches, online, mortgage and investment advisors, etc.
Every action that does not bring a company closer to its goal is not productive. Following Jonah's clues, Alex mobilizes his team at the plant to find ways to improve the flow of production and somehow ship the huge backlog of orders on time. Along the way they discover the importance of constraints and learn how to manage them to achieve growth and profitability. Alex eventually realizes that the goal is not cost-effective purchasing, employing the right team members, the latest technology, producing quality products, capturing market share, customer satisfaction, etc.
A persuasive solution for factories struggling with production delays and low revenues. Towards the end, he begins to realize that 'bottlenecks' or constraints can change over time, and hence he must adapt his way of managing the business. This chapter introduces the main character Mr. He arrives at the office one morning to discover that his parking slot has been taken by the division Vice President Mr. Bill Peach. The conversation becomes heated when they discuss order that is seven-weeks overdue. Bill is very angry and warns Alex that he must turn around the factory within 3 months or it will be shut down.
Furthermore the overdue order must be shipped that very same day or else…. Alex reflects back back on his travels, finding himself back at the place where he started from. His wife Julie is from the city and is struggling to adjust to small town life. They get into an argument when Julie wants to go out for lunch. He pushes all the employees to work extra hours and somehow, order finally gets shipped late that night.
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But this achievement comes at the cost of declining efficiencies and further delays for other orders. Later that night, while at dinner with a colleague, he reflects upon the mismatch between the company's MIS system reports and actual profits…. The next morning, Alex rushes to attend a meeting of plant managers at headquarters. At the meeting, Peach explains how bad things are and hands out new stretch targets for the next quarter….
While at the meeting, Alex remembers running into his old physics professor, Jonah, at the airport. With no prior knowledge, he accurately predicts problems like high inventories and missed shipping deadlines.
How did Jonah know so much about Alex's factory??? Their conversation is interrupted so that Jonah can catch his flight.
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But he leaves Alex with a lingering question: "What is his company's ultimate goal? Alex mind keeps wandering and he leaves the meeting to take a break. He cannot stop pondering over Johan's question. Suddenly it strikes him that the Goal of his company is to make money! Anything that brings him closer to the Goal is productive. Hence, all other activities are non-productive! Back at the office that evening, Alex sits with the plant's controller, Lou. Together, they discuss the details of how the plant could go about achieving the Goal and the new targets.
There is an urgent need to increase cash flow, return on investments, and the net profits. When Alex runs the numbers, the task seems daunting, almost impossible. Their conversation stretches late, and Alex finds himself in trouble once again with Julie when he calls home…. Returning home at a very late hour, Alex is surprised when his daughter greets him in the doorway. After tucking her into bed, he begins to rethink the situation from a more positive perspective. But he realizes that he might need guidance from Jonah once again…. The next morning at work, Alex tries to apologize to Peach after skipping out of his meeting the previous day.
Unable to get through, Alex decides to trace down Jonah instead. Alex is left wondering how to relate them in terms of the plant's operation….
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The head of the company decides to come down for a photo shoot with the robots in the factory. Alex begins to reflect on the viability of the robots. With the help of Lou the accountant, the inventory control person, and the production manager, Alex discovers that the robots increased operating expenses without reducing any costs like direct labor, which was merely shifted to other parts of the plant.
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Since inventory stayed the same and throughput did not increase, the productivity of the plant declined because of adding the robots! Alex and his team Bob from production, Lou from accounting and Stacey from inventory control reviewed the meaning of throughput, inventory and operating expense until everyone was satisfied. Lou, summarizes them as follows. Inventory is the money currently inside the system. And operational expense is the money we have to pay out to make throughput happen. But Lou explained that machines, tooling and the whole the building are all just different forms of inventory.
Stacey remarked, "So investment is the same thing as inventory. But how can they do that without lowering efficiencies? They call Jonah in search of answers, but to speak to him Alex must visit New York…. Jonah assures Alex that all the problems can be solved despite their looming deadline. He advises Alex to forget about the robots, and stop chasing efficiencies. After all, "a plant in which everyone is working all the time is very inefficient.
Both harmless enough to Alex, who feels confident that both should work themselves out farther on down the production line….
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Upon his return home, Alex gets caught in an argument with his wife about all the unanswered phone calls. At this point his marriage is very strained due to the pressure of work and lack of time available for his family. Alex promises to set aside some time for her over the weekend…. Alex wakes up on Saturday morning surprised to find his son dressed and ready to go on an overnight Boy Scouts hike.
Alex forgot that he had volunteered to lead the boys! As they hike, the boys in the troop keep getting spread out further and further. It seems Alex discovered the true meaning of "dependent events" in relation to "statistical fluctuations" by fluke! This analogy between a single file hike through the mountains and a manufacturing plant, makes Alex realize the difficulty of making up the downside of the fluctuations following "dependent events".
The last event must always catch up everything to average out, which rarely ever happens. To observe the effect more carefully, Alex devises a dice game to play with the boys. It quickly becomes clear that any balanced plant faced with "statistical fluctuations" and "dependent events" will see throughput going down and inventory going up. Jonah was right - a balanced plant is not the answer!
The next day the troop begins to hikes again. But this time, Alex decides to let the slowest kid named Herbie lead the line. He also distributes some of the extra weight that Herbie was carrying. Sunday evening when they reached home from the camping trip, Julie has gone missing. In her note, she expresses frustration that Alex is spending all his time at work and has yet again broken his promise to spend time with her.
He picks up his daughter from his mother's house and tries to reach Julie on the phone. Despite making several calls to friends and acquaintances, he is unable to locate her anywhere.
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The next day at work, Alex explains his revelation about dependent events and statistical fluctuations to a hesitant team of co-workers. Fortunately, he is able to prove his point by using these principles to complete a large overdue order. Now what…? But Alex, on the other hand, remains unsure what to do next.
Predictably, Jonah is consulted once again. This time, the professor discloses the Theory of Constraints: "A bottleneck is any resource whose capacity is equal to or less than the demand placed upon it. A non-bottleneck is any resource whose capacity is greater than the demand placed on it. Alex and his team set out to find their bottleneck and zero in on the NCX machine and heat treatment section…. Jonah finally visits the plant in person. He explains to Alex that every plant should have bottlenecks! But Alex is confused. What must he do to increase the capacity of the plant? Ideally he would like to purchase an additional machine, but they have neither the time nor the budget for that.
How much does it costs when the bottlenecks NCX and heat treatment machines go down? And how much does it cost when the whole plant goes down? How many working hours are available per month? About That is because each minute of downtime at a bottleneck translates into lost throughput for the entire plant! Alex prioritizes the bottlenecks to work on the overdue orders starting from the most overdue down to the least.
While this production plan is being set into motion, Alex discovers that his wife Julie had been staying with her parents. But when he tries to convince her to come home, she insists that she needed more time to herself…. The crew works out a detailed plan to keep the bottlenecks fully utilized. They soon discover that they need a mechanism to inform workers about the priority sequence at non-bottlenecks as well.
A system of red and green tags is put into place to map priorities visually: Red for bottleneck parts to be worked on first and green for non-bottleneck parts to be worked on second. Alex is determined to make up for the weekend he owes Julie, so he asks her out for Saturday. She is excitedly agrees to this plan. This time, Alex manages to keep the date he promised his wife without any interference from work…. Monday morning, Alex is excited to learn that their new system is actually working… the plant managed to ship twelve overdue orders! Alex is pleased, but he definitely wants more.
He invites suggestions from the team for additional improvements. Bob, the production manager, finds and refurbishes an old machine to take some of the load off the NCX Things are finally beginning looking up…. New problems crop up at the bottlenecks to disrupt production. There is nothing to do while waiting for the bottleneck to finish its batch, so workers have been shifted to other areas between batches to keep busy. To prevent this, Alex dedicates one foreman at each constraint location all all times. Meanwhile, things are beginning to work out between Alex and Julie as well….
The team is excited about the sudden increase in performance and decides to celebrate.
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Afterwards, Stacey dropped Alex home but Julie is waiting up for him. She becomes suspicious that Alex might be cheating on her and leaves! Back in plant, the new priority system is in place. The rate of flow has increased considerably, thus reducing inventory. But now that the productivity of the bottleneck has improved, new bottlenecks begin to surface! This intrigues Jonah and he decides to visit the plant to have a look…. Rather, the current practice of prioritizing non-bottlenecks to work first on bottleneck parts inadvertently caused the problem.