Role of Operations Management
This paper describes operations management and how it is applied in the banking field. Operations management is fundamental for any business seeking a competitive advantage in productivity. The role of operations management is to efficiently and effectively produce quality goods and services to create wealth. Bank operations management is the foundation of banking. Processing daily transactions, controlling and managing trades and sales and supporting front and back officers is part of the many functions of operations management.
According to Chase, Jacobs, and Aquilano, 2006, operations management is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services (p. 9). Bank operations are behind the scenes and commonly referred to back office operations because it does not handle front office sales. However a bank cannot move forward without operations management. Thus operations strategy is vital to banking to function at its optimal level.
By definition “operations strategy is concerned with setting broad policies and plans for using the resources of a firm to best support its long-term competitive strategy” (Chase, Jacobs, & Aquilano, 2006, p. 24). Typically a strategy breaks down into three major components: operations effectiveness, customer management, and product innovation. It is important that a firm’s strategy aligns with its mission of serving the customer. JPMorgan Chase, the bank with which I am familiar, strategizes into three major components: operations effectiveness, customer management, and product innovation.
A strategy must always align with a firm’s mission statement to make sure goals are attained by focusing on customer service. In the banking business some of the many competitive dimensions are the following: cost or price of service or product, quality, and speed. JPMorgan Chase bank is a recognized national bank that integrates competitive dimensions in business strategy. Some of the services offered are free checking accounts with fee waiver requirements.
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The starting fees are $12 a month for some checking accounts but there are fee waivers that some customers qualify for to waive the monthly fees. One common fee waiver is a recurring direct deposit totaling $500 or more each month. Price is an important factor for some customers but quality is an even greater concern for others. Because Chase bank offers high technology banking through Quick Pay and Quick Deposit at no cost to all customers, a monthly service fee for a checking account may be less important for customers seeking convenience and quality products.
The next dimension Chase focuses on is speed and delivery of online payments. Chase is dedicated to providing the best customer experience in all areas of banking, including online and mobile banking. Chase bank is mainly focused on customer service, which is the reason for business growth. There are three dimensions of value by which businesses differentiate themselves in the marketplace, according to Chase, Jacobs, & Aquilano, 2006. The three ways are through: product leadership, customer intimacy, and operational excellence.
Chase strives to keep a proportionate balance of all values to maintain the good reputation and strong name. All the competitive dimensions mentioned above are controlled and managed by back office operations. Therefore operations management is the cohesiveness of the banking business as a whole. It interconnects all functions of banking to maximize productivity in the most effective and efficient manner, creating wealth. Without back office operations support, JPMorgan Chase bank would not have the ability to excel in the banking business.
