Global Financial Corporations – Process Improvement Options
In this article we will talk about a couple of ideas that can help smooth the operations issues within Global Financial, suggest a radical change and end by concluding with a recommendation for the company.
Splitting the processing operations in two queues: News and Standards
Splitting the operations into two loan-specific queues could grant Global Financial more efficient use of their processing time by reducing the variability of their inputs. The regional teams working with the evaluation and analysis of the loan (teams of two according to the case) could split their workload by News and Standards Loan applications. Standard loans, as mentioned in the case, are loans that have been approved by Global Financial in the recent past. Therefore it stands to reason that most of the information needed to analyze the application has already been collected. By allocating the less complicated and less time demanding process of standards to a single process owner, that individual can quickly review and deliver applications to the interest rate analysis queue, and move on to help colleagues with the New Loan applications. While this would initially slow down the News queue by reducing capacity, Standards would be processed through the system more quickly by processing the standards as a batch before the employee moves on to work with the News. If this strategy is followed collectively throughout the three regional teams, the throughput of standards would reduce, and provide an incentive to previous customers to continue to work with Global Financial as their lender.
The interest rate analysis process is always constant in its time regardless of loan type. On average, it takes 30 minutes for a single employee to complete this task. By queueing up all the Standard loans from the three regions first, Global Financial can decrease the lead time for the New loan processing that would be sent later in the day.
Improving the data gathering process/loan application process
If Global Financial were able to reduce the time it takes to gather all necessary information for a loan application, the process flow will, in turn, be more efficient. According to the case, the loan application information is sent via fax or overnight mail to the processing office. The case also mentions that employees take more time to gather information critical to the loan application. There are two significant issues with this process: data availability and lack of standards. If Global Financial were to develop an online platform for loan applications, much of this issue could be resolved through automation and continuous improvements. By implementing an online platform, the information will be available to the Bakersfield office within a matter of minutes and reduce the costs of overnight mail. The system would also provide the benefit of reducing the repetition of tasks by having a sales representative enter all pertinent information at the start of the process rather than collecting the information, mailing or faxing information over to the head office, and head office employees having to enter the information into a system a second time.
This not only provides the firm with the ability to control what gets sent into the queue but also it also increases the efficiency by reducing the time it takes for information to be fed to the Interest Rate analysis queue by making the information available as soon as the loan application is submitted to the platform. Building on the previous suggested change, having an online platform will give the firm the ability to split the News from the Standards seamlessly, and potentially have an even more significant impact by having Standards processed automatically through the platform based on the information already entered. This, in turn, would free up more employees by allowing them to focus on the News, increasing capacity and addressing the bottleneck by making the operation more efficient in terms of data flow and capacity.
A Radical Idea for Re-Engineering
One radical re-engineering idea is to overhaul the organization of the system from a product-focused system to a process focused system. Currently, at two process steps, evaluation and analysis, and loan terms, each region has its dedicated resources. By removing the regional focus and pooling all the resources together, Global Financial stands to increase the efficiency of the total operation by utilizing resources more effectively. The case states that the groups were split up into regional teams so that the sales representatives and the analysis team could work together more efficiently by fostering a strong foundational relationship. This organization of resources, however, is potentially causing unintended bottlenecks through reduced utilization of resources and increased throughput time of loans. Additionally, the goal of improving relations is likely to be unmet due to tension between the sales representatives and the analysis team that may arise from reduced processing time of loan applications and resulting in lost sales. Global Financial’s main goal should be to reduce lead times for processing loans, which can be accomplished by reallocating resources. When changing to a process focused system, the majority of the six employees would work on the evaluation and analysis on applications of News from all regions, with a single, or possibly a pair of employees processing the Standards. Should an enterprise management system be implemented, Standards would be mostly completed by the system, with quality checking step to be conducted manually by a dedicated employee. This employee would be the process owner of the Standards and input any new information that is needed to complete the analysis of the application and pass it along to the next queue.
With or without an online platform, the reallocation will reduce the estimated processing time of the evaluation and analysis step by taking advantage of economies of scale and scope by dedicating more resources to the larger pool of work. This process can be replicated in the loan terms process step as well for the same benefits of improving efficiencies and reducing lead times. A final benefit that can be achieved by merging the three regional teams would be to implement a training system so that uniform standards can be applied. For example, Region 2 spends an average of 35.9 hours processing an application versus Region 1, which spends an average of 126.7 hours. Respectively, the number of applications processed through the system are 66 and 78. Region 3 spends 54.6 hours on an application, with an average of 74 applications of both New and Standard. While Region 1 has more News than Region 2 or Region 3, the amount of hours Region 1 is taking processing its 52 News versus Region 3’s 42 News indicates that Region 1 is effectively utilizing its resources. By implementing a routine set of standards and having top performers train other employees, Global Financial can address the operational inefficiencies and go a step further in implementing performance management standards to identify staff that are failing to meet standards while rewarding staff members who excel at their job and motivating the teams overall to reduce throughput of loan applications.
From an operational perspective, Nancy Rodriguez, VP of Global Financial, is dealing with a problem of translating operational inefficiencies to high-level management. This can be noted by the exchange between the VP of Personnel, Amanda Williams, and Rodriguez. Rodriguez requested to increase the headcount in the operations in order to be able to make the “under 10-day loan processing time” goal feasible. Williams, by capacity modeling through the operation, noted that the Bakersfield operation was running at 86% capacity and that the operation should, in theory, be able to take on 10% more applications and still not reach 100% workforce capacity. There seems to be a disconnect in the company regarding overall perceived workforce capacity and the real capacity of operation. An operation is only as efficient as the capacity that its bottlenecks can produce in output and not by how much input and overall workforce is available.
We suggest that Global Financial make a more radical organizational change in implementing a process-focused system. If such an appetite for radical change exists with high-level management support, then a process re-engineering and re-design can produce a much more meaningful result than continuous improvement initiatives. By pooling resources together and implementing training standards, Global Financial stands not only to reduce throughput and to queue time through the system, but also to better relations through sales and analysis staff by increasing the efficiency of the financing process. The three regions have the same amount of resources, respectively, despite the differences in the loan type applications. By pooling resources, Global Financial can dedicate a more significant percentage of staff to address the bottleneck of News. Further investments in technological improvements will also benefit Global Financial by increasing information flow throughout the process, reducing lead time through automation, and further freeing up capacity to focus on bottlenecks. Should Rodriguez not be able to garner a level of support for the re-design, further investigation should be conducted to understand why certain regions are operating more efficiently than others, and training should be rolled out based on the findings of the investigation.
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Hi there! I’m a Full Stack Developer and Project Manager with experience in delivering creative and effective solutions across healthcare, higher education, nonprofits, and other industries. I’m very passionate about transforming operations with technology and challenging standard practices. My strategy tends to focus is on people interactions, how we learn, perform, and communicate.