om term report by a baseer, hammad & saddam

Operations Management Term Report

Submitted To;

Mr. Affaq Vohra

Submitted By;

AbdulBaseer

Muhammad Hammad

Saddam Hussain

2015


ACKNOWLEDGEMENT

ALLAH is very kind, Merciful and Compassionate. His benevolence and blessings have enabled

us to accomplish this task.

We highly appreciate Mr. Muhammad Adil Ali, Operations Manager at Bank Islami Pakistan

Limited Block 14 Gulistan-e-Johar branch, for his support and collaboration.

We pay special gratitude to our honorable teacher Mr. AffaqVohra who is teaching us this

course.

The last but not least, we would feel incomplete without thanking to our parents who pray for our

success and bright future.

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CONTENT

CHAPTER NO. 1 31.1 Executive Summary 31.2 Introduction 3

1.3 Vision 4

1.4 Mission 4

1.5 Head Office 4

CHAPTER NO. 2 5

2.1 Operations Strategy 5

2.2 Project Management 5

2.3 Process Design Strategy 6

2.4 Process Analysis 6

2.5 Process Performance and Quality 7

2.6 Lean Management 7

2.7 Supply Chain Strategy 7

2.8 Location 8

2.9 Forecasting 8

2.10 Scheduling 9

CHAPTER NO. 3 10

3.1 Analysis 10

3.2 Recommendations 133.3 Conclusion 13Bibliography 14

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CHAPTER NO. 1

1.1 Executive Summary

The report was commissioned to examine the operations strategy of the Bank Islami Pakistan

Limited, how the operations are managed, how they take actions on projects, how the processes

are being designed and how they process analysis, the process performance and quality

measures, the usage of lean management concept, maintaining supply chain, deciding the branch

locations, forecasting the requirements of cash at valet and last but not least the scheduling

procedure of the tasks and resources.

1.2 Introduction

The epochal idea of Bank Islami was conceptualized by Jahangir Siddiqui & Company Limited

and Rendered family in late 2003. Mr. Hasan A. Bilgrami was appointed as Adviser to the

sponsors on March 16, 2004 to formalize the idea. He presented the concept paper of Bank

Islami to sponsors on March 24, 2004. A detailed business plan was then prepared and a formal

application was submitted to the State Bank of Pakistan on May 26, 2004. On September 26,

2005, Dubai Bank joined the Sponsors and became one of the founding shareholders of Bank

Islami by investing 18.75% in the total Capital.

The State Bank of Pakistan issued a No Objection Certificate in no time on August 19, 2004 and

Bank Islami Pakistan Limited, the second full-fledge Islamic Commercial Bank in Pakistan, was

incorporated on October 18, 2004 in Pakistan.

Bank Islami Pakistan Limited was the first Bank to receive the Islamic Banking license under the

Islamic Banking policy of 2003 on March 31, 2005. The Bank envisioned to focus primarily on

Wealth Management as the core area of business in addition to Shariah compliant Retail Banking

products, Proprietary and Third party products, and Integrated financial planning services.

The State Bank of Pakistan declared Bank Islami Pakistan Limited as a Scheduled Bank with

effect from March 17, 2006. Bank Islami started its Banking operations on 7th April 2006 with

its first branch in SITE, Karachi. By the end of 2006, the Bank had 10 branches, nine in Karachi

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and one in Quetta. The Bank further concentrated in building a nationwide network and by the

end of year 2007; its branch network grew to 36 branches in 23 cities. In 2008, the Bank opened

66 new branches nationwide which expanded its network to 102 branches in 49 cites. By the end

of 2013, the Bank has achieved the target of 201 branches in 77 cities nationwide this gave Bank

Islami the distinction of having the fastest expanding network in Pakistan as well as offering the

widest network by any Islamic Bank in Pakistan.

1.3 Vision

The Vision of Bank Islami is to be recognized as the leading Authentic Islamic Bank.

1.4 Mission

The Mission of Bank Islami is to create value for our stakeholders by offering Authentic, Shariah

Compliant and technologically advanced product and services. We differentiate ourselves

through:

• Authenticity

• Innovation

• Understanding our client's needs

• Commitment to excellence, and

• Fast, efficient and seamless delivery of solution. As a growing institution, the

foundation for our performance lies on our human capital and Bank Islami remains committed to

becoming an employer of choice, attracting, nurturing and developing talent in a transparent and

performance driven culture.

The Board of Directors of Bank Islami comprises of eminent representatives. These include Mr.

Ali Hussain, Mr. Abdul Hakim Binherz, Mr. Ali Raza Siddiqui, Mr. Ali Al Shamali, Mr. Fawad

Anwar, Mr. Kamal Afsar, Mr. Hasan A. Bilgrami and Mr. Shabir Ahmed Rendered.

1.5 Head Office

11th floor, Executive Tower, Dolmen city, Marine Drive, Block-4 Clifton, Karachi.

Call at 9221-35839906 or 9221-111-BIP (247)-111

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CHAPTER NO. 2

2.1 Operations Strategy

An operations strategy for a business is the company's plan for how the business will operate to

achieve a set of goals. It transforms inputs into outputs. Compare it to a machine; the machine is

used to achieve a certain purpose or function, but all components of the machines must operate

correctly and in conjunction with each other for the machine to work successfully. An operations

strategy in a business is essentially the same thing. It defines how different components of the

business will work together to achieve success. Companies define operations strategies

differently, based on the management style and needs of the company.(Render, 2008)

Operation strategy at Bank Islami Pakistan Limited starts as a client enters the branch; they have

different departments of services for the satisfaction of their pampered clients. They have sales

representatives, counter offices and branch manager for the satisfaction of their clients.

2.2 Project Management

A project is unique in that it is not a routine operation, but a specific set of operations designed to

accomplish a singular goal. So a project team often includes people who don’t usually work

together – sometimes from different organizations and across multiple geographies.

The development of software for an improved business process, the construction of a building or

bridge, the relief effort after a natural disaster, the expansion of sales into a new geographic

market, all are projects. All must be expertly managed to deliver the on-time, on-budget results,

learning and integration that organizations need. Project management, then, is the application of

knowledge, skills, tools, and techniques to project activities to meet the project requirements.

(Ritzman, 2008)

Bank Islami Pakistan Limited manages its daily operational project by breaking down the tasks

in small work groups and that is assigned to the representatives.

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2.3 Process Design Strategy

Design strategy, as a field of theory and practice, refers to the integrated, holistic planning

process examining the interplay between design and business strategy. However, for most

graphic designers, design strategy simply refers to the conceptual underpinning for their creative

work.(Render, 2008)

“Design strategy is a dimensional, multifaceted plan that allows traveling down different paths,”

says Volker Durer, creative director of Durer Design Inc. in Los Angeles.

Bank Islami Pakistan Limited is encountered with a new mobile app by their close competitor

Meezan Bank Limited therefore they have to launch a mobile app for their clients for having ease

in transactions as per their requirements 24x7. They will provide different services such as

account balance checking, bill payment, funds transfer, mobile top up and feedback anytime

using their mobile phones for free.

2.4 Process Analysis

Process analysis is an analysis of a process, as in a how-to or explaining how something works.

These last two types of process analysis are known as directive process analysis and informative

process analysis.

Directive process analysis shows a person how to do something, as in how to cook a turkey for

the holidays or for Thanksgiving.(Shafer, 2012)

Informative process analysis shows how something works; for example, an informative process

analysis may show how Face book works, or may show how a bicycle or car works.

The Bank Islami Pakistan Limited has identified an opportunity of new service that is card less

transaction, which is not being provided by any other bank till now. They are providing this new

service.

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2.5 Process Performance and Quality

Total quality management is a philosophy that stresses three principles for achieving high levels

of process performance and quality. There principles are related to customer satisfaction,

employee involvement and continuous improvement.(Ritzman, 2008)

The Bank Islami Pakistan Limited has the service quality department which makes sure that the

processes they are conducting in their branches are satisfying their clients as they anticipated

while generating them.

2.6 Lean Management

Lean management is an approach to running an organization that supports the concept of

continuous improvement, a long-term approach to work that systematically seeks to achieve

small, incremental changes in processes in order to improve efficiency and quality.

Lean management seeks to eliminate any waste of time, effort or money by identifying each step

in a business process and then revising or cutting out steps that do not create value. The

philosophy has its roots in manufacturing.(Shafer, 2012)

The Bank Islami Pakistan Limited uses lean management by which they have removed the

unnecessary activities in their processes. Such as introducing Universal Teller counter instead of

having cash receipt, cash payment, check clearing, and online transfer counters. The only one

counter can handle the activities of all the counters.

2.7 Supply Chain Strategy

Supply chains encompass the end-to-end flow of information, products, and money. For that

reason, the way they are managed strongly affects an organization's competitiveness in such

areas as product cost, working capital requirements, speed to market, and service perception,

among others. In this context, the proper alignment of the supply chain with business strategy is

essential to ensure a high level of business performance. Despite these advances in supply chain

theory, traditional approaches to formulating and validating supply chain strategy have not been

consistently successful.(Ritzman, 2008)

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The Bank Islami Pakistan Limited uses supply chain strategy for both inflow and outflow of the

funds. They give handsome profit rate on term deposits so that the inflow is not interrupted. They

also coordinate with the cash house to provide their clients with the required cash.

2.8 Location

Being in the right location is a key ingredient in a business's success. If a company selects the

wrong location, it may have adequate access to customers, workers, transportation, materials,

and so on. Consequently, location often plays a significant role in a company's profit and overall

success. A location strategy is a plan for obtaining the optimal location for a company by

identifying company needs and objectives, and searching for locations with offerings that are

compatible with these needs and objectives. Generally, this means the firm will attempt to

maximize opportunity while minimizing costs and risks.

A company's location strategy should conform with, and be part of, its overall corporate strategy.

Hence, if a company strives to become a global leader in telecommunications equipment, for

example, it must consider establishing plants and warehouses in regions that are consistent with

its strategy and that are optimally located to serve its global customers. (Ritzman, 2008)

The location strategy here in Bank Islami Pakistan Limited plays a vital role, they decide on

locations where they have more clients awaiting.

2.9 Forecasting

Forecasts are vital to every business organization and for every significant management decision.

While a forecast is never perfect due to the dynamic nature of the external business environment,

it is beneficial for all levels of functional planning, strategic planning, and budgetary planning.

Decision-makers use forecasts to make many important decisions regarding the future direction

of the organization.

Forecasting techniques and models can be both qualitative and quantitative and their level of

sophistication depends on the type of information and the impact of the decision. The forecasting

model a firm should adopt depends on several factors, including forecasting time horizon, data

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availability, accuracy required, size of the forecasting budget, and availability of qualified

personnel.(Ritzman, 2008)

The forecasting is done at Bank Islami Pakistan Limited, the forecast the requirement of cash at

their branches, and the amount of deposit to be attracted.

2.10 Scheduling

Scheduling pertains to establishing both the timing and use of resources within an organization.

Under the operations function (both manufacturing and services), scheduling relates to use of

equipment and facilities, the scheduling of human activities, and receipt of materials.

While issues relating to facility location and plant and equipment acquisition are considered long

term and aggregate planning is considered intermediate term, operations scheduling is considered

to be a short-term issue. As such, in the decision-making hierarchy, scheduling is usually the

final step in the transformation process before the actual output (e.g., finished goods) is

produced. Consequently, scheduling decisions are made within the constraints established by

these longer-term decisions. Generally, scheduling objectives deals with tradeoffs among

conflicting goals for efficient utilization of labor and equipment, lead time, inventory levels, and

processing times.(Ritzman, 2008)

Bank Islami Pakistan Limited schedules their staff, equipment and tasks so that their daily

operations are not interrupted and are conducted in such away they achieve high standards.

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CHAPTER NO. 3

3.1 Analysis

We have analyzed that operation strategy is necessary in every type of business in the world. The

operation strategy of Bank Islami Pakistan Limited starts working when the client enters the

branch; he/she may be concern with online fund transfer, cash deposit, cash withdrawal, account

opening, remittances, receiving check books or changing money. They welcome their valuable

clients with a deep smile; ask him/ her about the purpose of the visit. According to need they ask

him to take counter token and sit in the clients waiting area and as his number is announced than

the client is guided to go on the counter. The teller listens carefully checks the details and

performs the desired operation. If there is any query from the customer side and he feels

unsatisfied with the personnel than there is a service quality officer who keeps an eye on the

services performed by their personnel.

He / she ask the clients about the bad experiences note it down and provide helpful assistance.

Any client can meet the branch manager or operations manager for the queries. Bank Islami

Pakistan Limited has a standardized time of dealing with a client not exceeding 11 minutes. They

are also providing on demand services as per client’s preferences. I like the distinguished

operational strategy of BIPL from other banks. They are providing card less ATM transactions

for their customers, they really does not let any of their client unsatisfied.

The Bank Islami Pakistan Limited breaks down their daily operations into different categories

such as Customer Services, who give direction to the clients as per their need. There are Wealth

Manager and Business Executive who deals with the account opening, loan requirement of the

client. They also have representatives for car and house finance in the branch. Core operational

activities are such as clearing, depositing cash and withdrawals, remittances and other services

are assigned to the Universal Teller.

There is also one more representative that is responsible for maintaining hygienic environment in

the branch. The bank operation starts from 9:00 am till 5:00 pm. We further analyzed the process

design strategy of Bank Islami Pakistan Limited; they use to keep an eye on their competitors in

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the marketplace. They aim to provide better services as compared to their close competitor that is

Meezan Bank. Meezan Bank Limited provided their clients a mobile app service six months ago.

Therefore in order to retain and satisfy their clients Bank Islami Pakistan Limited started

working on mobile app that will provide more value added services to the clients. It has finished

the working on mobile app and soon it will launch on Apple iTunes, Android play store and BB

App World. Further in the past era of banking in Pakistan, none of the banking institute provided

ATM services, Standard Chartered Limited identified the opportunity and provided the ATM

24x7 services to their clients.

Bank Islami Pakistan Limited introduced the valued added service card less transaction on their

ATMs. By single thumb impression identification the clients can avail all of the value added

services of the ATM. For this clients must provide required details and thumb impression to the

representative at the branch so that they are able to use this value added service.

Bank Islami Pakistan Limited the only bank using the card less transaction concept in the

Pakistan. There is no link1 option available till now because the other banks have old ATMs.

They are going to be awarded for providing this new service in the very short time period. We

also analyzed in every branch of Bank Islami Pakistan Limited there is a separate desk for the

Service Quality Officer. The duty of this representative is to main hygienic environment; provide

pleasurable experience to the clients. It also ensure that counter officer should not handle any

client more than 11 minutes, provide daily feedback of operational activities such as how many

tokens have been taken today, who was absent, any mishap with the clients and sits in the branch

till the counters are closed. Keep an eye on every activity of the staff to maintain decorum in the

branch.

We analyzed that Bank Islami Pakistan Limited uses the concept of lean management proving

this they have introduced the counter of Universal Teller instead of having different counters for

cash deposit, cash withdrawal, and remittances, online transfer. The only one counter of

Universal Teller can provide with all the needs of the other counters which we use to see in the

past. This has helped the Bank Islami Pakistan Limited to reduce cost and time by reducing the

number of staff. They also work on push and pull methods of Just in Time philosophy. They use

push method in local currency by maintain a minimum level of cash at their valet for any

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uncertainty or delay in cash delivery from cash house. They also work on pull method in dealing

the foreign currencies withdrawal, if any client demands they provide the foreign cash in two

hours to the client.

The Bank Islami Pakistan Limited uses the concept of supply chain strategy so that they are able

to receive deposits from the clients by providing them handsome profit rate so they deposit their

cash with them. They also keeps close tie with the cash house so that they have enough cash at

their branches to satisfy their clients. The clients may be interested in withdrawal of their deposit

therefore they must have sound cash balance at their valet so the clients are not frustrated and is

provided with cash when they demand. We have analyzed the location of Bank Islami Pakistan

Limited’s branches. They are some in the residential area or some in the commercial area.

The branch we visited is located in the residential area, the location decision are made by the

head office. We asked the concerned person he told us that branch should be in the commercial

area where they are able to do more business and earn more profit, he also told us we also give

full concentration to residential are because they have to satisfy the both business executives and

households. In commercial branch the staff is happy because they don’t have to do too much

work daily. The deposit amounts are huge in the commercial are compared to residential area.

When we asked the operational manager about the forecasting, he gave us today’s scenario

where profit rates are lower regulated by the State Bank of Pakistan.

As a natural psychology people want more profit in every condition but the profit rate is lower

than 8% per annum on term deposits. So the clients are more interested in withdrawing their

funds and investing in securities that provide more profit rates. Even then they have to fulfill the

demand drawn on them therefore they have to forecast and maintain the requirement of cash at

their valet so that they are to make the demand withdrawal of their pampered clients. On the

other hand it becomes very difficult situation because it has to lend loans to corporate and other

businesses on which they are surviving.

We further asked the operational manager about scheduling; he explained it is done by the head

office. They have predefined task for every personnel and have predefined operational activities

such as the bank will start operation at sharp 9:00 am they will not receive any remittance

request after 4:00 pm. Timings are also being scheduled it must send the clearing check

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deposited with them of other banks before 4:30 pm for same day clearing. They also have a to-do

list for every personnel that tasks must be done by every personnel in the branch.

3.2 Recommendations

The branch of Bank Islami Pakistan Limited, which we have visited for our report

purpose, is performing well in their operations; they can perform better by motivating

their staff because when you become customer oriented you act according to customer

need and preferences, in this case sometimes the staff get irritated by continuously

dealing customers.

One thing that we found in branch, was shortage of seats in customer waiting area, the

manager operations should provide proper sitting area to their valuable customers, for

better business performance of branch.

Bank Islami should provide more functions or features in their mobile app as compare to

their competitor which is Meezan Bank; this will provide them edge over Meezan Bank.

Another thing, by which their customers get annoyed with them is, their early branch

operations closing that is 5 pm. They should increase their duration of branch operations

in accordance with their competitors at least 5:30 pm.

Their competitor (Meezan Bank) is growing customers by providing free check books,

pay order facility, online transactions etc. Bank Islami should also provide these main

facilities not free but at lowest cost to their customers because cost of everything matters

in every type of business, customer always wants facilities at lower cost.

3.3 Conclusion

In the end we would conclude that the Bank Islami Pakistan Limited should sort ways in which they may have edge on their competitors of which the closet one is the Meezan Bank Limited, it should continue to work on the policy so that they may have high standards than their close competitor. It should introduce new kind of services before the Meezan Bank not after them.

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BibliographyRender, B. (2008). Principles od Operations Management 7 ed. New York: Prentice Hall.

Ritzman, L. R. (2008). Operations Management: Processes and Value Chains 8 ed. Chicago: Addison-

Wesley Longman, Incorporated.

Shafer, S. M. (2012). Operations Management For MBAs 5 ed. Sydney: John Wiley & Sons, Inc.

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om term report by a baseer, hammad & saddam

Economy & Finance