ITM343
Change
Management & Business Process Re-engineering
(For CNM
Cases)
Assignment - II
Assignment
Code: 2016ITM343A2 Last Date
of Submission: 30th April 2016
Maximum
Marks: 100
Attempt all the questions.
All the questions are compulsory and carry equal marks.
Section-A
Ques. 1 There are 5 steps for
implementation of BPR in any company. Discuss any 3 steps in
details.
Ques. 2 Total quality management (TQM)
and BPR must start from top management in any
organisation,
Explain how TQM and BPR should be implemented in any organisation
at each
functional level.
Ques. 3 After the world war ended in
1945, Japanese Companies stared dominating the
western
world after 1960, by “ Rigorous practice of Kaizen philosophy” There are many
features of Kaizen. Describe any five features
of Kaizen in details.
Ques. 4 Describe the qualities of a
CHANGE LEADER
Section-B
Case Study
Reject
Rate Reduction at the Reserve Bank of India
The
National Clearing Cell (NCC), Madras, is a division of the Reserve Bank of
India, responsible for cheque-clearing operations in Madras area. Cheque
clearing has been computerized since 1987 and involves running cheque on a
high-speed reader-sorter system (HSRSS) driven by a mainframe computer. The
cheques, customers deposit in their banks, that are drawn on other banks, arc
presented to the Clearing Cell. which captures the data on the HSRSS, sorts the
cheques on the basis of the drawee bank
and branch code. and prints out a number of reports, including the clearing settlement.
The HSRSS reads the Magnetic Ink Character
Recognition (MICR) code on the band at the bottom of the check. The first
fields on the MlCR line (serial, route. account. transaction codes) arc
preprinted, and the amount field is encoded after the customer presents the
cheques to the bank. cheques that are improperly encoded or of poor quality arc
rejected by the HSRSS, they must be manually sorted and their data is manually
entered. Banks get back their cheques in two lots, one fully sorted by branch
and transaction code by the HSRSS, and the other that still must be sorted by
branch and transaction code by the bank.
The
quality of the entire operation hinges on the reject rate of HSRSS, and this
most important quality parameter was
found to be very high, say around 10 percent. The banks complained that they
were receiving too many rejected
cheques and were left with a lot of tedious,
labor-intensive, and costly work to do after the NCC process was complete The
manual handling of the rejected cheques meant possible errors in both data entry and sorting, which often
resulted in reconciliation differences among banks. Also, the banks pay a
penalty on every item, if their reject rate exceeds 3 percent.
The
controlling authorities pointed out several
times to the manager of NCC Mr.
Srinivasan, that the reject rate was too high and that customers were uphappy
that the benefits of shifting to computerized processing had not been realized.
Srinivasan explained to his authorities that the high reject rate of
cheques at Madras was due to the
peculiarity of cheques presented there
and pointed out the high proportion of bank drafts from other places. In short,
the blame was shifted elsewhere.
After
about a year of this, the manager decided to look inward to try to improve
performance, and chose one of his shifts-in-charge Kaza Sudhakar, to do the job. It was felt that the
high reject rate was due to poor tuning of the HSRSS equipment The engineers
fine-tuned the equipment and cleaned the entire operations area to eliminate
all traces of dust This reduced the reject rate by only I percent. The NCC then
issued a series of instruction- to the bank to help them improve the encoding
of their cheques, but this did not help much.
NCC then embarked upon a project to inspect all
of the cheques presented by the banks and to separate and repair the bad
cheques This reduced the reject rate by 2 percent. but at a tremendous time and
labor cost. This approach was abandoned and it was decided to review where the
NCC had gone wrong
The
clerks receiving the cheques pointed out about the process shortfall at the
banks, where the cheques arc encoded. This meant that the solution would have
to involve nearly 800 branches of 50 banks in and around Madras. But the potential
benefits were great, so the NCC decided to go ahead. Five officers were
allotted 10 banks each, with the assignment to train the banks' encoding staff.
The first two months of the project produced negligible results, but as more
and more banks were trained, the reject rate fell to 4.5 percent!
The
banks were advised to continue the training on an ongoing basis, and to train
every new operator, and to designate an officer to ensure that only quality
cheques arc presented to NCC. The banks were also invited to visit the clearing
facilities so they could understand the importance of encoding to the entire
clearing operation. Although these steps had resulted in dramatic improvement,
the reject rate still exceeded the international standard of 3 percent.
The
NCC team once again reviewed the process with people from the banks who pointed
out that most of their cheques had five fields pre-printed on them: the banks
merely encoded the amount field. The banks felt they were paying for the poor
quality of the preprinting done by the cheques printers.
The
printers were invited to NCC and asked to send a proof batch of 100 cheques
before printing a run, which often numbered in the millions. The NCC promised
to run the proof batch on the HSRSS and deliver a report to the printer within
half an hour. Some agreed to proof- reading their cheques, others did not.
Subsequent, study showed that banks whose printers had proofed their cheques
had a reject rate of less than 1percent: This shifted the balance in favour of
checking proof batches, and soon all of the printers were doing so the overall
reject rate for the clearing operation was now around 2 percent. which proudly
measured up to any international standard.
The
benefits of this improvement were many. NCC manpower devoted to manual entry
and sorting could be dramatically reduced and re-deployed to other areas in
need of personnel The banks were happy to receive almost all their cheques
fully sorted by the HSRSS and reconciliation
differences among the bank were reduced to negligible levels. Banks.also
could redeploy their manual sorting and reconciliation staff which had
tremendous financial implication for them.
Srinivasan initiated measures to standardize all the
procedures that enabled the achievement
of low reject rates The staff was even rotated to see, if the standards could
be met independent of personnel, and this was accomplished. Regular meetings
were arranged with the banks to solicit feedback on the clearing operations and
to elicit suggestions for further improvement
NCC’s
quality project became truly total in dimension involving thousands of employees
in 800 bank branches in Madras. It had the full support of the top management
and the newly empowered operation staff. One lesson taken from the project was
that no operation could be improved just by tuning up the equipment until the
people connected with the operation are also tuned up (trained). The
improvement has to be continuous, without accepting defeat at any stage.
Perhaps the most important lesson is that a project, when started, aimed solely
at better customer service, ended up producing substantial cost savings,
without a conscious effort in that direction .
Case
Question:
How many different
approaches to quality Improvement were attempted by the National clearing cell?
Which were the most effective and why?
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