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Global Financial Corporation (GF), a subsidiary of Global Equipment Company (GEC), currently faces a pressing challenge in efficiently handling financing for customers seeking to acquire GEC heavy equipment.
The current processing time for leases poses a significant bottleneck, with only 51% of loans processed within the stipulated "10 days or less" timeframe. Ms. Rodriguez, the Vice President of GF, has been assigned the crucial task of reducing loan processing time with the existing staff to meet market expectations.
Operating out of Bakersfield with a dedicated team of 14 employees, GF specializes in providing financing solutions for customers opting for lease agreements due to the substantial cost associated with GEC heavy equipment. The urgency to streamline the loan processing system arises from a competitor's commitment to completing financing within "10 days or less." Currently, GF only manages to process 51% within this stipulated time frame, necessitating a strategic overhaul to enhance competitiveness and customer satisfaction.
The Bakersfield office operates at 86% capacity, utilizing 2990.5 hours of processing time out of a potential 3485 hours.
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In October, the team successfully processed 218 applications, comprising 89 standard applications and 129 new applications. However, only 51% of these applications met the 10-day requirement, indicating a bottleneck in the system. A more in-depth analysis by region reveals that Region 1 handles the highest number of applications at 78, with 52 being new applications. Surprisingly, this region averages 126.7 hours, translating to a prolonged 20.1 days. Region 2 processes only 66 applications (35 new) with an average processing time of 5.7 days, while Region 3 manages 74 applications (42 new) with an average processing time of 8.7 days. The Northeast office handles about 35% more applications with essentially the same staff, exposing inefficiencies that need immediate attention.
Within the current structure, the analysis and evaluation stage emerge as the primary source of inefficiency, creating a bottleneck in the overall process.
Utilization rates among different regions fluctuate between 73% and 95%. The MMK model reveals critical insights into expected wait times, with Region 1 experiencing a significant bottleneck, taking 16 days out of 37 to review 78 applications. Region 2, with a utilization rate of 73%, records the most idle time in the evaluation process, processing the least applications at 66 during the quarter being reviewed. Region 3, with an 84% utilization rate, has the capacity to handle an increase in applications but still faces bottlenecks.
The interest rate stage proves to be an effective multi-channel process, with applications processed quickly and usually handed over to the next step within 30 minutes. The utilization rate is consistent at 64%, implying that this staff member can continue to devote only half of their time to this task. However, the loan terms stage mirrors issues in the analysis and evaluation department, creating uneven work distribution and inefficiencies. The final issuing stage, being an effective multichannel process, consistently operates at 93% of capacity, processing each application in less than 4 hours.
To address the existing bottlenecks, several alternatives are proposed for consideration. The first involves redistributing the staff strategically to eliminate bottlenecks in the process. By assessing the current distribution of tasks and reallocating resources accordingly, GF aims to optimize efficiency and minimize processing time. Another proposed alternative is the automation of information input into a computer database at the sales level, eliminating the need for duplicate entry and streamlining the system for increased speed and accuracy.
Introducing a generic queue is another potential solution, aiming to decrease processing time to 9 days. The proposed plan involves drastically reducing evaluation time to 2 days, subsequently increasing utilization and reducing idle time. Active time in the system is projected to be reduced to 13.72 hours, providing a more efficient workflow.
Another alternative strategy suggests changing all stages to a multiple, multiphase channel, as depicted in Exhibit C & D. While this approach may still have bottlenecks, especially from the evaluation stage, it is considered a step toward an optimized system. The case manager approach is also proposed, projecting an increase in the active time of application to 18.5 hours. However, this approach would significantly reduce queuing time to approximately 3 days, assuming no teams during the evaluation stage, and potentially doubling the average time to 9.5 hours. By changing to multiple channels and adopting an assignment multiphase model (Exhibit E & F), the goal is to eliminate bottlenecks and achieve a service rate of 22.2 per FTE per quarter.
After thorough consideration of the proposed alternatives, the recommendation is to transition to a case manager structure. In this proposed structure, one dedicated individual would be responsible for the entire completion of a loan application, as illustrated in Exhibit E. This approach is deemed the most efficient way to minimize idle time and maximize utilization rates within the current staffing constraints.
By implementing the case manager structure, loan applications can be processed and completed in approximately 3 days, marking a substantial improvement over the existing system. Importantly, this transition allows for an increase in volume to 255 without the addition of staff, assuming 60% remain new applications. This equates to a remarkable 16.9% increase, surpassing the initially anticipated 10% application increase.
In conclusion, the shift to a case manager structure emerges as a strategic move for Global Financial Corporation. It not only addresses the current bottlenecks but also positions the company for increased efficiency and improved customer satisfaction. This recommendation aligns with the overarching goal of providing timely and effective financial solutions for customers looking to purchase GEC heavy equipment.
The proposed transition to a case manager structure signifies a commitment to excellence in customer service, streamlining operations, and maintaining a competitive edge in the market. The multifaceted analysis conducted underscores the complexity of the current challenges faced by GF in loan processing. Each proposed alternative has been carefully evaluated, considering its potential impact on efficiency, staff utilization, and overall customer satisfaction.
By choosing the case manager structure, GF aims to address the root cause of inefficiency—the analysis and evaluation stage. This restructuring will not only minimize idle time and streamline the workflow but also enhance the overall customer experience. The emphasis on a singular point of contact for each loan application ensures accountability and reduces the likelihood of errors or delays in the process.
Furthermore, the anticipated increase in processing speed and volume without additional staff demonstrates the potential scalability of this approach. This aligns seamlessly with the company's growth objectives and ensures that GF can meet the rising demand for financing solutions without compromising on quality or turnaround time.
As GF embarks on this transformative journey, continuous monitoring and evaluation will be crucial. Regular assessments of the case manager structure's effectiveness, customer feedback, and internal performance metrics will enable the company to fine-tune its processes further. This commitment to ongoing improvement reflects GF's dedication to not only meeting but exceeding customer expectations in the dynamic landscape of heavy equipment financing.
Optimizing Loan Processing at Global Financial Corporation. (2017, Jan 24). Retrieved from https://studymoose.com/global-financial-corporation-essay
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