Business

I recently entered the banking industry as a banker for Bank of America. As many may know that every since the financial crisis of 2007–2008 there has been intensified competition, and increased customer sophistication that have forced the banking industry to reevaluate techniques to improve operational efficiency and profitability. In recent years, service industries have faced significant competitive pressures resulting from globalization, rapid advances in technology, and a high degree of customer sophistication. In order to enhance their competitive position in the global marketplace, world-class service organizations must constantly look for ways to improve their performance. According to Eli Goldratt, “the goal of every for-profit organization is to make money”. This goal can be achieved by increasing ROI, which can be accomplished by increasing T, decreasing OE, or decreasing I. At our bank we realized that the bottleneck of the company was the mortgage department. It took the bank too long to process individual home mortgage applications. It takes the department around 5 weeks to process an application. The goal of the bank is to reduce the average processing time to three weeks. At Bank of America the three measures of TOC in order to achieve our goal are exercised as follows. Throughput would be the rate at which the banking system generates revenue for service provided from giving out loans for houses. Our bank generates money by offering a variety of service such as wire transfers, foreign exchanges, and cashier’s check. Our operating expenses would be all the money the bank spends in the process of generating throughput. These expenses include all direct and indirect expenses except for the cost of obtaining money in the market. The inventory investment would come from amount of money spent by a bank to raise capital necessary to generate throughput. It consists principle amount and interest. In order to achieve our goal, our management of the bank...