ING DIRECT CANADA
Role of the Responder: Basil Bell, Vice-President Operations, ING Direct Canada
ING Direct Canada is facing back office capacity problems in handling new and existing accounts because of a successful direct mail campaign by the marketing department. Providing same day processing of new and existing accounts has become challenging for the operations department. This is resulting in cost overruns with increased overtime hours and errors for the employees. The main issues affecting the company are mailing room capacity shortages, variability in daily mail volume and budget, space and headcount constraints. The division with its current available options can improve the existing mailing room operations process by using its human resources wisely in the short term and plan for capacity expansion in the long term, understand the reasons behind mail variability and renegotiating with corporate to gain more resources for the operations division. Based on detailed analysis and findings, it is recommended that the division implement a careful and planned short term and long term strategy to enhance and expand mailing room processes.
ING Direct Canada operates in Canada as a Schedule II bank and launched its operations in Canada on April 22, 1997. Its strategy is to differentiate itself from the domestic banking powerhouses by expanding its retail banking operations in Canada using a low cost strategy. It achieves low cost in its operations by offering a limited line of standard products and services with easy enrolment processes without any service charges or fees. The company has only one location with no branch networks, which makes it easy to offer very competitive rates on savings deposits. As of March 2000, ING Direct Canada has a staff of 242 people, with 94 being full time call center employees known as Direct Associates. The bank is facing significant capacity issues for its back office processing tasks due to increasing accounts and faces various constraints from expanding its current staffing levels. KEY ISSUES
1) Mailing process is facing capacity issues – ING Direct Canada is gaining many customers to their financial services with their attractive rates and services. In 1999 110,000 new accounts were opened and up to 220,000 customers were projected to join the bank the next year. Management plans a further 30% growth in the next two years. Processing new accounts takes around 50-60% of mailroom capacity and a significant part of the mailroom process and manpower. The Operations department is under a dilemma on how to live up to the commitment of ING Direct for same day processing of new accounts and deposits to existing accounts while not increasing staffing levels. Maintaining the deposits with existing accounts is also taking a significant chunk of the resources. The operations team is under a challenge on how to improve the process of mailing operations but at the same time operate under various constraints.
Metrics that can be used to measure capacity -
Total Mailroom machinery handling capacity per day
Total Mailroom man hours available per day
Total Productive man hours available per day
2) Variability in daily mail volume – Daily mail volume is highly variable ranging from 500 to 1,500 pieces. From this statistic up to 35% of the mail is receipts for new accounts. With such variability it is difficult to plan adequate manpower for the mailing operations which results in overtime of existing employees to assure same day processing of new accounts and deposits. During direct mail marketing campaigns, mail receipts can spike up to 2000 pieces of mail per day. This leads to error rates by staff due to longer working hours and burnouts. Variability is a key concern for the operations group.
Metrics that can be used to measure variability in mail volume - Mean mail volume in a month
Standard deviation of mail volume...