Operations Management: A Case Study of Central Bank of Oman (CBO)

OPERATIONS MANAGEMENT
A CASE STUDY OF CENTRAL BANK OF OMAN (CBO)

Table of Contents
1.0 Introduction................................................................................................................................4
2.0 Capacity management................................................................................................................5
3.0 Personalization/ Customization.................................................................................................7
4.0 Procurement...............................................................................................................................8
5.0 Customer satisfaction.................................................................................................................9
6.0 Quality management................................................................................................................10
7.0 Speed / Velocity.......................................................................................................................12
8.0 Flexibility.................................................................................................................................13
9.0 Cost..........................................................................................................................................16
10. Risk management.....................................................................................................................18
11. Integrated design and maintenance..........................................................................................20
12. Recommendation.....................................................................................................................23
13. Conclusion...............................................................................................................................24
References:....................................................................................................................................25
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Executive Summary
The supply chain may be considered to be one of the most success-critical aspects of the study of
operation management. The instant report deals with the various aspects of the supply chain of
the Central Bank of Oman (hereinafter may be referred to as "CBO" or the bank, as the case may
be). At the very beginning of the study, the report provides an overview of the supply chain
concept with respect to the banking industry and especially to the CBO. In the subsequent
sections of the paper, 10 different aspects of supply chain management of BO have been briefly
analyzed which are capacity management, personalization or customization, procurement,
customer satisfaction, quality management, speed or velocity, flexibility, cost, risk management
and integrated design cum maintenance. In the last part of the report, the researcher provides a
brief recommendation followed by the concluding note.
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1.0 Introduction
Operation management is considered as the business function accountable for supervising the
procedure of product and service creations. In the opinion of Slack and Brandon-Jones (2018),
the process includes organizing, planning, coordination and control every possible resource
required to produce a businesses’ product and service lines. Operation in the banking sector
ensures that it’s all procedures and transactions are executed without any interruption that tends
to minimize the risk likelihood and maximize service quality standards (Kerzner and Kerzner,
2017). Hence, correct maintenance if the operation process in the banking sector helps
management to establish the highest degree of process efficiency within the organization
(Avkiran, 2018). The Central Bank of Oman (CBO) is majorly accountable for retaining stability
in its national currency, which is the Omani Rial and guaranteeing financial stability in the open
financial and deregulated system. The present project aims to evaluate the operation
management efforts followed in the Central Bank of Oman. It would determine its capacity
management, supply chain system, inventory process, procurement efforts, quality management
supervision, customer satisfaction index, customer support function, etc.
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2.0 Capacity management
Scenario – Operational capacity may be denoted by way of inventory and hence, capacity
management may well be equated with inventory management in the given example. In the case
of banks, inventory primarily refers to the money. An analysis into the operation of the bank
reveals that the sufficient monies are available in the CBO reserve which includes foreign
reserves and gold and liquid monies as well. These all monies are floating in the market issued
by the bank.
Strategy – The reserve amount of money ensures that there is no need for any stimulus package
e.g., printing excessive monies (borrowing from the future), stable interest rate. In this context, it
may be noted that the interest rate structure in the Oman country is basically determined by the
two factors. The first determinant is market forces. In a deregulated environment, the rate of
interest is determined by the equilibrium point of demand and supply forces which are driven by
the market. Secondly, the LIBOR impacts interest rate heavily and a number of countries across
the world keep the LIBOR as a benchmark for setting the rate of interest level for own country.
CBO also keeps a close watch on the movement of LIBOR. The insight denotes that the bank
sets only the interest rate ceiling on personal loans, which gets changed from time to time
depending on the developments in the economy. In this context, the recommendation proposal
for Basel III regarding the capital requirement and maintenance is worth mentioning which aims
to ensure the adequacy of the capacity from the view point of systematic risk management. CBO
has introduced capital conservation and countercyclical capital buffers for all banks in line with
BIS requirements, which are briefly shown below.
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Figure 1: Capital as percent of Risk Weighted Assets in OMAN based Banks
(Cbo.gov.om, 2017)
The figure shows that the recommended capital buffer is a strategic move towards the stability in
terms of operating capacity which afterwards will help the banks tyo sustain the capex (capital
expenditure) and also the routine expenses.
Recommendation – The bank should consider building the reserve for future expansion and
growth of the entire banking system of the country. Such reserve will help CBO in assuring the
capital and money flow within the banking channels of the country.
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