Capacity planning• The key to efficiency and fast customer service in the service industry is

the correct and dynamic matching of demand and capacity.• Seasonality in demand issues.• Difficult during the early stages of establishment• Depends on General Service Capacity Strategy• Provide: sufficient capacity at all times• Match: change capacity as needed• Influence: change demand pattern• Control: maximize capacity utilization

• Very less possibilities of balancing the demand especially in banking.

Transaction types and effectsFactory like transactions • Standardized• Check encashment, withdrawals, and check deposits• Constitute the bulk of transactions• Fairly predictable in terms of duration or cycle time, and occurrence• Seasonality or peak-and-low periods during the day, week, and month can also

easily be discerned from a careful study of past data• Easy to match demand with the capacity

Personalized transactions• Opening accounts, loan application, or marketing a new service• Difficult to match demand and supply in this type of transactions

Elements of capacity planningNumber of employees required

• Frontline employees• Back end employees

Space required• Customer space• Operational space

Size of the branch• Frontline space• Back end space

Security requirements

Storage space requirements

Requirements of value added service based on the status of the bank or type of customers.

Long term planning• Very critical• No plan or a wrong plan is planning for failure or bad service which

leads to customer attrition• High fixed costs• Under demand will leave un utilized resources and over demand will

cause high customer attrition• Resource allocation usually done by taking the total value of the

business• leads to over capacity or under capacity and long queues.

Number of transaction

s

Transaction hours Head count

Method for capacity planning in banking• Calculating the manpower requirement

• The increasing power of computer technology at the disposal of banks, getting an accurate count of transactions are getting simpler.

Challenges• Seasonality of demand within a day, week or month.• Capacity planning is difficult for multiple stage transactions.• Identify the bottleneck activity and plan

• Front-line and backroom capacities have to be adjusted to meet the demand• Last step in planning• fine tuning for unplanned activities that decrease capacity• machine downtime, and errors and rework• Machine or computer breakdown can slow down other efficient processes• Provide capacity allowance like 5% or so for unplanned activities.