Table of Contents

Executive Summary.............................................................................................2

Process Elements.................................................................................................3

Issue Identification..............................................................................................3

Environmental and Root cause analysis......................................................................3

Suitability of SPC use in the service industy...............................................................................4

Advantages and Disadvantages of the SPC................................................................................4

SPC Measurement Issues faced at DAV and how to overcome tem................................................5

Recommendations...............................................................................................7

Next Phase...........................................................................................................................7

Conclusion........................................................................................................8

Annexure I .......................................................................................................9

1
Executive Summary

Deutsche Allgemeinversicherung (DAV), has majority of their business in Germany (51%) and of that
market 60% was in retail insurance dealing with disability income protection and health, property, and
life insurance.
Until recently, DAV has enjoyed a dominant position in the industry , but the emergence of smaller
insurance companies is now challenging the position of DAV. This development has increased the
competition for the market share in the insurance industry. There is a potential loss of market share and
revenue for DAV.

DAV launched pilot the Process measurement improvement (PVC) – Statistical process control (SPC)
program within the company, Taking the new policy set up process team as the target. Many other
departments showed interest in participating, but faced numerous issues, though the improvement gains
achieved after 12 weeks showed the project was successful, but the problem is how to sustain the
success in the long run, and how to make sure that the rest of the company understands that this is a
process worth investing time and effort, and that it has shown some positive results.

the pilot project has gone to too many departments, and the performance measurement process is not
customized to each department.

it is important to identify the processes of each department and customize the measurement yards sticks
to each departments according to the relevance, the volume and the importance of mesureing
performance of the selected process.

2
Process elements

The ‘Process Measurement and Improvement’, project introduced a manufacturing-style improvement

technique to the insurance industry. Inconsistencies in service quality require systematic monitoring to
see if they are random or regular, of a problem.
To find out what accuracy levels were like throughout DAV, we thought of taking New Policy Set-up as
a pilot measurement project. The plan was to take a sample of the work carried out by the associates,
and use that sample to obtain what the general accuracy rate was in the New Policy Set-up process.
To carry out the experiment, we decided to use SPC which had traditionally been used in the
manufacturing industry. P-charts are used to measure performance, where a person would measure five
components every few hours, and mark the sample average and range of the measurement on the chart.
At DAV, New Policy Set-up group, a sample of each other's work is recorded at the end of every day.

Issue Identification

The pilot process of the SPC was introduced to the company, within 2 months, some areas of concern
were highlighted, with the sample size, the degree of mistakes, measuring yard sticks for different
teams, automatic charts and increasing concern only performance numbers.

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Samplers of the New Policy Set-up group were group members themselves. One member from each
team was selected at random, on the same day that he/she would be recording the number of incorrect
entries made by his/her team

Its needed to have people use a tool which would become part of their everyday job, so that quality
management would also be part of that job,

People tend to protect people and teams from the senior managers who, would point figures at
individuals, when actual failure rates are identified.
Data was recorded on a daily basis and P-charts were created and displayed. Senior management was
known to survey the charts, and call attention to those departments who’s quality numbers were lowest.

Environmental and Root cause analysis

The first two months of each team's project had been devoted to charting data, so that the natural
variance of each of the processes could be estimated. This phrase also allowed people to practice
keeping SPC charts. The next phase would involve improving the process.
The management is concerned about the accuracy of data in the system, and management is keen to
check the accuracy of the results, and make sure that the results are maintained at a high level of
accuracy.

It is my interest to make sure that the operations deliver the expected levels of accuracy in the day to day
operations.

SPC is a good approach at DAV, since it will encourage the data entry operators to take extra care in
data entry, and also it makes the team to work more closely with a quality assurance mentality, together
in rectifying errors and maintaining the error free standards.

With the availability of state of the art software systems, including scanning machines and the right
people, the operation team is ready to face the challenges of SPC.

4
Suitability of SPC use in the service industry
SPC, is traditionally used in the manufacturing industry but this can be tailored to the service industry,
though this could prove to be challenging.

Comparing SPC application in the manufacturing industry, to that of the service industry is harder to
measure.

The service industry is mostly driven by humans , and cannot be avoided like in the manufacturing
industry. Thus it makes it difficult to determine how to measure, what to measure, what values are
acceptable and when a problem arises.

The P charts maintained can show the progress of a team, and they can be used as motivational tools to
make the process more effective. On the other hand it could have adverse effects on how the
management react to the performance of the P chart,

It is clear that proper planning implementation and measurement yardsticks are critical for success.

The Advantages and Disadvantages of the SPC

There were advantages and disadvantages to implementing PVM.

Advantages: It broke down employee’s everyday procedures into checklists, allowing them to actually
observe the complexity of some of the company's processes.

Employees themselves had to figure out what was important to measure, to measure it, and then figure
out if there was a better way of doing things.

Improved team work towards making an error free environment.

Drawbacks : . If employees feel that it’s just another ‘fad’, a waste of time, and another way of getting
more work out of them, the project will not reap actual results.

Employees feel insecure about the results, linking to the team and individual performance, and tend to
give incorrect results.

5
DAV encountered a number of issues in the deployment of the SPC program. If these factors are
tactfully handled, SPC can be made an effective tool for improving DAV productivity, consistency
service reliability, and customer satisfaction.

SPC Measurement Issues faced at DAV and how to overcome them

Issue 1 : Better teams do more sampling: Increased sample sizes were becoming a burden to those
groups that had a high accuracy rate
Keep the original SPC experiment limited to the New Policy Set-up group.
Its a good thing that 15 departments from mail sorting to legal were interested in the SPC program, but
its better to have the program concentrated on the New policy set up department, since that’s the
customer facing department and that is where the performance improvements are required critically.

15 departments and processes are too many to monitor in the pilot project, and there is a larger risk of
failure and creating a lack of interest for any future improvement ideas too. Once we launch the program
properly in the policy set up department, and once the areas of improvements are identified to suite the
nature of the business, as the second phase, we can implement SPC procedures in the other departments
gradually.
Streamline Sample sizes.
The sample size should be determined by the team and department, according to the nature of the
business task and the number/size of transactions handled by each department. Each department
participating in the SPC pilot improvement program should be considered individually. Sample sizes
need to be large enough to find at least three wrong items in each sample, otherwise there will be
nothing to plot. Assuming that the benchmark of 99% accuracy is correct, the sample sizes of 300 can
be kept as the minimum requirement for the New Policy Set Up department.

Issue 2 : Problems measuring quality and defining problems

Define parameters.
Determining when a mistake was not a mistake became tricky, as the parameters for right and wrong
were not clearly defined in the beginning. Considering all scenarios of ‘right or wrong’ answers,
mistakes should be those that affect the accuracy of important information. What is important and what

6
is not important should be decided prior to the measuring phase. For example, for the New Policy Set-up
group, phone number mistakes are not important, where as mis-entered addresses, are mistakes.

Issue 3 : Management- Sr. managers were reacting negatively to charted data. Employees were
becoming leery to the testing process, as they were concerned about remaining employed.
Enforce a no penalize rule

The management shouldn’t compare the results and penalize team / members based on the results.
Instead the management should look at the option of enough=raging the better teams with incentives, so
the poor performers will be encouraged and motivated to perform better.

Also the management should spend more time on training the staff about the concept, the outcomes what
the charts actually display, what is being measured, and the importance of the managerial roles and how
it should help the organization in the long run.

Issue 4 : Measuring lawyers- Measuring what was good and bad work in a legal department was
difficult to define, and the sampling and measurement process was causing frustrations.
Use a different measurement tool to determine accuracy.
Fisrt of all test the New Policy Set-up group in the pilot experiment. SPC tool of measurement should be
applied to groups that can define mistakes in their processes. Customer satisfaction surveys per lawyer
could be used as a measurement.

Issue 5 : Automatic charting: Manual charting was becoming a burden and some groups wanted their
results to be charted automatically.
Listen to employee concerns
once the pilot program is launched and completed “New policy set-up” team experiment completes, and
reach the control phase. When the method is ready to be applied to other groups, we should design a
way to generate automatic charts to make the process less extra work on the selected teams

7
Recommendations

Relate the importance of each departments role into the overall organizational objective of customer
service improvement.

It is important to make sure that all the departments involved understand that the goal is to improve
customer service. By doing so, people feel included and are given a sense of importance , and are more
likely to welcome the new program.

It is important to clearly define how each department activities are involved in the process under
investigation, and how it relates to customer relations of the company. an example of the process flow of
the new policy set up group and how it effect customer satisfaction is shown in the flow chart Annex 1

These process charts per department will result in a better understanding of the overall process as well as
displays the importance of the group’s role in achieving improvement in the company’s goal.

This will reduce the possibilities of employees manipulating the accuracy numbers. And the members
of the teams will know the importance of reporting the correct results.

Address employee concerns

It is important to involve the employees in a questions and answers session where employees including
the managers to raise their concerns address issues and get a better understanding about the concept.
And the negative approach to the concept will reduce over time.
Management Team
Have the management team well versed and geared about the concept. It is important to have the
management’s commitment and dedication in order implement a new concept and reap positive results.

Develop a process checklist for each group.

Managers and departments should to work together and develop a process checklist for each group. Each
group should make sure that the check list is covered at the end of each audit.

Next phase

8
The next phase for SPC is the full implementation of the concept starting from the New policy set up
team. There are few recommendations that i would suggestion include when we move to the next phase
of implementation.

With the following recommendations, the implementation within the company is going to be much
easier, and will have positive effects on achieving the expected customer satisfaction levels.

1. Select the process improvement team: (Annette Kluck, Consultants- Schoss and Kober, and
cross-level management team.)

2. Define the total process flow; highlight critical components that are required in a New Policy
Setup.

3. Identify critical process measures, eg what is considered a mistake (phone number or address)

4. Determine a sample size for each department based on the volume, type of work and the
importance (300)

5. Select a measurement period. (2-3months?)

6. Develop a sampling process plan, to ensure consistent, accurate sampling

7. Create a monitoring system, eg: automated charting system that, that all associates can use and
understand.

8. Continuously monitor and identify improvements for the process.

Once the necessary improvements are our team will be able to use the information recovered from the
improved pilot to identify factors affecting data entry, and develop ways to improve the performance of
the processes.

Once its successfully implemented within the New policy set up team we can extend it to the rest of the
organization as well. and extending out to the rest of the company

9
Conclusion

DAV had concerns on customer satisfaction, and loosing market share with increasing competition, the
operations team introduced the new performance monitoring system called SPC that’s been used in the
manufacturing industry. The pilot program proved successful though it had many concerns with many
departments getting involved in the pilot process. There were couple of concerns from the employees
and few concerns of various other measurement yard sticks.

With these issues identified addressed in the second phase, it is possible to prove that the SPC system
fits in well with the insurance industry and has made a positive impact on the core competencies of
customer satisfaction at DAV

Annexure 1

Process flow and customer feedback on new policy set up team

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