Deutsche Allgegeinversicherung Case Study

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PROS

- Greater customer satisfaction

- This will lead to gain in productivity

- It will support an ease to efficient data entry and information retrieving across all departments in DAV

- The continuous Quality improvement in customer service focuses on improving business processes as a means to improve a company rather than blaming staffs for sources of inefficiency.

- Improve profitability

- Increase market share

Cons

- Resistance to change from employees may frustrate any positive promises that this system could have brought to DAV

- Lack or non-commitment on the part of the upper management may deter any possible improvement it promised to bring.

- Cost of set up, implementation and training may unsettle DAV if processes are not well planned

RECOMMENDATION

In the past, DAV has enjoyed a dominant position in the industry but a shift in the industry dynamics has DAV in a position that smaller insurance companies are capable of challenging the position of DAV. This development has increased the competition for the market share in the insurance industry. An improvement on these processes has the potential of making DAV the largest and most efficient insurance company in Germany . In an industry where the product is becoming more of a commodity, the company can differentiate itself by improving on one or more of these processes.

Industry benchmarking firms have placed DAV’s first-pass accuracy numbers at 99%, though DAV's management questioned the integrity of their performance data. Kolb thought that it was actually more like 90% for New Policy Setup.

The following recommendations were proposed;

- DAV needed to get accuracy in their data before proceeding with their improvement strategies. The management team decision to use the strategies of SPC to measure and ultimately improve its process performance, would give the associates the tools necessary to improve upon the quality process themselves.

I and Kolb have decided to monitor the New Policy Setup as a pilot measure project of PVM.

- The use of Statistical Process Control (SPC), also known as statistical quality control (SQC), SPC is a tool of the Six-Sigma Improvement Methodology, also known as Total Quality Management (TQM). Though originally developed for quality control in manufacturing, it is applicable to all sorts of repetitive activities in any kind of organization. SPC is a method for achieving and maintaining quality control. It is a set of methods using statistical tools such as mean, variance, and others to detect whether the process observed is in accordance to standards. In the case of Deutsche Allgemeinversicherung, SPC will track the proportion of applications inputted correctly and incorrectly in each sample in order to measure, analyze and improve the quality of customer service.

- The Six-Sigma Improvement methodology insists that there are five phases in quality improvement, and that if completed sequentially, it is likely the firm in question will be successful in improving the quality of a particular process.

Quality control involves 5 phases: (1) Defining the problem and goals for process improvement, and the project scope (2) identifying key process performance metrics, and collecting process and customer data, (3) analyzing and identifying cause and effect relationships of the process, (4) developing solutions to reduce the desired improvement gap, and (5) monitoring the process to control improved performance.

To improve the quality and accuracy of DAV data entry numbers, PVM should be launched. There were advantages and disadvantages to implementing PVM. Advantages of PVM included the fact that it called for employees to breakdown their everyday procedures into checklists, allowing them to actually observe the complexity of some of the company's processes.

- Employees themselves have to figure out what was important to measure, to measure it, and then figure out if there was a better way of doing things.. Drawbacks of PVM included the fact that management commitment was invaluable for implementation, as uncommitted, disinterested management might directly affect the desire of the employees to commit to the project. And employee commitment was crucial.

The DAV PVM core management team are made up of my Erwin Weippert, Hans-Jorg Schoss, Kerstin Kober (consultants) and myself, who would use over eight weeks to develop the New Policy Setup process as a case study for training.

Organizational consultant Kerstin Kober would be hired to help with training and any HR issues that might arise. She would be very eager and excited to see the lessons that would be learned from SPC be applied to other departments of DAV.

The ‘Human Factor’, inescapable in the service industry, makes is difficult to determine how to measure, what to measure, what values are acceptable and when a problem actually is a problem. There is significant chance of motivational use of data and there are many sources of variation in this industry, which could possibly lead to dysfunctional measurement and the misuse of SPC. Methods should be developed for measuring the quality of a number of process steps at DAV, such as the process for transcribing information from a customer application form into the computer. According to SPC practice in manufacturing, this type of data requires a different sort of control chart, called a p-chart. It is clear that proper planning and implementation was critical for success.

Other Suggestions for improvements to my methodology would be;

- To let each department know their role in the big picture. It is important to relay the reasons behind the new procedure and well as the importance of each department in reaching DAV’s overall goal of improved customer service. By doing so, people feel included and are given a sense of importance or worth, and are more likely to welcome the new program. There is need to also address employees concerns by scheduling a meeting with my team and employees in question may find find the right answers to their questions and concerns.

- The need to involve the management team by introducing a six sigma black Expert as they are especially dedicated to quality improvement projects.