DAV Study Case

Deutsche Allgemeinversicherung case study

Assignment 4: Deutsche Allgemeinversicherung case study Chancellor University

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Deutsche Allgemeinversicherung case study

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Abstract Deutsche Allgemeinversicherung, the second largest insurance firm in Germany, had decided to adopt a new quality improvement initiative: PMV in order to maintain its prominent position due to the looming competition and increasingly customer demands. Kluck, the architect behind Prozessmessung and Verbesserung, was head of Operation Development at Deutsche Allgemeinversicherung (DAV). The PMV project was a revolutionary effort to use manufacturing style improvement techniques in insurance services; it will differentiate DAV in the industry and hopefully, maintain its prominent position. Kluck, however, was facing a number of difficult problems with the improvement phase of the project.

Deutsche Allgemeinversicherung case study

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Statistical Process Control is an effective method of monitoring a process through the use of control charts. It would involve using Statistical techniques to measure and analyze the variation in processes. It can detect the presence of special causes of variation. To make a chart, you first have to study the process and find out how what sort of results to expect. Plotting ongoing results of the process on the chart can alert you to changes that could signal problems. One of DAV challenge was that they did not know the actual accuracy rate of the process. Kluck was more interested in improving the accuracy number than knowing exactly what it is. Second, Kluck needed to have people use a tool which would become part of their everyday job, so that quality management would be a part of that job. And last, is to record honest numbers. Insurance was becoming more ubiquitous and customers were having a hard time differentiating one firm from another. Of all their core capabilities, DAV’s customer service was seen as the best way of standing out of the insurance crowd. DAV management believed that customer service was a critical element in DAV strategy to maintain current customers and attract new ones. One element of customer service that needed to improve at DAV was the ability to process information and data without mistakes, and the ability to retrieve it in a timely manner. The Prozessmessung and Verbesserung (PMV), meaning “Process Measurement and Improvement”, project was launched and divided into two phases – Measurement and Improvement. Kluck, head of Operation Development, spearheaded this process improvement project by implementing manufacturing style improvement techniques to the insurance industry. Inconsistencies in service quality require systematic monitoring to see if they are random, regular or, indicative of a problem.

Data for services are concerned with two things: defects (mistakes, errors, omission, etc.) and turnaround times. So for most defect-related application you would need a date, the number of defects,

Deutsche Allgemeinversicherung case study

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the sample size (total number of opportunities for a defect), and the percentage of nonconforming units. It would be beneficial for DAV to hire a Six Sigma professional who is an expert in projects that involve quality enhancement. The six sigma model focuses on customer needs and process arrangement. 1, Define: To decrease input errors that cause customer to be unhappy, while continuing with the fast pace workload. 2. Measure: To measure the number of errors as they have a direct influence on customer frustration. It is important to see what point these errors are acceptable or not.\ 3. Analyze: Find out what causes employee to input errors and rectify it. It is important to identify the specific variable (such as working long hours or working late). 4. Improve: Here the staff can be asked what they think can be improved as many factors are usually involved. 5. Control: This can be done through the p-chart. Over time, the p-chart might give clues to where the process is heading, and whether it is predictable or not. The p-chart (using date from exhibit 4 on page twelve) Total people in sample: 30x300=9000, total errors: 516 Mean=9000-516/9000=0.94266 This means the average correct number of application was 94.3% the p-chart is a measure of quality and should be used on an on-going process. It is crucial to measure the lower and upper limits. If the measurements exceed the lower or upper limits there is a problem that should be rectified. Irregular fluctuations on the chart can give the company insight on opportunities to capitalize on, factors it should deal with, or threats that it should terminate. The SPC would not be appropriate if you are already at 99% accuracies, and there are not enough samples with wrong items in each sample.

Deutsche Allgemeinversicherung case study

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SPC is a form of supervisory control. It is not about telling machines what to do and making sure they do it, but about checking that the output is as expected, detecting deviations and triggering human intervention before these anomalies have a chance to damage products. The presence of increased data also increases the need for proper use of SPC to ensure correct sampling, and to ensure that you react properly to the data ( not over-reacting to events when they are not statistically significant) which leads to process tampering. The mission of the DAV firm had attributed to success to two key factors: sound, traditional insurance management; and outstanding customer serve. SPC feedback could indicate uncontrolled weaknesses in the designed processes that hadn’t been accounted for. There would a question such as: Where do things need improvement? If it is not incorporated properly; then a collaborative team would be needed to use SPC objectively to look and listen to processes, examine execution and to study or validate market/customer responses. Then you can check with meaningful and timely data. Can we be more effective by operating differently? Is the manifestation of our passion in this specific business idea or model economically do-able? Another question would be address. Does the excellence level of our execution match the quality requirements of our customers? If not, then something has to change.

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References Constructing and Using Process Control Charts (2007) Harvard Business School, 9 (686-1180 Upton, D. (1997) Deutsche Allgemeinversicherung. Harvard Business School, 9 (696-084). Deutsche Exec Summary (wikispace.com/Deutsche+Exec+Summrary)