MONDAY, JANUARY 22, 2018
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Implementation Case Studies Sustaining Breakthrough Improvements in Insurance FirmAn iSixSigma Case Study

Sustaining Breakthrough Improvements in Insurance FirmAn iSixSigma Case Study

A young, rapidly expanding insurance company in India, which was looking for breakthrough improvements in its customer service, decided its No. 1 critical-to-quality objective would be “reducing the turnaround time from an insurance proposal to policy.” Phase 1 of the project achieved dramatic success with turnarounds, reducing time in the central processing division by 80 percent and 60 percent overall. Data-based pointers indicated overall time could be reduced by 60 percent again – a total reduction in time of nearly 85 percent.

The operations team was involved in the entire project, suggesting, testing and implementing each change. Control charts were in place for routine performance tracking and maintenance before handover. Senior management had applauded the success of this quality story and asked for the quality initiative to be expanded.

Just four months later, however, the performance had deteriorated. The central processing division’s average +3 sigma performance of turnaround had increased threefold, from four days to 12 days. The company not only wanted to restore the gains previously made, but more importantly wanted to assure that those gains could be maintained.

Defining the Problem

Problem = customer desire – current status for central processing division turnaround from receipt at central processing of insurance proposal to dispatch of policy.

The best turnaround achieved for CPC was average + 3 sigma, less than 4.5 days. Current status was average + 3 sigma, less than 11 days. The initial problem was to find a way to reduce average + 3 sigma of turnaround time (TAT) by 6.5 days.

But was that the real problem? Decreasing the turnaround had been achieved once, and without doubt could be achieved again. The vital problem was to stop any deterioration of turnaround time (TAT).

Few teams realize the importance and the demands of maintaining the improvement after their first project. The change agent must be sensitive to this and step in to reestablish process performance and more importantly,the process of maintaining the improvement. Maintenance is a lot easier at this point because the team knows and accepts the techniques of improvement and the focus can be on the techniques of maintenance.

Selecting the Metrics

Two metrics were suggested:

  1. Improvement: Average + 3 sigma TAT < 4.5 days
  2. Maintenance: Average + 3 sigma TAT = 3.5 days (This metric derives from the quality dictum: “If you do not improve, you deteriorate,” and was agreed by operating team to be 20 percent further improvement on the best performance achieved during project.)

Experience shows that this is a powerful metric for ensuring that project gains are maintained. It demonstrates that the doers are committed to using a structured approach on a day-to-day basis for continuous improvement. Thus, the project was begun with this objective.

Analyzing the Problem: Why, Why, Why, Why, Why?

The root causes of a high turnaround time were known from Phase 1 of the project.

Why? Waiting time.
Why? Gradual breakdown of flow processes.
Why? 1) 250 percent volume increase in current state compared to the flow line designed; 2) Unsystematic new product introductions snarling regular operations; 3) Re-emergence of a reactive rather than proactive mindset at line level.
Why? Non-adherence to the performance maintenance process.
Why? Lack of experience (realization) regarding rigor in the implementation of the maintenance process.

Reestablishing the Improved TAT

The project team went through the standard Lean/just-in-time process:

  1. Current-state value stream map: Average + 3 sigma = 11 days.
  2. Run smallest unit – one proposal – without waiting: 33 minutes.
  3. Run a limited flow trial to regain confidence of operating team.
  4. Design optional flow lines for three throughputs (see table below).
Takt Time Options: 8, 10, 20 Per Hour
Output

Option 1

Option 2

Option 3

Minutes/Policy

7.5

 

6

3

Policies/Hour

8

 

10

20

Turnaround Time    
1 Policy

Persons

Takt

Persons

Takt

Persons

Takt

15

2

7.5

3

5

5

3

3

1

3

1

3

1

3

5

1

5

1

5

2

2.5

6

1

6

1

6

2

3

3

1

7

1

4

2

2

1

1

3

1

1

  

1

1

1

1

 

1

1

2

   

6

2

3

4

      

40

8

32.5

9

30

15

17.5

Man-Minutes/Policy 

60

 

54

 

45

Utilization 

67

 

74

 

89

 

It is apparent from the table that productivity increases by 25 percent as takt time decreases and the line flow increases. During the first fortnight of operation TAT average + 3 sigma = 4.78

Maintaining the Performance

The process of maintaining performance was now taken up. The team was reminded of the one simple principle underpinning this process, “If you do not improve, you deteriorate!” The following process for maintaining standards was repeated:

  1. Daily control chart is plotted by operating team.
  2. Small line team led by line leader does daily reviews at scheduled time.
  3. Any spike is analyzed for root cause-countermeasure-implement-check cycle until resolved.
  4. If no spike, policy with longest TAT of previous day is discussed for improvement.
  5. Line leader’s boss reviews this process once every fortnight.
  6. Senior management reviews process once a month.

In addition, regular checks are made to see that:

  • Line meetings are being held regularly.
  • Problem solving is effective, and help is provided if necessary.
  • Technical inputs are not lacking, and help is provided if necessary.
  • Support from other departments is available if required.
  • Customer feedback and parameter trends are monitored.

This process was implemented and reviewed in fortnightly project meetings for two months to ensure its effectiveness and rigorous implementation before the line was transferred to routine control.

Checking the Results

Almost one year later the average + 3 sigma was reduced to 3.2 days as reflected in the adjacent figure.

Sustaining Performance A+3s Turnaround Time

Sustaining Performance A+3s Turnaround Time

The downward sloping trend clearly shows the daily rigor paying off. It is not that deterioration never happens. Rather, deteriorations are arrested before they add up into a major deterioration requiring a major effort to restore the performance. The intangible gains of the process are a line team that becomes self-managing and takes ownership of and pride in its improvement.
Standardizing Control

Standard operating procedures were made for management reviews at three levels:

  • Line level – daily
  • Department level – fortnightly
  • Director level – monthly

Review report formats and the content of reviews were specified. Performance parameters were gradually introduced into the performance objectives and appraisal of each member of the team by the organization with a specific weight assigned for the critical-to-customer elements.

The process of continuous improvement was totally integrated into the normal working of the department.

Conclusion: Sustaining Versus Breakthrough

A quality improvement report emphasizing the change effort was prepared by the project team and presented to senior management. While experienced change agents using the Lean Six Sigma/TQM methodologies can in most cases achieve breakthrough improvements in three to six months, perpetuating the performance often needs the inculcation of a quality mindset. That mindset must include all those involved, from the board to the line employee. This experience is often a more challenging and time-consuming task than achieving the breakthrough improvement itself. It is senior management’s role to cultivate a company culture in which every employee works toward small improvements everyday until that attitude becomes a way of life.

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