Questions:
1) How is the Fruitvale Branch doing?
Background
The Fruitvale branch has become Manzanas worst performing branch, and Manzana is
being severely outperformed by a competitor, Golden Gate Casualty, in Fruitvales territory.
The turnaround time (TAT) for processing a request has grown to exceed five days at a
time when Golden Gate began guaranteeing one day TAT. This important measure of
service could be a large factor in Fruitvales loss of business. Improving the system should
result in operational efficiencies, improved service, and hopefully an increase in business.
2) How are the causes of these problem?
Current Organizational Problems and Goals for the New System
The organizational problems and goals were derived from a study of the facts provided in
the case and supported by an organizational and financial analysis submitted during stage
1. They are presented here in rank order.
Problem 1: Average turnaround time (TAT) is too lengthy.
Turnaround time is an important indicator of service quality used by originating agents to
help customers choose an insurance company. Fruitvales average TAT for processing a
request had grown to six days when Golden Gate began guaranteeing one day TAT. In
addition, Manzana is already processing at a rate faster than the 95% Standard Completion
Time (SCT) being used to calculate TAT (Exhibit 4). This causes Manzana to overstate
TAT and hurt their chances to win business.
Goal: Modify system to decrease turnaround time.
The new system will automate and streamline certain tasks and track the processing status
of requests. These changes should create efficiencies that will lead to shortened turnaround
time. In addition, TAT calculations will be periodically reviewed and revised to ensure that
new processing efficiencies are accurately reflected.
Problem 2: Large number of late renewals.
RERUNs are currently held until the last day before their due date. Agents expect a
renewed contract offer before the expiration of the old policy. Late renewals result in a
large renewal loss rate, representing a significant loss of business.
Goal: Modify system to decrease the number of late renewals.
The new system will deliver RERUNs to the originating agents with sufficient time before
expiration. The prioritization of processing requests will be controlled by the system using
a modified FIFO approach. Processing will be monitored so that alerts are generated when
processing falls behind schedule.
Problem 3: Large backlog of policies.
An inconsistent priority system among departments causes downstream problems. For
example, the Rating Department is unable to address its backlog because of consistently
late RERUNs from the Underwriting Department.
Goal: Modify system to decrease backlog of policies.
