Manzana Fruitvale Case

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The main problem of Manzana Fruitvale is a significant loss in profits. It originates in operating performance failures characterized by a total throughput time of 8.2 days. This situation can be improved through structural changes in the underwriting process, reorganization of the incentive structure and redefinition of priorities concerning renewal policies. The total turnaround time (TAT) then decreases to 0.7 days.
Manzana Insurance is a leading player in the Californian commercial insurance space. The Fruitvale Branch is positioned in property insurance only. In the 1970s Golden Gate Casualty enters the market putting Manzana with fierce price competition and intensive marketing activities under pressure. The …show more content…

The backlog is caused by assuming an out-dated Standard Completion Time (SCT) which does not take technological advances into account.
In structural terms, we can analyze the organizational supply chain by performing an MMc Queue calculation, based on the figures from the last 120 working days, a 7,5h working day and weighted averages of operating times. This data yields the service rate which is combined with an arrival rate of 39 to calculate the throughput time. One has to consider that the arrival rate in the PW step is lower than in the other processes because only 15% of RAPs are converted into RUNs and reach this step. The cumulated throughput times yield our TAT, which in this case, falls into a range of 0.794 – 1.394 days. Hence, the underwriting process itself seems to be efficient and the difference has to have its main roots in qualitative and organizational defects. However, structural improvement is possible. The three geographically split UTs can be merged into a single unit, making up for different workloads which result in backlogs. Throughput times of the UTs can be decreased by up to 82,5%.
On the qualitative side we could identify three key performance drivers. Firstly, the prioritization within the FIFO process does not seem to reflect the fair value of requests. Clearly RUNs contribute the highest value per request (6.724 $) followed by RERUNs (6.205 $) and RAINs (645 $). In

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