Manzana Insurance: Fruitvale Branch

The State Farm Insurance Company operates using a mutual company conducting business throughout the US and Canada. The company business lines include property, casualty, and life insurance companies. Since State Farm is a mutual company, it is collectively owned by State Farm policyholders, and not by shareholders. An analysis of State Farm’s business process can prove to be advantageous to the company’s bottom line. A business process analysis can help State Farm improve how it conducts its day-to-day functions and activities in

IV. Business Model and Strategic Plan Part III: Assumptions, Risk and Change Management Plan; Summary of Strategic Objectives; Balanced Score Card and its impact on stakeholders; the Communication Plan…………………..…………..15

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.

Besides the product and geographical focus, Progressive also emphasizes on strengthening the relationship with the over 14,000 agents to distribute its products and services. By discipline pricing, Progressive demands adequate rates to achieve underwriting profitability and is willing to forego volume if necessary to achieve profit objectives. It is committed to set individual rates more accurately than the competitors. In addition, they will promptly respond to claims reported by local claim adjusters, which deliver effective control of the claim resolution process.

Another weakness is seen on the limited space for expansion that is in the infrastructure. The current infrastructure can only accommodate 30 employees and even if there is the plan of growth by 20%, the space might not be adequate as growth normally necessitates a lot of space (Gupta & Jayaraman, 2010). This is because, there might be a need for a few offices and the current architecture might not be enough for the expansion and thus could delay the expansion.

Based on this, we then decided to look at the utilization and queue figures on, leading up to, and after day 31 at each station, so we could attempt to identify any potential bottlenecks. The first thing that jumped out at us

3. How does demand variability impact capacity issues at LAA? What can the company do to control variability in demand?

the workload within the current services” – this points out that there is a shortage of internal resources to

Managing demand and capacity: MGH could forecast the demand and research the bottlenecks in each area of process flow diagram (Exhibit 8) such as surgery room, Ellison 8 rooms, SICU floor bed, and other hospital beds. Based on the research, they can increase or decrease the resources such as staff or beds or even expand the facility. They need the data to forecast and manage the capacity. Without the data, it is impossible to manage the capacity. So MGH need to start collecting data to better manage the demand and available capacity. However, this would not help solve the current immediate problem in hand to improve the process and reduce costs.

Hence, the bottleneck is due to high variability in order arrival rate and order processing time. Hence, we need to analyse the quarterly utilization level.

Gibson Company is an insurance company that mainly sells annuities and life insurance. Gibson possesses two subsidiary companies, Midwest and Compton, which also sell the same products but with different prices and features. Both subsidiaries rely on Gibson provides administrative supports for maintaining. Gibson used to use an objective measure to calculate each policy as the support costs allocation basis. The original method did not reflect the real cost by support activities. Moreover, when the sales volume had increased, the profitability declined. The managers are considered the prices are set improper or costs are out of control. Management is looking for a better solution for solving pricing

Capacity analysis based on Mean Time (Exhibit 2) shows the bottleneck for RUNs is the Distribution step, for RAPs is underwriting, for RAINs is again Distribution and for RERUNs is policy writing. The same capacity analysis when done using 95% SCT (Exhibit 3) shows Underwriting step to be bottleneck for all the 4 types of policy requests.

The current average utilization rate of the call centre is 30.48% (see appendix XXX). The average arrival rate, rate at which the patients call, is lower than the average service rate, rate at which the patients are serviced. However, both the arrival time and the service time contain moderate variability (see appendix XXX), negatively impacting the flow time during peak hours. There are two arrival rate variability issues: variability amongst the different days the calls are received and variability amongst the hours the calls are received. The problem is bigger than Laura anticipated. As per the ‘Appendix 5’ of the case, the average daily abandoned calls are 338 and not 35. This does not include the patients receiving a busy signal, therefore becoming lost throughputs. Thus given the low utilization rate it is clear that the problem the call centre faces is in managing variability and not capacity.

It is a common desire to have a balanced plant, but this cannot be reached if there are problems with the levels of capacity in the plant. If there is not enough capacity in the plant, it almost seems as if the possibility of having throughput is being lost and if there is an excessive amount of capacity there is money that is being wasted, which would be a problem when trying to reduce the operating expenses. However, in reality the closer that a plant comes to being balanced, the closer they get to losing money. “ Look at this obsession with trimming capacity in terms of the goal,

IT plays a role in servicing a large number of clients and reduce processing cost. At the same time IT can help in churning out statistics and information necessary to analyse the performance of current and potential business. As such, Sun Life need to look into the aspect of insurance systems and IT infrastructure in Malaysia.