Dav Case

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Executive Summary
Deutshe Allgemeinversicherung (DAV) is one of the world leading firms in the insurance industry and was founded in 1966. Approximately half of DAV’s business is in Germany, where it mostly offers retail insurance such as health and property insurance as well as life insurance and disability insurance. In 1996, the company wrote nearly DM 48 billion in premiums in over 32 countries. With the presence of giants such as Allianz, Credit Lyonnais, and Aenta, DAV was able to position itself as the second largest firm in its core market namely; Germany. This high level of success can be attributed to the following factors: * Sound, traditional insurance management

* Wide range of insurance management offerings
* Excellent group of insurance risk managers
* Outstanding customer service

An important part of delivering such outstanding customer service relied on the ability to process information and data without making mistakes and the ability to retrieve it in a timely manner. In reality, this was not such an easy task because DAV ran diversified operations in numerous divisions in various countries making it quite a challenge for the DAVKG. The issues facing DAVKG were the result of the following factors: * High- volume production environment

* Corporate mandate for “ same-day” processing
* Problem of hand-written forms
* Not- in- good order forms had to be reworked requiring 20 extra minutes processing * Mistakes done by associates in the confirmation notice leading to customer dissatisfaction and over an hour spent rectifying the problem * Double-Key entry and sight verification proved to be expensive as it included extra internal quality failure costs and deterioration in quality was witnessed

DAV has always enjoyed a dominant position in the market but a shift in the industries dynamics has been seen to rise as a result of the emerging of smaller competitors capable of challenging DAV’s market position. This maturing of the industry presented a set of challenges and demanded a focused strategic response from DAV in an attempt to differentiate the company’s products in the market and to maintain their competitive advantage.

This situation mandated an adoption of a new quality improvement initiative PMV so that the company maintains its prominent position due to competition and increasing customer demands. DAV management believed that customer service was a critical factor in DAV’s strategy to maintain current customers and attract new ones. Furthermore, the one factor in customer service that needed to improve was the ability to process information and data without mistakes and the ability to retrieve it in a timely manner. The company decided to adopt Statistical Process Control (SPC) to measure their process and improve their quality.

Analysis of Current Process

In order to achieve their goals DAV set out to improve on the quality of its service by reducing variability in its process. SPC is being used to measure and analyze the variation in the process. Moreover, SPC holds the idea that quality is at the source and that it is extremely expensive to inspect quality into a company’s output. Thus, it is much more efficient and cheaper to produce item right in the first place rather than to inspect quality within. Traditionally, SPC is used in manufacturing for quality control but it can be altered to all sort of repetitive activity in any industry. SPC uses the six sigma methodology known as total quality management (TQM). The goal of SPC is to make the process sustainable and to alert management if there are excessive variations and to monitor consistency. For DAV it is used to track the proportion of application inputted correctly and incorrectly in each sample in order to measure, analyze and improve the quality of customer service. DAV is implementing SPC since the degree of inefficiency in the data entry process is the reason for several...
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