To: Bill Pippin
From: ABC Consultants
Date: Feb 12, 2009
Re: Manzana Analysis.
ABC Consultants is pleased to present an analysis of the current state of operations at Manzana and the relevant recommendations to improve the operational performance.
We understand that there are four types of work processes viz. RUN, RAP, RAIN and RERUNs. In these four types of processes, RUN is the most profitable one generating annualized premiums of $6724. Also, RUN's and RAP's are given priority over RAINs and RERUNS, since renewals are given a low priority. However, a closer look at the numbers reveals that RERUNS are actually more profitable for every minute of time invested - for e.g. RERUNS generated an average annual premium of $6205 and took only 172.3 minutes to complete whereas RUN generated an annual premium of $ 6724 while taking 259 minutes! RERUNS may be treated as a second priority compared to RUN and RAPs, but in that case, more time should be given for the RERUNS to ensure that the renewal is completed in the stipulated time so as to eliminate policy renewal losses. In the first six months of 1991, Manzana lost 926 policy renewals (~ $5.7 million in revenue)! In general with current system the processing time could be as high as 6.5 days. This can be a prime reason for loosing repeat business (132% RERUNS are lost in first 2Qs of FY 91 over first 2Qs of FY 89). Another reason for loosing RERUN business is incentive program of awarding $150 for RUNS that makes managers to prioritize RUNS always high. Geographical rearrangement in 1990 also contributed to sudden increase in loss of RERUNS by 82%.
Further investigation in the Turn around time (TAT) quoting process reveals that the TATs are quoted based on 95% standard completion time (SCT). This is an extremely conservative time estimate which has a very little relation to the actual completion times. In some cases the 95% SCT are about 3 times that of the mean SCT. Since we treat the process...