Introducing Tqi and SPC to an Organization

Deutsche Allgemeinversicherung (DAV) Case Study

Deutche Allegemeinversicherung Case

Determine the primary advantages of DAV using Statistical Process Control (SPC).

DAV has already pinpointed some area in operations and customer service that need attention. However, there are likely to be many more areas of weakness -- and areas of strength that DAV is not currently leveraging (McNamara, 2014). Establishing a single, integrated statistical process control (SPC) system can enable the company to target effort at proactively improving the company instead of inefficiently focusing on the effects and not the causes (McNamara, 2014). Implementing an SPC system -- setting up metrics dashboards -- in DAV will bring all the primary challenges into focus, illuminate the relationships between the component processes and practices, and provide a map to creating a more efficient and profitable company (McNamara, 2014).

2.Describe the major challenges and limitations in applying SPC to a service industry as opposed to a manufacturing industry.

People generate much more variability than machines or automated processes using robots, for example. The company's customer service representatives, agents, and adjusters are all customer facing in their work (McNamara, 2014). Every contact with a customer has the potential to delight that customer, but it also has the potential to create a problem for the customer or leave the customer with a negative sentiment regarding DAV. The SPC system would need to be configured to address the high rate of variability that people contribute to the overall data set.

As with any organizational change effort, bringing stakeholders on board is critically important to a successful reception to the new quality improvement system (McNamara, 2014). A substantial challenge will be ensuring that management takes a highly visible role in the transition, championing the use of SPC as way to improve company profit and culture (McNamara, 2014). Importantly, the introduction of SPC must not be viewed as a threat to employees at any level; this will require a nuanced introduction and sufficiently monitored implementation of SPC throughout the company (McNamara, 2014).

3.Prioritize the problems facing Annette Kluck, as described in the Measurement Challenges section of the case, from the most to the least serious.

a. Describing the purpose and scope of the SPC project - The first challenge is to recognize that SPC is one component of a broader system known as Total Quality Management, and that both Six Sigma and SPC are approaches with their own set of tools that when combined, are the foundation to a powerful, effective improvement system ("Statistical Process Quality," 2014).

b. Determining what to measure -- At this juncture, it seems that Kluck is not yet certain about what she wants to include in the system. The literature is replete with examples of non-manufacturing companies that have applied quality management programs to their enterprises (Newman, 2014). As a point of reference, for instance, the Malcolm Baldridge National Quality Award is a method and a competitive program for improving quality assurance in healthcare, education, non-profits, and government -- all service organizations (Newman, 2014). With a bit of research (and possibly, the help of the consultant she hired), Kluck should be able to align the statistical processes and the quality improvement program to DAV (Newman, 2014).

c. Creating the dashboard -- Kluck and the DAV department heads must determine which processes are to be measured, identify and map the process flows, establish the metrics (the critical process parameters - the band limits) for each process, determine sample sizes, figure out the most efficient ways to collect data for those processes that cannot be automated, and generate procedures for correcting course and refinement ("Statistical Process Quality," 2014).

d. Align the new practices with personnel - Establish a system for overall monitoring, staff training and professional development, and employee performance measurement that is keyed to the active and successful participation in the quality improvement system ("Statistical Process Quality," 2014).

4.Determine why each of the problems you prioritized in the previous criterion is occurring and how it could be resolved.

a. Describing the purpose and scope of the SPC project -- DAV is looking for a way to differentiate the company, and their focus in on customer service. However, the company has not plumbed the depths SPC with respect to improving and strengthening their processes and systems. The focus could completely change course depending on the outcome of a pilot study ("Statistical Process Quality," 2014).

b. Determining what to measure -- The precision processes have been established according to the rules of SPC but rules about error correction have not yet been established ("Statistical Process Quality," 2014).

c. Creating the dashboard -- There are many unanswered questions about what elements will constitute the dashboard. Each of the basic elements of the measurement system is interconnected, and decisions about the metrics and parameters have not all been made ("Statistical Process Quality," 2014).