20 Mar

Six Sigma In The Insurance Industry

Posted by admin, under Management Systems

6 Sigma concepts and philosophies were originally developed for improving the overall quality of business processes in the manufacturing sector. Companies like Motorola and GE were among the first few that successfully introduced Six Sigma concepts in their business processes. However, with the development of newer tools and techniques, 6 Sigma is now deemed appropriate for the services sector as well. The usability of Six Sigma in the services sector is easily evident from the increasing number of finance and insurance companies that are opting for 6 Sigma.

Consumers are increasingly becoming aware of the quality of services being offered to them, making it essential for the services industry to implement quality improvement techniques like Six Sigma for conforming to customer expectations. This is especially true for the insurance industry where the relationship between the insurer and the insured is still largely governed by sustained personal contact. By implementing 6 Sigma programs, insurance companies have been able to offer quality services at affordable rates to their customers.

Identifies Key Business Processes

Unlike other quality management practices such as Total Quality Management (TQM) whose effectiveness is difficult to measure, Six Sigma based improvement programs make use of statistical tools, which can measure the effect of changes being made in a very short time. 6 Sigma focuses on process orientation, enabling organizations to identify key business processes that are necessary for improving customer satisfaction. This helps managers in understanding the exact requirements of their customers and in altering business processes to suit customer needs and expectation.

Follows A Disciplined Approach

Six Sigma has helped insurance companies in improving quality as well as reducing costs of services offered. It has enabled insurance companies to follow a disciplined approach, which has helped in preventing errors, minimizing hand-offs, and eliminating rework and workarounds. It has also helped in increasing the speed of business processes used in the insurance industry.

Helps In Making Informed Decisions

6 Sigma has enabled managers in taking informed decisions based on statistical data. With the use of Six Sigma tools and techniques, managers no longer have to rely on their perceptions or gut feelings for rendering the level of services promised to policyholders, clients, and prospects.

Helps In Building Customer Loyalty

6 Sigma emphasizes on understanding the needs of the customers before making any changes to business processes. This helps insurance companies in building customer loyalty among their policyholders, which is necessary for the long-term success of any business organization. Insurance companies can also hope to increase their market share, as satisfied customers are most likely to recommend a company that offers quality services while advising a friend, relative or business associate.
Helps In Reducing Costs

Six Sigma tools and techniques aim at streamlining business processes in such a way that helps in reducing costs. This helps insurance companies to improve their savings and avoid drastic cost-saving measures such as downsizing, which can have a negative effect on employee morale. It can also create doubts in the mind of policyholders and prospects as downsizing usually attracts a lot of negative publicity.

6 Sigma has helped the insurance industry in bridging the gap between planned strategies and actual operations by providing analytical and in-process performance measurement tools. These tools are used for comparing planned goals and objectives with actual outcomes and for finding the reasons as to why a particular business process is not giving the desired results. Once the exact problem has been pinpointed, managers can make the necessary changes that will help in improving overall quality of services rendered to policyholders and prospects.

Tony Jacowski is a quality analyst for The MBA Journal. Aveta Solution’s Six Sigma Online offers online six sigma training and certification classes for lean six sigma, black belts, green belts, and yellow belts.


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08 Mar

Deploying a Kaizen Project in the Service Industry

Posted by admin, under Management Systems

In nearly every organization, there are opportunities for business process-related improvements. In many cases, the problems that plague companies are simple. The factors that influence the efficiency of a given process are few. In these type of situations, a full Six Sigma deployment may be unnecessary for designing a solution. These are circumstances in which Kaizen can offer tremendous value.

The methodology’s focus is dedicated to generating continual improvement. If an activity is constantly improved upon, inefficiencies will eventually disappear. The concept is simple and can be applied to any activity in any environment.

Even though it originally gained popularity within the manufacturing sector (similar to Six Sigma), Kaizen can also be applied to the service industry. In fact, it is perfectly suited for it. This article will discuss the reasons the methodology works well in a service environment. You’ll note that there are strong undercurrents that are very similar to Six Sigma.

Reduces Customer Irritation

In a manufacturing environment, variances are costly. They can bring production flows to a grinding halt. This is the reason Six Sigma is used by many large manufacturers; once process-related inefficiencies are eliminated, production proceeds with few changes.

In a service environment, variance is natural and often the result of customer irritations. For example, consider a restaurant. The kitchen must prepare dishes efficiently or they risk falling behind. If a customer becomes dissatisfied with the wait time, he may complain. His complaint may need to be addressed by the server, which takes her away from other customers. In this case, Kaizen can be used to identify ways to reduce the wait time. Doing so reduces the number of customer irritations, thereby saving time and improving the level of satisfaction among all customers.

Near-Instant Impact

Because Kaizen is focused upon producing small improvements over time, the effects can be observed quickly. Rather than conducting a large-scale project that seeks to realize substantial process-related improvements, Kaizen attempts to resolve a wide range of small problems. As a result, the effects of implementing the methodology are nearly instant, especially within a service environment.

Let’s use our restaurant as an example. During the course of serving a customer, the server will greet him, bring drinks, take his order, and deliver his meal once the kitchen has prepared it. Rather than examining the entire process, Kaizen focuses on improving each piece. In other words, what can be done to greet the diner more quickly? Can the wait time between the greeting and the server bringing drinks be shortened? Can the day’s specials be communicated in a way that reduces the need for questions?

By focusing upon small problems, Kaizen can yield instant improvements that impact the bottom line and improve customer satisfaction.

Boost In Employee Productivity

Much of the variance and customer irritation in the service industry can be attributed to human error. That is, employees make mistakes which often cause problems that require time and effort to resolve. Contrast that to a manufacturing environment where information and material flows are largely static. The goal is to identify inefficiencies and waste within the production process.

If Kaizen is used in a service environment to produce incremental, continuous improvements, employee productivity rises. As productivity rises, the time required to perform a given task declines. This has an immediate impact upon the customer’s experience. In a restaurant, it might translate into shorter wait times for meals. In a hospital, it might mean seeing a doctor more quickly. In a bank, it can help reduce the line of people waiting for a teller. Each circumstance improves the level of customer satisfaction while lowering costs.

Kaizen plays an important role within the service sector. Organizations that implement the methodology will likely see an immediate impact on their efficiency, employee morale, and profitability.

BMGI, one of the leading education and consulting companies for Innovation Tools, provides volumes of information at http://www.BMGI.com


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