eBook_LeanSixSigmaBlackBelt_AI.pdf
Project Overview
This Project is based on a hypothetical company (Morning Glory Associates, "MGA") that faces many of the same issues that companies are dealing with today. The Project illustrates the entire business improvement effort through every phase of the DMAIC methodology. You will complete challenging exercises (project deliverables) that build on the tools and concepts taught in this course. You will understand what true business improvement is.
Morning Glory “MGA” is a Business Insurance company that conducts business throughout the XXXXXXXXXXPennsylvania Commonwealth. During the past 2 years, MGA has fallen from the second business insurance provider to 4th, in the Pennsylvania Commonwealth. The business Insurance industry has continued to grow in Pennsylvania. Poor customer service and process are the primary cause for MGA falling behind its competition.
XXXXXXXXXXA Lean Six Sigma team has been formed to address their delivery issues.
MGA identified that their process required 23 days to process insurance applications as compared to 16 days for the competition. The total process time of 16 days was what business insurance customers consider to be Critical to Quality (CTQ). By not meeting the CTQ of 16 days, MGA estimated that it was losing $105.5 million in lost revenues while incu
ing an additional 10.5 million in process inefficiencies.
The primary goal for the Lean Six Sigma team is for MGA to meet customer expectations for the mortgage application/approval determination process throughout Pennsylvania.
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Project Scope
Area of
Focus:
Processes in Ha
isburg, Pittsburgh, and Philadelphia
Includes:
Customer, Insurance Agent,
Underwriting, Credit Agency, processing of application,
and approval/denial of application
Accounts Payables and Receivables, re-finance
Excludes:
processes
Start Point:
When a customer requests Insurance
Stop Point:
Loan acceptance or rejection package is
eceived by the custome
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PROJECT TEAM
Team Members
Function in the Business
Project Role
Time Dedicated to Project (Hrs./Week)
Jeff Davidson
Senior vice President
Sponso
2
Judy Waters
Manager continuous Improvement
Black Belt
3
Bob Decarten
Project Manage
Green Belt
25
Janice Pearl
Finance
Team Membe
10-15
Norm Brossen
Operations SME
Team Membe
10-15
Herald Gonzales
Processing SME
Team Membe
10-15
Additional Support
As required from other departments
PROJECT MILESTONES
Milestone Phase
Start Date
Completion Date
Define
June 15th
In Progress
Measure
July15th
August14th
Analyze
August 15th
September 14th
Improve
September15th
October14th
Control
October15th
November 14th
Closure
November 15th
December 14th
Business Insurance Process Flow
The MGA business insurance process starts when a customer contacts a local Insurance Agent (IA) to request insurance coverage for their business. The IAs are located across the state. The IA emails the customer a business insurance application to be completed and emailed back to the IA. The IA forwards the application to their Regional Office Manager (ROM). An Application Processor (AP) is assigned to the application. The AP reviews the application. The AP contacts the IA to request additional information (clarity on business, areas of commitment, potential liability areas, etc.). The IA contacts the customer to request further information and clarity. The customer gathers the additional information and emails it to the IA. The IA emails the information to the AP. With the additional information, the AP reviews the application and additional information to ensure that it is complete. If there is missing or inco
ect information, the AP contacts the IA to make the necessary co
ections. If the information is co
ect, the AP forwards the information to an Underwriting Officer (UO). The UO reviews the customer information to evaluate risks, and to determine pricing. The UO sends information to the ROM to determine insurance acceptance or not.
ROM forwards the final determination to the AP. If the application is accepted, the AP creates an insurance policy. If the application is rejected, the AP creates a rejection letter. When this is complete, the AP forwards the final determination package to the Regional Officer for review and approval. The AP then sends the determination package to the IA and schedules a call with the IA to review the final determination package. The IA reviews the final determination package. The IA sends the final determination package to the customer and schedules call. When the customer reviews the final determination package, signs it, and sends payment. At this point the MGA Business Insurance Policy process is complete.
Primary People and Departments Involved in the Application Process
· Custome
· Insurance Agent (IA)
Regional Office Manager (ROM)
Application Processor (AP)
· Underwriting Officer (UO)
Quick Win Opportunity
Easy To Implement
Reversible
Fast To Implement
Within
Team’s
Control
Cheap To Implement
Name
Function / Organization
Name
Function / Organization
Tammy Johnson
GM Pittsburgh Office
Susan Beal
Regulation and Compliance Officer
Joseph Petrini
GM Philadelphia Office
Laura Jones
CFO
Thomas Kerns
GM Ha
isburg Office
LSS Team Members
Various
Bus. Insurance Customers
NA
Mark Cante
VP Sales
Karen Milnes
Underwriting Manage
Lu Suni
Agents Manager, Pittsburgh
Maria Bandleris
Agents Manager, Ha
isburg
Mike Brown
Agents Manager, Philadelphia
Segment
Customer Issue
Customer Need
CTQ
External
It takes too long to process loans
Reduce loan processing cycle time
15-day loan processing cycle time
External
There are too many e
ors on the final determination packages
External
It is exceedingly difficult to reach anyone at SI
Internal
No clear roles and responsibilities to who owns the loan process
Internal
Too much time is spent reviewing the application
Translate the following VOC into CTQ’s
X/Y Matrix: Input, Process, And
Output Measures
This eBook is for personal use only. Please DO NOT use this eBook for presentations and training facilitation purposes. Copyright © 2009 Acuity Institute LLC. All rights reserved. 1
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Measure
Operational Definitions
Display
Total Loan
Processing
Cycle Time
The total time in days from when a customer submits the application to when the is mailed by location; Time stamp calculation in database
Histogram,
Run Chart,
Control Chart
# Of Final
Determination
Packages with
E
ors
% Of Defective
Incoming
Applications
Application
Cycle Time Per
Department
Segment
Process
Improvements
Previous Average Processing time (days)
New Process Time (days)
Process 1-Connect with IA to request mortgage insurance
1.4
Process 2-Email Mortgage Insurance application
1.2
Process 3- Complete Application
1.2
Process 4-Send Application to IA
1.2
Process 5- Forward Application to ROM
3.9
Process 6- Forward Application to AP
3.4
Process 7-Review Application
2.5
Process 8-contact Customer to request additional information
3.8
Process 10-Gathers additional information and sends to AP
1.3
Process 11- AP Reviews File
1.4
Process 12-Is the application complete? If not contacts AP
2.4
Process 13- UO Review risks and determines pricing
2.5
Process 14- Sends the application to the ROM for determination
3.7
Process 15-Is the application complete?
2.4
Process 16-Is the application Rejected or Accepted? Creates Acceptance
2.6
Process 18-Create Insurance policy
1.2
Process 19- ROM Review and approve the decision
2
Process 20-Sends determination package to IA and schedules a call with IA to review determination
1.4
Process 21-Is the determination accepted?
1.2
Process 22-Signs and send payment
1.1
This eBook is for personal use only. Please DO NOT use this eBook for presentations and training facilitation purposes.
Copyright © 2009 Acuity Institute LLC. All rights reserved.
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As-IsProcessMapProjectName:BusinessInsuranceProcessBusinessInsurance CustomerInsurance Agent(IA)RegionalOffice Manager(ROM)Application Processor(AP)Underwriting Officer(UO)MailInsurance ApplicationTocustomerComplete ApplicationForwards Applicationto ROMMail Application ToIAForwards Applicationto APReviewsfileRequests additional information FromCust.Gathers additional informationSend Information ToAPReviewsfileIs Information Comp.12Con1tactsIATo requestInsurance31094156781112NoGoto Step13
As-Is Process Map
Project Name: Business Insurance Process
Business
Insurance Custome
Insurance Agent (IA)
Regional
Office Manager(ROM)
Application Processo
(AP)
Underwriting Officer(UO)
Mail Insurance Application To custome
Complete Application
Forwards Application to ROM
Mail Application To IA
Forwards Application to AP
Reviews file
Requests additional information From Cust.
Gathers additional information
Send Information To AP
Reviews file
Is Information Comp.
1
2
Con1tacts IA To request Insurance
3
10
9
4
1
5
6
7
8
11
12
No
Go to Step 13
Morning Glory Associates, "MGA Insurance Company Prof. Conlon June 5, 2023
Morning Glory Associates, "MGA
Insurance Company
Prof. Conlon
June 5, 2023
Team 1
Marty Céspedes
Maria Godoy
Helene Ohouo
Krishna Saxena
Tapshak Augustine
1
Introduction
Morning Glory Associates ("MGA"), a fictional company, has many of the same problems as actual ones. The Project shows each DMAIC business development procedure. Project deliverables will be easier with this training. Business will grow.
Morning Glory "MGA" in Pennsylvania insures businesses. MGA slipped from second to fourth in Pennsylvania business insurance in two years. Pennsylvania insurance grew. MGA lags in client service and technique XXXXXXXXXXLean Six Sigma fixes delivery concerns.
MGA took 23 days to complete insurance applications, while competitors took 16. Business insurance consumers termed the 16-day process Critical to Quality (CTQ). MGA lost $105.5 million in income and $10.5 million in process inefficiency by missing the 16-day CTQ.
2
Project Charte
3
4
5
6
Flow Chart
Measure Phase
They offer a place to start when taking process measurements. Data collection gather information about the time it takes to apply for and be approved for insurance.
Establish a baseline for process performance using the data.
Measurement Standards:
Total Loan Processing Cycle Time (a): The number of days it takes from the time an application is submitted until the final determination packet is mailed.
How many final determination packets included e
ors.
The quantity of received incomplete applications.
Application Processing Time by Department Application cycle process timings split by departments.
SIPOC
FMEA
Cpk – Average App Cycle Time
RESULTS:
Based on the results, the capability of the process needs improvement to enhance its capability and produce products that consistently meet the required specifications. That is why it will be recommended to do a root cause investigation, and process optimization may be necessary to achieve this improvement.
Cpk – Loan Time Processing
Summary Report for Total Loan Time Ha
isburg
Summary Report for Total Loan Time Philly
Summary Report for Total Loan Time Pittsburg
Run Chart of Total loan Time Ha
isburg
Run Chart of Total Loan Time Philly
Run Chart of Total Loan Time Pittsburg
Fitted Line: Philadelphia Total Cycle Time versus Philadelphia App Cycle Time
Two-Sample T-Test and CI: Accuracy, Location
Project Takeaways/Lessons Learned
Importance of Customer satisfaction and expectations
Importance of identifying the CTQ
Proper process documentation
Communication improvement
Cross-training and collaboration between departments
Understand the financial impact due to inefficiencies
Determination of roles and responsibilities
DMAIC_Roadmap
Lean Six Sigma DMAIC Roadmap
Purpose Key Tools Key Outputs
Define To establish a quantified problem statement, objective and business case that will become the foundation to your Six Sigma project. Conduct stakeholder analysis, select team members and kick-off your project. Primary Metric Process Map Project Charter Project Plan * Process Map
* Gather VOC
* Translate VOC to CTQ's
* QFD/HOQ
* COPQ
* Primary & Secondary Metrics
* Establish Project Charte
* Stakeholder Analysis
* Team Selection
* Project Plan
Measure Refine your understanding of the process. Assess process capability relative to customer specifications. Validate measurement systems. Brainstorm potential x's. C&E SIPOC FMEA Cpk * Early Y=f(x) Hypothesis
* Detailed Process Map
* SIPOC
* Cause & Effect Diagram
* Cause & Effect Matrix
* FMEA
* Basic Statistics
* Normality Test
* Capability Analysis
* Gage R&R
Analyze Conduct data collection and planned studies in order to eliminate non-critical x's and validate critical x's. Establish a stronger and quantified Y=f(x) equation. Normality Test ANOVA 2 Sample t-test Equal Variances * Na
owed Y=f(x)
* 1 & 2 Sample t-tests
* 1 & 2 Proportions tests
* Equal variance tests
* Normality tests
* ANOVA
* Moods Median
* Mann Whitney
* Paired t-test
* Chi-Squared test
Improve Design, test and implement your new process or product under live operating conditions. Pilot solutions if feasible before
oadly deploying expensive improvements or products. Pugh Matrix Linear Regression Binary Logistic Regression DOE * Refined Y=f(x)
* Pugh Matrix
* Co
elation
* Simple Linear Regression
* Multiple Linear Regression
* Binary Logistic Regression
* Full Factorial DOE
* Fractional Factorial DOE
Control Plan, communicate, train and implement your product or process solutions. Ensure control mechanisms are established. Use Poke Yoke, visual controls, SOP's and SPC wherever possible. Control Plan SOP's Communication Plan SPC * Control Plan
* Training Plan
* Refined FMEA
* Communication Plan
* Standard Operating Procedures
* Five-S Audit
* Poke Yoke
* Visual Controls
* Statistical Process Control
DMAIC_Project_Checklist
D.M.A.I.C Project Checklist
DEFINE IMPROVE
2 Projecct Charter 2 Potential Solutions Developed
2 Business Case (why is this project important) 2 Potential Solutions Prioritized
3 Problem Statement & Objective 2 Solution Selected
2 Baseline Data (Primary Metric "Y") 2 Improvement Pilot/Test Plan
2 Target 2 Improvement Pilot/Test Execution
2 COPQ Estimate 2 Improvement Verified
2 Project Team 2 New Process Capability
2 Project Scope 2 Updated Process Map
2 Project Timeline 2 Solution Implementation Plan
2 Project Constraints/Dependencies 2 Primary Metric Updated
2 High Level Process Map 2 COPQ Revision
2 Customer Requirements Identified 2 Improve Phase Report
2 Define Phase Report
MEASURE CONTROL
2 Detailed Process Map 2 Full Solution Implementation
2 SIPOC 2 Standard Operating Procedures Developed
3 Data Collection Plan (Potential X's) 2 Communication Plan
2 Measurement Systems Analysis (Primary Y) 2 Training Plan
2 Process Capability Analysis 2 Audit Plan
2 List of Possible X's 2 Control Charts
2 Prioritized List of X's to be Analyzed 2 Control Plan
2 Primary Metric Updated 2 Primary Metric Updated
2 COPQ Revision 2 COPQ Revision
2 Measure Phase Report 2 Full Project Report
ANALYZE
2 Sources of Variation Identified
2 Potential X's