Manzana Case Answers
1. As competition drove profit margins lower for Manzana, it became apparent that the basis of competition was driven by customer service, in the form of turnaround time and late renewals. Fruitvale trailed their competitor Golden Gate by 4 days in turnaround time, and while late renewals information was not available for comparison, the renewal loss rate clearly gave Golden Gate the advantage. Fruitvale would have to improve in these two areas to be competitive.
2. See attached PPT file.
5. Priority Rules:
The current priority system placed emphasis on RUNs and RAPs, as they were deemed more profitable. As such, RERUNs were constantly pushed to the bottom of the pile, resulting in a high percentage of renewals being late and lost. Ironically, RERUNs had a theoretical processing time of 172.3 minutes compared to 258.6 minutes for RUNs. Despite generating an annualized premium of $500 less than a RUN, RERUNs took 2/3 of the theoretical time to process.
Data analysis from problem 2 above shows that the distribution of requests and utilization is not uniform amongst the 3 teams. Team 1 is at nearly 93% utilization, subjecting the process to delays with even small amounts of variation and serving as the bottleneck of the system. At 71% utilization, Team 3 has much more room to work with before experiencing delays.
6. List of Actions
1. Consolidate 3 UW Teams into 1 pool: This will alleviate the high utilization on Team 1, and create a new process center with a utilization of 82.0% (Combined capacity 47.53 req/day).
2. Change the system in which RERUNs are released to the DCs the day before they are due. This is a major reason why there is such a high late renewal rate. Furthermore, base priority of requests by due date, not by perceived profitability or ease of accomplishing. Basing priority on due date will help cut down on late renewals.
3. Develop a better system of in-office distribution: By...