MICI case analysis

MICI case analysis
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MICI Case Analysis
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Case analysis- mutual insurance Company
Overview and summery
This is a case analysis of Mutual insurance Company of Iowa, MICI. The company has experienced speedy growth in sales which resulted in corresponding increase in customers’ claims. However, the claim department was unable to cope with the volume which led to outcry from the company customers.
Company management has proposed to install JIT system in an effort to fix the problem. JIT is a lean production system whose core principles are to reduce production wastages. The system will require training of company staff to make them multi skilled and may require restructuring of the company.
The new system if well implemented will solve the current workload as the claim forms will be processed as soon as they arrive. This will enhance production efficiency and increase customer confidence in the company.
Introduction
The mutual insurance company of Iowa is currently experiencing troubles in service delivery which could derail company performance. The claim department is overwhelmed by massive incoming claims from its clients. The company has limited personnel and facilities to handle increased number of claims from its customers.
This situation if not addressed urgently will land the company into legal and financial problems which will adversely impact on company performance. The management has come up with drastic measures to address the problem by seeking the installation of JIT system to help solve the problem of delayed processing of customers claims.
This method is costly and will require trainings to be undertaken to equip the workers with JIT principles. However, the new system will result in major departmental changes, revision of operation layout and work methods consequently setting in place the process of lean production in MICI.
Lean production will help the company to reduce wastage and satisfy the customers by processing their claims in time and also adding value to the customer as well. Different wastes that lean production will eliminate include; overproduction, excess inventory (claims), conveyance (movement of claims to different offices), correction wastes (having to rework on parts due to error, motion by workers (puts stress on employees’ body), processing costs (unnecessary processes) and waiting waste (workers being idle between operations).
By eliminating wastage in production of goods and services, the firm will do more with less capital, space, effort, labor, inventory and lead time.
Discuss the basics of lean production
Lean production commonly known as Toyota production system is assembly –line methodology which focuses on waste elimination, reducing inventory and empowering workers to enhance productivity, Shili, (2011).
The lean production has two main pillars namely:- just in time system and Kaizen developed to adopt mass production techniques of production. The JIT system of lean production entails producing what is required in the market at that particular time. The lean production method eliminated inventories and safety stocks.
Leveled production where a company produces different models/ products using the same production line to cater for the needs of customers. Production is based on customers’ demand and reduces the delay in meeting customers’ requests. Production plants should be centralized to avoid movement of parts of products and services from place to place as this is waste of time and money.
Pull system in lean production refers to initiating production activity as a result of pull generated by the customers. The methods in MICI will demand processing of claims as per customers demand without delay. The customers in this case have triggered the production chain in timely claim processing.
Continuous flow processing is a precondition for the JIT system. This is necessary as there is no safe stock and inventories in lean production. There is no fear of shortages in lean production. In the insurance firm, there shall be smooth flow of claims as they arrive and no pending claims should be found.
In lean production, the pace of work is determined by customers’ demands. The demand for services by clients is apportioned to workers, for instance the demand to process 2,500 claims a day is divided by the minutes in a day to find time to be spent by employee on one claim.
Flexible workforce is necessary in lean production. Trainings are necessary and inevitable to develop a multi- process handler employee. Time wait is eliminated in lean production by structures that allows for the worker to perform other tasks as he waits for task to be completed
What are the issues with inventory under a lean production model?
In lean production, there is no inventories management because there is smooth flow processing which means that work is arranged inside each production process and flows from one step to another. This is JIT system which does not allow safety or buffer stock to exist between the processes unlike just in case (JIC) process.
Excess inventory is termed as wastage in lean production which unnecessarily ties up company cash. Inventory management is also seen as unnecessary costs to the company and hence those stocks that are absolutely necessary are needed in lean production.
Lean production is characterized by continuous flow production which cannot maintain inventory. All the work is passed through in a continuous mann...