Deutsche Allgemeinversicherung Harvard Case Solution & Analysis


Why is DAV using SPC? What are the primary challenges in applying Statistical Process Control (SPC) to a service industry compared with manufacturing?


            DAV wants to implement the Statistical Process Control in its operations in order to make the operations of the company more smooth, flexible and efficient. If the SPC process is implemented throughout the company, then all the data entry operators of the company would be motivated and the data entry process of the company would become more efficient and error free. A philosophy of full quality assurance would be maintained and developed throughput the company and the data entry operators would then be motivated to work as a single team. Each and every employee would then assume to rectify all the benefits and a culture of error free work would be created across the organization. The company will have to overcome many challenges to successfully implement the SPC system.

Challenges of implementing SPC in service industry as compared to manufacturing

            For a long time, the concept and all the models associated with SPC had been used in the manufacturing industry, however, the SPC process could be tailored so that it could be implemented in a service industry but this is going to prove challenging for the company. The measurement of the processes through SPC in a service industry is more complex and a difficult task than in a manufacturing industry. Another challenge is that unlike the manufacturing industry most of the tasks and activities in a service industry are not repeatable. One example is of the back office operations which makes the implementation more difficult. Furthermore, the employees of the company interact with the customers differently each time which makes the measurement of the success of the process more complex.

            Human resource is the core base and the cause for the success of the company’s operations in a service industry unlike in manufacturing industry. Therefore, there are more difficulties such as how to measure, what to measure, what metrics to decide and what would be the control limits and acceptable limits of the processes. Although the use of certain statistical tools such as p-charts, r-charts could simplify the problems but their usage is itself complex which makes the implementation of SPC in a service industry more critical and complex.


Explain the concept of a p-chart to a group of bank tellers without a background in SPC or statistics.

            When data is collected in the forms of subgroups, then the use of p-charts is must in order to determine the efficiency and the effectiveness of different process through the use of p-charts. The changes in the entire process could be shown by the p-chart over the time. It evaluates a specific attribute of a process and then the p-chart tells us that whether the process is pass/fail, it should go ahead or not or answers in yes or no. After the evaluation it is then determined that whether the item is defective or not. Furthermore, the p-chart provides us with the lower control limits and the upper control limits and if the data crosses both of these limits then it could be said the concerned process is not in control.

Deutsche Allgemeinversicherung Case Solution

            Therefore, this helped to keep proper track of the efficiency of the processes of the company thus enhancing the customer service, profitability and the sustainability of the company’s operations. There are many advantages of p-chart. Project management and process implementation teams make the use of p charts to assess the performance and the efficiency of the processes. If the business leaders do not make the use of p-charts then they interpret the data incorrectly. Lastly, since the p-charts provide the management with specific control limits thus is provides the management with the information regarding what future performance they could expect from the process.


The first 12 weeks of the data in exhibit 4 represent the diagnostic period for the Policy Extension Group. What are the 3 sigma control limits for the process?

                The complete data for the New Policy Extension Setup Group has been provided in exhibit 4 along with the total number of weeks and the sample sizes. Based on this complete data set, the three sigma control limit calculations have been performed in the excel spreadsheet. The upper control limit and the lower control limit for the SPC process of the company during the first phase is 0.424 and 0.3756 respectively.....................

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