As introduced in chapter 12, Paisley Insurance Company provides a range of insurance products to residential and commercial customers. Figure 17.16 shows the process map of Paisley’s billing department activities.

The following four key activities and available hours are identified as key activities within the
billing department.

Activity ...................................... Number of hours available per week
Account enquiry activity ...................................... 134
Correspondence activity ...................................... 19
Account billing activity ......................................... 153
Verification activity ................................................. 75

A recent concern for Paisley’s managers relates to the growing number of customer complaints associated with poor-quality billing activities. On further investigation, several sources of bottlenecks have been observed at all stages of the billing department’s processes. For example, account enquiries often require detailed individual advice from Paisley’s insurance sales department.

Supervisors for the correspondence activity have specialised skills and sometimes hold-ups in supervisory activities have resulted in accounts not being processed correctly or sent out on time.

Bottlenecks in account billing have also occurred with unanticipated breakdowns of their ageing printing machines. Likewise, the verification activity is also performed by specialised employees.

Currently, there is a shortage of labour for this activity, particularly while the senior manager is on maternity leave. At varying times, these bottlenecks have contributed to delays in sending bills out (hence, delayed payment to Paisley), as well as billing errors and growing customer complaints.

Required

(a) Drawing on your knowledge of the TOC, explain how this system might be useful for Paisley Insurance Company.

(b) As part of a wider concept of lean thinking, explain how a lean approach might help Paisley Insurance Company improve the quality of the billing department activities.

Transcribed Image Text:

Telecommunications Occupancy Paper Supervisors Computer Account enquiry labour Printing machines Billing labour Correspondence activity Account billing activity Verification Account enquiry activity activity Labour hours Letters Lines Accounts Residential account summary Commercial account summary