A flooring manufacturing company was paying over $3 million dollars annually in customer claims. Unless something was changed the cost of claims was likely to increase or at best stay the same.
A team was formed and trained in the Lean Six Sigma DMAIC problem solving process. The team was given 12 weeks to complete this important project with a management goal of at least a 5% reduction in annual claims cost, or approximately $150,000. The team used Deployment Process Mapping to get started and identified the waste and bottlenecks within the process. The Voice of both the internal and external customer were evaluated to gain a full understanding of requirements. It quickly became apparent that the process was not consistantly followed nor was the documentation to intitiate a claim properly filled out. All of which added to the length of adjudicating a claim and the fairness of a claim for both the customer and the company.
Solutions and Results:
- A standardized claims managment process was defined with work instructions for all processing steps.
- Training was developed for executing the process.
- Training was developed for all applicable employees in the diagnosis of defects and the responsible party, whether the manufacturer, the installer, or the end user of the floor.
- Samples and photographs were developed to aid decision making.
- Common claims forms with photographic requirements were created.
- A process to use third party evaluators for large complex claims was also developed.
After implementation of the improvements the team exceeded the management expectations for a 5% cost reduction and delivered $500,000 in savings for over 16% in cost reduction.