Tm Nas Value Chain

When thinking of improvements to our value chain, there are a few major outputs we might look for such as cost savings, an increased level of customer service, and an increased level of customer satisfaction. These results can be achieved a number of ways, but they similarly are usually derived from crucial areas in an organization’s value chain. When looking at TMNAS, I would like to offer a few improvements that I believe would help achieve some of the desired outputs previously mentioned. To start, I think that there should be an enterprise wide emphasis on employing service level agreements (SLA’s) to as many, if not all, services provided to our customers as possible. At the current stage, there is obviously a high expectation of customer

service and performance, but I think this can be taken one step further and put into measurable forms. It might sounds unnecessary at times to outline expectations and time tables for all services, especially miniscule ones that are infrequent in nature, but here is why I stress the importance of doing so. If we think about how our customer service is measured, there are several ways.

One way is less formal and basically comes from an overall feeling of our customer’s management level stakeholders, and another way is employee surveying at all levels. A lot of times this data can be abstract, and not based on much as customer service may more difficult to quantify than say performance. I think that SLA’s will help in quantifying the customer service level, and I think it would be valuable to be able to quantify this as our relationship hinges on customer service and performance. So as an example lets outline the process of a computer repair with an SLA, an IT responsibility that happens regularly, and look at how just employing an SLA would benefit our customer service rating. Let us assume that the expectation is set that upon TMNAS IT receiving a computer repair request that someone will reach out to the employee within one hour of the request, the issue will be fixed the same day, and a follow up will occur the following business day. This can be outlined and agreed upon by TMNAS management and our customer’s management, and stated that this timeline must be met at least 97% of the

time. AT the end of the year, when each incident has been recorded and tracked to completion, there will be data to measure against the service agreement. Having hundreds of these SLA’s can give a concrete understanding of how TMNAS performed against our customer service expectations. If overall, our average was higher than the percent originally agreed upon, the company looks good. More importantly though, we can extract value from these results moving forward. Next year we know what areas can be improved upon, and in which areas have we set unrealistic expectations to our customers. With this approach, we can build on customer service goals and successes will be cumulative also giving us the ability to show our customer every couple years how we have improved our processes on their behalf. I recommend that each SLA be managed by the functional area for which it pertains. They would be the most hands on and have the greatest ease of tracking services from start to finish. While not a huge change, this analytical approach to measurement of customer service improves our value chain in a couple ways. It demands more accountability to perform at a high level, gives customers more transparency into our meeting expectations, and allows TMNAS to improve as an organization based on cumulative findings from SLA’s.
The next improvement that I think would be beneficial to any company’s value chain if it is not already included is a cost analysis of everything within the organization. Since it is a services company, TMNAS focuses its value chain around services. A large part of this is providing the customer with information to make decisions about running their business. As any company spends a lot of time and effort managing expenses, a full ongoing yearly analysis of all associated costs of doing business would create much value for our organization in managing costs and as a reporting function back to our customers. A cost analysis of this magnitude is something that we currently do, but I think it could be worth it to implement a system and processes to do so. What I recommend is software that would include every cost that we have as an organization. This would be everything from employee salaries, to rent for all office locations, to every software license we are paying for. With a full and comprehensive scope of cost inputs, the outputs would give us the ability to do significant analyses to manage costs and prioritize project initiatives. Not only would this be helpful internally to help TMNAS function efficiently and make decisions, but it is also something that our customers are not doing. As we are their IT, accounting, finance departments and so on, they do not have as much insight into our internal structure and costs of what exactly they are paying for. They are not blind to this information, but they are more interested in the products they receive and whether they are delivered on time. If one of the insurance companies found that the cost for underwriting personal auto insurance was much higher than expected, they could make the decision to get out of the business of writing these lines of insurance. One thing that is well emphasized is that we should always be sharing information with our customers that would help them make decisions. We have a lot of administrative duties that come with providing services, and one of them is reporting on many things. About a year ago one customer engaged us to help them determine whether it would be profitable to insure microbreweries. Since they already look to us for information to base decisions on, I think the improvement of cost analysis software would go a long way. Not only would it allow us to better manage the customer’s costs, but it could really drive their decision making and provide more transparency and accessibility into their costs of doing business.
We have looked at two higher level improvements that could be added to improve our value chain, now I would like to propose an improvement to a specific functional area.

This area is procurement within the accounting department, which is often thought of as a support area for the value chain. I have taken a look at this possibility earlier in the semester, but the improvement would be to create a strategy for cost savings around multi-company purchasing and contracts. As a services company, a big goal from our value chain is saving our customers money wherever possible. What I mean by multi-company purchasing is this. If we look at IT specifically, we support several insurance companies’ infrastructure, software, hardware, and so on to give them the ability to operate soundly. I’ve noticed two things during my time at TMNAS that gives me reason to suggest this as an improvement to our value chain. The first thing is that we often purchase software for one customer that another customer needs later or could use and benefit from just the same. The second thing is we often deploy IT projects for one customer and perform the same deliverable to another customer after depending on need. My thinking is simple and is around saving money for customers by purchasing more at once to take advantage of large savings. This has been done in the past, and savings are very significant, but I think we can further this process in order to take advantage of greater savings. As an example,

instead of purchasing a couple software licenses upon request from individual employees, we could purchase a bundle to deploy across all companies on a need basis. We know there will be requests like this, and the current thinking is that we will incur the expense when we have to. When we need a license we will buy one. However, if we make my suggested improvement it would mean spending more money upfront, but saving money in the long run. I know we have done this infrequently with multi-year contracts where we had two customers in need of the same product at different times. We negotiated a deal with the vendor we worked with to have a three year deal for both customers, but the start time of the contract was staggered for the customers based on need. The three year contract was going to cost each customer about $400k, so a total of $800k. Purchasing the deals at once required a little planning ahead, but only cost $600k saving each customer about 25% of the purchase price. It is not always the case that this is possible, but my suggestion would be to create a best practice within procurement that before all purchases, multi-company purchasing options need to be weighed first. This could be as simple as just determining the need of the requested product or service among all customers before making the purchase for the requestor. Like I said, multi-company purchasing will not always be an option, but to create a purchasing strategy heavily centered on this idea would be beneficial.
A final proposed improvement to the TMNAS value chain is also procurement related, and it comes as a more organizational strategy than a process related improvement. The way that procurement is handled in the organization is essentially that it is done on the departmental level. If the facilities department needs a chair, someone from facilities will order the chair. If an employee in the actuarial department needs to purchase something, it is done