American Airlines CLAIMS Success with Lean Techniques
At American Airlines (AA), claims are an important component of total customer service/customer satisfaction. Between volume reduction and learning new Lean techniques, AA staff now takes pride in their new found ability to turn claims in 25% less time it used to take. AA hopes to serve as an industry model for how efficient an airline claims operations should run.
Processing claims was exceeding service standards. AA needed a way to increase capacity without increasing the headcount to process a variable workload.
AA had previously hired TMAC for a successful Lean 5S projects in their DFW Airport Vehicle Maintenance Shop. The management team in Claims determined that a similar Lean project could benefit the issues experienced in the claims process. After an assessment and consultation it was decided that a basic Lean Office training followed by a Value Stream Map project would be appropriate for data collection, gap analysis and ideas for improvements. Action plans could be identified and deployed beginning with the Central Document Processing Correspondence Desk (CD), the “brain” and entry point for claims. The team was developed and the race was on!
One of the main goals was to reduce the cycle time necessary to close a claim. Some cases could take up to 90 days. All documentation coming into the Correspondence Desk feeds two other departments; Claims and Tracing. The CD receives emails, faxes and snail mail. CD staff has to review every document and assign to Trace or Claims. The CD has a small staff that now rotates all positions and is co-located. Claims are advanced to Tracing and Claims for resolution.
Teams were also reorganized and several administrative tasks were eliminated or reassigned. Files are no longer batched but are assigned immediately. Five steps at the CD desk have been reduced to three. Now, instead of workers waiting for runners to bring them files, staff retrieves their own files and goes to work immediately.
TMAC trained AA staff on the Principles of Lean Office and also on Value Stream Mapping which takes the “current state” of a process and develops it into a “future state” improvement. For the Tracing Department implementing Lean measures was quite radical in that the team has added a supervisory function to their administrative role by self-managing their tasks. There are also less handling activities.
At the Correspondence Desk, cubicle walls were torn down. Though not as private, the group is pleased with the openness of the new configuration. It promotes learning, sharing, troubleshooting and problem solving.
Supermarkets in all three Claims Departments were developed as a “first-stop” point entry for all files. It is open and visual. A file “pull” system has decreased the sheer volume of an employees’ work product. In turn, this has led to an increase in productivity for all 3 departments within the Department and happier, more productive employees.
The Department has experienced some challenges with Lean since some of the administrative duties eliminated at the Correspondence Desk now reside in Claims. However, they have learned to distinguish between value added and non value added activities and continue to work with the CD and Tracing Department on learning and deploying Lean methods.
The next challenge for AA is to sustain and grow their Lean improvements. A new software implementation is scheduled which should relieve some of the backlog and administrative paper handling. They plan to have document scanners at every Correspondence Desk to take the place of paper files. AA may consider another VSM to drive success for the new software implementation project. Sustaining the Lean improvements is the new challenge and American Airlines is geared up and ready!
- 25% reduction in time to close a claim
- 25% reduction in daily process waste at Correspondence Desk
- Streamlined information flow – push to pull
- Eliminated two administrative steps at Correspondence Desk Intake
- New training manual is in place and continuously improved
- Enhanced communication flow
- Employees are now empowered to make their ideas known and to act as change agents
- 100% of Correspondence Desk staff are now cross-trained
We want to contribute to better relations with American Airlines customers and our internal stakeholders. With Lean methods we have learned to utilize our resources better and the results have been very positive.