MBA7061 Operations Management: Analysis of Muscat Insurance Company

This case study examines the operations management strategies employed by Muscat Insurance Company in Oman. It identifies and analyzes key elements such as capacity management, supply chain management, procurement, inventory management, quality management, customer service, risk m...Read More

Running Head: OPERATIONS MANAGEMENT 1
OPERATIONS MANAGEMENT
STUDENT’S NAME
COURSE
UNIVERSITY
DATE

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EXECUTIVE SUMMARY
Effective Operations management is very crucial for the success of the business organization.
There are various elements that built the foundation of operations management. The report is
going to focus on Muscat insurance company in Oman. The report has outlined various operation
management strategies that can be applied by the organization to achieve organizational
excellence.

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Table of Contents
1.0. INTRODUCTION.........................................................................................................................4
2.0. Elements of operations management............................................................................................6
2.0.1 Capacity management......................................................................................................................6
2.0.2 .Supply chain management..............................................................................................................7
2.0.3. Procurement.....................................................................................................................................9
2.0.4 Inventory management....................................................................................................................9
2.0.5. Quality management.....................................................................................................................10
2.0.6 Extra care and extra mile customer service..................................................................................13
2.0.7. Risk management..........................................................................................................................13
2.0.8. Competitive advantage..................................................................................................................14
2.0.9 Sustainability...................................................................................................................................15
3.0. Appraisal of the scenarios for the elements in Operations management.................................16
Negative scenario in capacity management...........................................................................................16
Negative Scenario in supply chain management...................................................................................17
Negative Scenario in procurement.........................................................................................................18
Negative Scenario In quality management............................................................................................20
Appraisal of operations management strategy...........................................................................................21
Capacity management...........................................................................................................................21
Operation strategy for supply chain management................................................................................22
Operation strategy for procurement.....................................................................................................23
Operation strategy used in inventory management..............................................................................23
5.0 THINGS TO BE DONE TO ACHIEVE OPERATIONAL EXCELLENCE................................24
In Capacity management........................................................................................................................24
In supply chain management..................................................................................................................24
In procurement........................................................................................................................................24
In Quality management...........................................................................................................................24
6.0 Recommendation...............................................................................................................................25
7.0 Conclusion....................................................................................................................................25
References................................................................................................................................................26
Appendix 1- Diagram indicating elements of operations management....................................................27
Appendix 2 Table outlining Operation management strategy...................................................................28

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1.0. INTRODUCTION
Operations management for the company refers to the various strategies used by the company in
the process of delivering the insurance services to various clients (Harvey, Heineke and Lewis,
2016). Most of the insurance companies are usually successful because of the provision of the
unique services especially in relation to responding the clients’ grievances. An organization that
handles the operations management systematically is usually successful in the process of
achievement of the stipulated goals and objectives. Operations management refers to the process
through which organizations produce various goods and services through the establishment of
unique strategies to enhance the achievement of the organizational goals and objectives. This is
depicted through various organizational functions such as personnel management, marketing,
insurance services etc. Operations management can also be defined as the organizational
function that is involved in the production and delivery of various goods and services
(Linderman and Chandrasekaran, 2010). Organizations can be classified as either manufacturing
organizations or service organizations. Manufacturing organizations engage in the production of
physical tangible items which can be stored as inventory before been finally delivered to the final
consumer. Service organizations engage in the production of intangible items and the degree of
consumer satisfaction is determined by the quality of services provided by the organization to the
final consumer. An insurance company is a service industry due to its insurance service to the
clients. This report is going to focus on Muscat insurance company in Oman. The company
provides both general and life insurance cover in Sultanate Oman. The general insurance
products offered by the company include: liability cover for bad debts, motor insurance cover,
fire insurance cover, marine cover, work men compensation for employees who might be injured

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in the course of duty in the organization, general accident cover. The company offers both
individual and group life and health insurance policies for the Oman citizens.

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2.0. Elements of operations management.
There are various elements which are key to the success of operations management of any given
organization (Krupa, 2017). These elements are: capacity management, supply chain
management, procurement, inventory management, quality management, extra care and extra
mile customer service, risk management, customer satisfaction, competitive advantage and
sustainability. Muscat insurance has to enhance the efficient application of these elements to
facilitate its success in the competitive business environment. These elements are discussed
below.
2.0.1 Capacity management
Capacity refers to the number of individuals that the insurance company can insure over a given
period of time (LaGanga, 2010). This information is very crucial for the operation of the
insurance company because it enhances the process of strategy formulation by the company.
Capacity management is important for the company because it enables the company to offer
quality services for a specific number of clients through the process of formulating efficient
strategies to cater for the needs of the clients. Muscat insurance company has a specific number
of people to be insured under various insurance policies. Capacity management is a strategic
issue for the company because it enables the manager to make long term decisions over the
operation of the company which enhances the success of the organization. Capacity management
refers to the ability of the organization to meet the various demands of the customers with the
available resources. The insurance company should be precise on the capacity to be served. This
is because it enables the organization to formulate marketing strategy to create awareness to the
general public in relation to its existence when there is an under used capacity.

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2.0.2 .Supply chain management
A supply chain refers to the series of activities that take place in order to enhance the provision
of the service to the consumer (HITT, 2011). Supply chain management involves the co-
ordination of the products to ensure the satisfaction of both the producers and the consumers.
Muscat insurance company has various procedures which are used to facilitate the compensation
of the individuals who suffer the risks that they have insured against. Some of the major
activities involved in the supply chain management are
Sourcing the materials
This occurs where an individual needs to be compensated for the loss suffered e.g. in case of fire
for the building, the insurance company has to source various materials to enhance the
construction of a new building for the individual who have suffered the loss.
Manufacturing products
The products are manufactured by the factory and supplied to the consumer for consumption.
The insurance company accesses various products from the manufacturer so as to compensate
people who suffer the loss as a result of the occurrence of the risk that had been insured against
by the company. This is a very critical aspect in supply chain management because without the
products, the supply chain management cannot exist.
Storage of products in the warehouse
The insurance company has its own warehouse where various goods for compensation are stored.
The company stocks a variety of goods as per the risks that have been insured against by the
clients so as to enhance quick compensation after the occurrence of the risk.

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Offering the services
The insurance company compensates the clients after the occurrence of the risk. This is very
crucial because it keeps the insurance contract in force as the clients gain confidence which
results to continuity in the payment of premiums which is an assurance of compensation after the
occurrence of the risk that they have insured against.

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2.0.3. Procurement
This is the process through which the insurance company make requisitions for various goods
and services from various suppliers (Baily, 2015). The procurement function is very crucial for
the success of the organization. It determines the degree of reception of various goods and
services within the organization. This is an important aspect in supply chain management.
Procurement function does not only facilitate the acquiring of various materials required within
the organization but also enhances the selection of various suppliers for various products and
approving various orders requested from the suppliers. Procurement is usually associated with
the purchases of all the raw materials, equipment and all the other goods and services to be used
in the operations management of Muscat insurance company.
2.0.4 Inventory management
This is a very significant aspect of operations management. The type of operations management
applied by the insurance company depends on the nature of the demands for the service offered
by the company. The aspect of demand in relation to inventory management can broadly be
classified as dependent demand and independent demand (Axsäter, 2011). The demand for
compensation from the clients depends on the availability of the resources to effect the
compensation, this is referred to as dependent demand. Independent demand refers to where the
insurance company can compensate the clients whether there is inventory or not due to use of
alternative means.

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There are various types of inventory in operations management as outlined below:
Buffer or safety inventory
This type of inventory is mainly used to compensate some risks that cannot be timed.
This risks can happen at any time such as accidents. The insurance company needs to
have some vehicles in its store so as to effect immediate compensation for individuals
who suffer risks of accidents.
Anticipation
Muscat insurance company charges different amounts for the premiums depending on the
likelihood of the occurrence of the risk. When the company has a great anticipation in the
occurrence of the risk, it charges higher premiums for such risks.
Inventory management is usually concerned with the trade-off between the variation of
the cost of not having any item in stock and the cost of ordering or holding the inventory.
2.0.5. Quality management
This refers to the process of eliminating the main causes of quality problems in the line of
production and provision of various goods and services. Some of the causes of poor quality
include: insufficient employee training. Muscat insurance company should ensure that all the
employees are trained in various insurance aspects before been employed so as to enhance
the provision of efficient services to the clients. Good quality services enhances the attraction
of the consumers to the organization hence should not be ignored. Quality management for
the insurance company shall entail aspects such as timely compensation of the clients after
suffering the risk insured against. Quality is usually defined by the customer, this implies that
the organization should always strive to seek the feedback in relation to the nature of services
offered so as to determine the areas where improvements can be made in the service delivery

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by the insurance company. The company can only be successful if it provides services to
enhance the satisfaction of the clients.
The management of the organization have to set up performance standards of employees to
ascertain quality. The organization can conclude that good quality service has been delivered
by the employee to the customer if an employee reaches a certain level of performance.
Quality management is not only achieved when the employees are committed in avoiding the
mistakes in production but is also achieved through their capability to improve their
performance on various tasks within the organization.
The organization should also initiate the culture of continuous improvement so as to outline
to the employees on the importance of quality to the performance of the organization within
the competitive business environment.
The insurance company should try to adopt a quality system that shall enhance the co-
ordination of the activities to enhance the achievement of the predetermined goals and
objectives within the organization with the idea of quality in mind. This can be achieved
through the implementation of ISO standards within the organization. ISO 9000 for instance
provides the standards of quality between the insurance company and the clients which helps
in the reduction of the complexities experienced in the process of managing various
standards of quality due to a large number of organizations willing to serve the clients.
ISO 9000 is a series of established standards of quality management and assurance for the
potential consumers for the services offered by Muscat insurance company. It has several
other subsections which are very vital to the organization as it strives to achieve quality in
service provision as outlined below:

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ISO 9001
This is applicable where the supplier has the key responsibility in the development and
designing of a service to enhance the achievement of the desired quality to enhance the
consumer satisfaction. This is very crucial to the success of the organization in the
achievement of its established goals and objectives.
ISO 9002
This is a standard of quality that is usually applicable where the supplier has the key
responsibility in the production and installation of a given service. It results to organizational
success if applied effectively within the organization.
ISO 9003
This is applied in the final inspection and testing of the products by the quality assurance
team within the organization. This ensure that the clients receive quality services and
products from the organization which is very significant in the success of the organization
within the competitive business environment.
ISO 9004
This provides the guidelines used by the managers within the organizations which help them
in the development of the quality systems to enhance an improvement in the performance of
the organization. It provides suggestions on the areas of quality improvement within the
organization.

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2.0.6 Extra care and extra mile customer service
This is very crucial for the success of the business enterprise. This implies the process
through which the organization provides a great service to the customers which enhances
the image of the organization to the public. Muscat insurance company ensures that the
compensation claims made by the clients are addressed with immediate effect which
enhances the satisfaction of the clients who continue to seek the services of the company
for a long period enhancing the long term organizational success as a result of profit
maximization.
2.0.7. Risk management
Risk management is the process of reducing the impact of loss after occurrence of a given
risk. This is a strategy that should be used by all the organizations including the insurance
company. Muscat insurance company have various risk management strategies for efficiency
of operations. Some of them are outlined below:

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Re-insurance
This is where an insurance company insures itself with another insurance company so as to
be helped in compensating the clients during the occurrence of the speculated risk. This is
important because it prevents a breach of contract between the insurance company and the
clients. Re- insurance is very important because sometimes the insurance company might
experience challenges after investing the premiums which might result to difficulties in
compensating the clients especially for life assurance where they might suffer the risk at
once. The insurance company can also be bankrupt due to factors such as the embezzlement
of funds by the management which may lead to in ability to compensate the clients hence the
need for re-insurance.
a) Customer satisfaction
This is where the customers appreciate the nature of service been offered to them.
Customer satisfaction is achieved if the business meets the needs of the customers in an
efficient manner. Muscat insurance company ensures that compensations are made on
time after a grievance is made which enhances the consumer satisfaction.
2.0.8. Competitive advantage
This is where the business becomes a center of attraction for most of the people as compared
to other organizations providing similar services within a given business environment. This
can only be achieved by the insurance company through winning the hearts of the clients
through provision of quality services at convenient prices.

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2.0.9 Sustainability
This refers to the process through which the business engages in production to enhance the
satisfaction of the present generation without compromising the opportunities that might be
crucial in the production process for the future generation. Muscat insurance company
ensures that it provides efficient services to its clients so as to gain their trust an aspect that
shall enhance the future growth of the insurance industry in Oman due to the notion of the
future generation towards the insurance companies.

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3.0. Appraisal of the scenarios for the elements in Operations management.
Negative scenario in capacity management
a) Under used capacity
An under used capacity for the insurance company implies the limited number of people been
insured by the company over a given period of time. This reduces the profit margin of the
company and furthermore, it leads to slow organizational growth over a given period of time.
The insurance company should do everything that it can to bring the situation to normal so as
to gain the competitive advantage over other insurance companies in Oman.
Just right scenario in capacity management.
b) Over used capacity
Overused capacity implies that the company has insured many individuals hence the need for
co-insurance which is usually a risk management strategy for most of the insurance
companies that have covered a given risk that has high chances of occurring for most people
hence the need to spread the risk to other insurance company so as to enhance risk sharing in
the event of the loss. This is also an implication of the large number of people that have been
insured by the insurance company at any given time. Muscat insurance company serves a
large number of people in Oman which is one of the major factors that have contributed to its
success in the country.

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Negative Scenario in supply chain management
a) Mismatch between supply and demand
Most organizations today suffer losses because of the failure to match the demand and supply of
various goods and services they offer in the market. Muscat insurance company should conduct a
thorough market research so as to determine the risks that are likely to affect the lives of the
citizens of Oman. After identification of such risks, the insurance company should respond
positively through the provision of respective insurance policies and create various initiatives to
encourage the people to subscribe to the insurance cover. This is important because it shall
enhance the growth and development of the company through investing some of the premiums
paid by the individuals in other sectors of the economy that are performing well. The insurance
company should also avoid offering cover for some of the risks that have less chances of
occurring because few individuals will be willing to seek the insurance cover for such risks
hence a reduction in the profit margin by the company.
b) Volatile fluctuation in supply chain.
Supply chain management has a tendency for fluctuations in demand. Muscat insurance
company faces some challenges in the fluctuation of its supply chain due to some of the factors
that increase the variability of the supply chain management. These include the time lagging that
usually exist from the time the clients claim for compensation to the time they are compensated
by the company. This usually occur due to the laxity of some of the key suppliers in availing
some key products to the insurance company to effect compensations which might be product
related.

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Negative Scenario in procurement
Delay in critical path items
This is usually a major problem in the supply chain of many organizations. Various items
requested by the insurance company take a long path to be delivered an aspect that usually
interfere with the compensation procedures within the organization.
Weak technical and commercial evaluation
Application of the modern technology in business transactions is one of the key aspects that
enhance the success of the business enterprise in the competitive business environment. The
organizations should upgrade to online purchasing so as to increase the efficiency of service
delivery which ensures that the target consumers receive their products on time. Organizations
that make use of the new technology in the supply of the products would enhance the success of
the insurance company in the compensation of various individuals.
Commercial evaluation refers to the process through which the business enterprise carries out the
market research to determine the number of consumers for its various goods and services. This is
very important in the process of formulating marketing strategies especially where the business
enterprise has a limited target market for its various goods and services. Consumers are usually
attracted by the business because of the value it creates in the market.

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Poor scope of management
Effective management of the enterprise is a key aspect that enhances the success of the business
in the competitive business environment. Muscat insurance company is facing some few
challenges such as high employees’ turnover rate due to poor management of the work force by
the management due to the poor style of leadership used within the organization.
Lack of ethical and sustainable procurement practices
Ethics and sustainability is very important for the success of the business. Ethics in procurement
involves activities such as effective and timely delivery of the goods and services that have been
ordered for. This enhances the good relationship between the suppliers and various consumers
for the goods and services. Sustainability is another important aspect in supply chain
management. Green purchasing is one of the sustainability practices for most of the businesses in
the modern world. This is where the suppliers offer products which are eco-friendly to enhance
environmental sustainability. Reverse logistics is also another sustainability practice used by
suppliers to enhance the reduction of waste materials to the environment. The suppliers usually
request the buyers to store the packages used during delivery for the purpose of recycling.

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Negative Scenario In quality management
High rates of failures, defects and returns
Quality is an important factor that enhances consumer satisfaction after the provision of various
goods and services. Low quality products results to high rate of defects for the products which
makes the buyers to return them to the suppliers. This has a negative impact to the performance
of the business because the buyers shall develop a negative attitude towards the products
affecting the overall performance of the organization.
High rates of customer complaints
This is usually a clear indication of poor quality services and products offered by the
organization to the consumers. This is very important for the business enterprise as it enables the
business to identify the areas that need to be improved as per the feedback from the consumers.
Muscat insurance company usually requests for feedback from the consumers in relation to the
nature of the services offered by the organization. This has enhanced its success as an insurance
company due to large number of clients the organization serves because of its good reputation in
relation to the quality of its service.

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Increased number of unhappy customers
This is a clear indication of the problem in the mode of operation of the business hence the need
for an urgent action by the management. Through the feedback obtained, the business can be in a
good position to establish the feelings of the customers in relation to the quality of goods and
services provided to them. Muscat insurance company carries out quality surveys to determine
the feeling the clients have for the quality of insurance services provided to them which enables
the company to improve on the nature of the services offered to the clients. The success of the
business relies heavily on the feelings that consumers have for the product and services offered
by the company. Happy customers always seek the services of the business unlike unhappy
customers who always seek the services of other similar firms in an attempt to achieve quality
services.
Appraisal of operations management strategy.
Capacity management
Accurate forecasting
The business unit should use appropriate means to ascertain the specific number of consumers
for the product in the market. This enables the organization to produce the specific number of
products to suit the specific consumer needs in the market. The organization can be in a good
position to formulate effective marketing strategies after identifying the trend of its products in
the market through effective surveys.

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Just in time production
Organizations that provide timely services to the clients are usually attractive for most of the
people hence they usually have a wide market for their goods and services. Muscat insurance
company serves a large number of people in Oman due to the efficiency of its services specially
in reacting to the claims from the clients.
Volume management
The organization should produce and supply the goods and services according to the demand in
the market. This prevents the production of surplus goods which may result to the loss for the
organization.
Operation strategy for supply chain management
Elimination of middlemen
Middlemen affect the price for the goods and services in the market hence the organization
should strive to eliminate them through the formulation of efficient marketing strategies. The
organization can use sales persons to reach the consumers.
Reduced time between the order and delivery
The organizations should strive to reduce the time used to avail the products to the final
consumers so as to enhance consumer attraction for the consumption of the organization’s goods
and services.

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Operation strategy for procurement
Regular auditing
This is important because it enhances the transparency of activities within the organization which
is an important ethical practice for business.
Outsourcing
The organization can use firms that have various resources for performing specific duties such as
cleaning rather than buying new cleaning equipment.
Operation strategy used in inventory management
Waste management reduction
The business organization should ensure efficient handling of the products in the warehouse so
as to avoid accidents that might result to the destruction of some of the products.
Regular feedback
The management should make use of the suggestion boxes so as to obtain regular feedback on
the movement of stock in the warehouse.

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5.0 THINGS TO BE DONE TO ACHIEVE OPERATIONAL EXCELLENCE.
In Capacity management.
The business enterprise should apply automated process flow and business transactions to
enhance the efficiency of services.
The business enterprise should prioritize the demand by the consumers and produce enough
goods that satisfy their needs.
In supply chain management
The company should enhance the suppliers’ capability through making timely payment for the
various goods and services delivered so as to enhance their continuity in service provision.
The company should come up with supplier development initiatives such as offering various
training programs to teach them on sustainability practices in purchasing.
In procurement
The company should enhance the optimum reduced time in the process of delivering various
products after an order has been made to the suppliers, this enhances repetitive purchasing
behavior
In Quality management
The Insurance Company should benchmark with other successful companies that offer the same
services so as to ascertain areas that they need to improve an aspect that leads to improved
organizational performance.

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6.0 Recommendation
The insurance company should adhere to all the operations management elements so as to
succeed in the competitive business environment. The management should ensure that the
business adheres to sustainability practices which is very crucial for the success of the business.
7.0 Conclusion
Muscat insurance company has been successful due to efficient operations management strategy.
The company responds effectively to various grievances of the customers which has resulted to a
large number of clients wishing to be served the company. The company has made an efficient
application of the elements of operations management which has enabled it to achieve its
objectives hence its continuous growth and development.

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References
Axsäter, S. (2011). Inventory Control when the Lead-time Changes. Production and Operations
Management, 20(1), pp.72-80.
Baily, P. (2015). Procurement. 2nd ed. Pearson Education Limited, p.50.
Harvey, J., Heineke, J. and Lewis, M. (2016). Editorial for Journal of Operations Management
special issue on “Professional Service Operations Management (PSOM)”. Journal of Operations
Management, 42-43(1), pp.4-8.
HITT, M. (2011). RELEVANCE OF STRATEGIC MANAGEMENT THEORY AND
RESEARCH FOR SUPPLY CHAIN MANAGEMENT. Journal of Supply Chain Management,
47(1), pp.9-13.
Krupa, T. (2017). Elements of Theory of the Correct Operations of Logistics Transforming
Networks. Foundations of Management, 9(1), pp.347-360.
LaGanga, L. (2010). Lean service operations: Reflections and new directions for capacity
expansion in outpatient clinics. Journal of Operations Management, 29(5), pp.422-433.
Linderman, K. and Chandrasekaran, A. (2009). The scholarly exchange of knowledge in
Operations Management. Journal of Operations Management, 28(4), pp.357-366.

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Appendix 1- Diagram indicating elements of
operations management

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Appendix 2 Table outlining Operation management
strategy
Element Strategy
Capacity
management
Automated process
flow of operations
supply chain
management
Reduced time in the
process of delivering
various products
Procurement Offering various
training programs to
teach them on
sustainability
practices in
purchasing.
Quality
management
Benchmarking with
other successful
companies