OPM 770

OPERATIONS MANAGEMENT

WAN KHAIDIR BIN WAN OMAR

(2019936775)
VUCA World – Case Studies from the Tenaga Nasional Berhad (TNB)

The VUCA concept was first introduced in the early 90s by the US Army War College
to refer to the multilateral world that emerged after the end of the Cold War and was
characterised as being more Volatile, Uncertain, Complex and Ambiguous than ever before.
In a business context, the VUCA concept took off after the global financial crisis of 2008 and
2009. Since then, it has featured heavily in the development of leadership skills in various
organisations. The concept describes a business environment characterised by:

Volatility: A brutal increase in four dimensions of the changes that we face today: the type,
speed, volume, and scale.

Uncertainty: As a result of the Volatility, we are unable to predict future events.

Complexity: Widespread confusion, with no clear connection between cause and effect,
affects all organisations nowadays.

Ambiguity: There is a lack of precision, and the existence of multiple meanings within the
conditions surrounding us.

‘‘Across many industries, a rising tide of volatility, uncertainty, and business complexity is
roiling markets and changing the nature of competition.’’ (Doheny, Nagali, & Weig, 2012)

Volatility

Volatility implies the speed, type, volume and scale of change in the situation. Taking
my division which is TNB HealthCare Division for this case study, we are dealing with the
changes in medicine prices and medical procedures fees every year. The price of medicine
keeps changing due to the fluctuation in our currency. Most of the imported medicines will see
a significant increase in their price, thus will indirectly increase the medical cost borne by TNB.
As for medical procedures fees, there is no control over how much private hospitals can
charge TNB. There is no act to govern the medical procedures fees rate charged by private
hospitals as well as on the medicines price. Panel clinics and private hospitals can set the
medical procedures fees and medicines price at any rate they want and make high profit.

Uncertainty

Uncertainty refers to the extent to which we can confidently predict the future. Different
hospitals will have various rate of charges which make it difficult for TNB HealthCare to
estimate the medical cost borne by TNB each year. TNB HealthCare has no control over the
charges made by the hospitals as well as the medicines price. Hence, predicting on how much
TNB should spend on medical cost is a very difficult task to do by TNB HealthCare. Besides
that, due to the unlimited medical benefits offered to both employees, retirees as well as their
dependents, TNB’s medical costs may increase further since it is difficult to predict how many
dependents that TNB needs to cover. For example, we cannot predict how many children a
single staff will have in the future.

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Complexity

Complexity refers to a situation that has many interconnected parts and variables.
Some information is available or can be predicted, but the volume or nature of it can be
overwhelming to process. In my division, we have to process thousands of medical invoices
which come from various hospitals. Each hospital will have different invoice format or template
which make it difficult for us to key in the details into the system called as Integrated Health
Management System (IHMS). Hospitals will send to us the hardcopy of the invoices and we
have to manually adjudicate each invoice to identify any uncovered medical procedures or
medicines such as supplements.

Ambiguity

Ambiguity refers to a situation where the problem and/or solution are both unclear to
the business. TNB HealthCare Division was created with the aim to reduce the medical cost
through enforcement of medical policies set out by the headquarters. There are a lot of medical
policies with contains ambiguity and is not clear. For example, in TNB Medical Policy, it
mentions that any supplements prescribed are strictly not covered. However, it does not
mention specific supplements and it is up to the operational staff who perform the adjudication
of the medical invoice to determine whether medicines prescribed fall under supplement
category or not.

Lessons Learnt

It is important for TNB HealthCare Division to understand the impact of VUCA on day-
to-day operations. When viewed in a more holistic approach, VUCA actually can create
opportunities for TNB HealthCare. Volatility opens the opportunity for TNB HealthCare to
adopt a more sophisticated technology which utilise the big data to determine the fluctuation
in medicines price as well as medical procedures fees rate. By using that technology, TNB
HealthCare can also utilise predictive data analysis to determine how many potential
employees and dependents that TNB needs to cover for their medical benefits in the future.
This will also eliminate the element of uncertainty.

By adopting a more sophisticated system to cater for high volume of invoices, it can
reduce the time taken to manually key in the invoices’ details into the system. With the
advancement in Artificial Intelligence, it is not impossible for TNB HealthCare to have a system
which can read the details in medical invoices and separate the covered and uncovered items
automatically. This will eliminate the element of complexity and ambiguity at the same time as
well as reducing the operation costs where the number of operational staff can be reduced.

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References

Doheny,M, Nagali, V.Weig,F (2012, May). Agile operations for volatile times. Mckinsey
Quarterly. Retrieved from http://www.mckinsey.com/insights/operations/agile_operations_for
volatile_times.