Improving Performance Using Statistical Thinking

MN ASQ Section 1203post-Dinner MeetingSeptember 14, 1999

presented by Robert MitchellChair, ASQ Statistics Division

MISSIONPromote Statistical Thinking for quality and productivity improvement.

Serve ASQ, business, industry, academia, and government as a resource for effective use of Statistical Thinking for quality and productivity improvement.

Our primary customers are Statistics Division members.

Other key customers are:

Management

Users and potential users of Statistical Thinking

Educators of the above customersProvide a focal point within ASQ for application-driven development and effective use of new statistical methods.

Support the growth and development of ASQ Statistics Divisionmembers.

VISION

Process Variation Data Improvement

Statistical Thinking

Philosophy ActionAnalysis

Statistical Methods

Statistical Thinking Everywhere

DESIRED END STATE

Our members will be proud to be part of the Statistics Division

Our Division’s operations will be a model for other organizations.

We will be a widely influential authority on scientific approaches to quality and productivity improvement.

PRINCIPLESOur customers’ needs will be continuously anticipated and met (i.e. Customer focused rather than customer driven).

Our market focus for products and services is weighted as follows:

Greatest weight on intermediate level

Nearly as much weight on basic level

Much less weight on advanced level.

Focus on a few key things.

Balance short-term and long-term efforts.

Value diversity (including geographical and occupational) of our membership.

Be proactive.

Recognize that we exist for our customers.

View statistics from the broad perspective of quality management.

Apply Statistical Thinking ourselves; that is, practice what we preach.

Uphold professional ethics.

Continuously improve.

PRINCIPLES

STRATEGY

Design and deliver selected useable products.

Have a strong and vibrant Division infrastructure.

Demonstrate the broad effectiveness of Statistical Thinking.

Integrate Statistical Thinking into educational curricula.

Develop a vibrant information communication system.

Influence key decision makers.

Improving Performance Through Statistical Thinking

• Why ST is important?• What is ST?• How do you apply ST?• How to begin implementing ST

capability in an organization• Summary• Appendix - tools, case studies

Definition

Statistical Thinking is a philosophy of learning and action based on the following fundamental principles:

All work occurs in a system of interconnected processes

Variation exists in all processes

Understanding and reducing variation are keys to success.

Glossary and Tables for Statistical Quality Control - Quality Press, 1996

Evaluation Based on Past Experiences or Perceptions

We’ve always done it this way!

We work with what we get!

We do the best we can!

I never thought about it!

I’m so busy with the day to day troubles, I don’t have time to try that!

That has no effect on the finished product (or service)!

Evaluation Based on Data

THE KEY IS TO ASK WHY!!!

Why is the material from the fabrication department machine so inconsistent?

Why do so we constantly firefight?

Why does our daily output vary so much?

Why does every job result in a monumental task that takes forever to complete?

Definition

Statistical Thinking is a philosophy of learning and action based on the following fundamental principles:

All work occurs in a system of interconnected processes,

FinishedGoods

or Services

Inputs Transformation Outputs

SuppliersInformation

Historical Data

Accounts PayableCar RepairBlending

Approvals

External Factors

- Materials - People

- Methods - Machines

- Environment - Measures

ProcessTransforms Inputs into Outputs

Processes and Sub-Processes

CustomerCustomer Customer Customer

Sub-Process A

Sub-Process B

Sub-Process C

External Supplier

External Customer

Supplier Supplier Supplier Supplier

Definition

Statistical Thinking is a philosophy of learning and action based on the following fundamental principles:

All work occurs in a system of interconnected processes

Variation exists in all processes

Like it or not, variation is everywhere!

Know it, accept it, learn to deal with it!

Our drive time to work each day.

The quantity of production each shift.

Departure time of our plane.

Measurement system

………

DefinitionDefinition

Statistical Thinking is a philosophy of learning and action based on the following fundamental principles:

All work occurs in a system of interconnected processes

Variation exists in all processes

Understanding and reducing variation are keys to success.

Deming once said:“If I had to reduce my message for management to just a few words, I’d say it all had to do with reducing variation.”

Variation and Targets

Variation can be thought of as:

1. Deviations around the overallaverage or

2. A deviation of the overall averagefrom a desired target.

Ave

TargetAve

Reduced deviation around the Average and on Target

Voice ofProcess

Voice ofCustomer

Target

Improvementusing

Statistical Thinking

Process Variation Data Improvement

Statistical Thinking Statistical Methods

Philosophy Analysis Action

Pitfall

Valuing only quantitative data

Qualitative data are just as important.

Example: Idea data!!

Benefits of Statistical Thinking

Provides a theory and methodology for improvement:

Helps identify where improvement is needed.

Provides a general approach to take.

Suggests tools to use.

A complete improvement approach includes all elements of Statistical Thinking:

Process - Variation - Data

Check Act

Do Plan

CheckAssess major problems and root causesDefine the scope of the projectIdentify the people who will be affected by the project

DoImplement the plan.Assure continued process performance.

ActFix the obvious.Decide how to approach the issue or problem.

PlanSet project goals and expectations.Develop the project plan.

CAPDo DiagnosticTips for Statistical Thinking

Use of Statistical ThinkingDepends on levels of activity and job responsibility.

Where we're headed

Systems & processesto guide us

Where the work gets done

Strategic

Managerial

Operational

Executives

Managers

Workers

Process

SuppliersInputs

ProcessOutputs

Customers

S I P O C

A series of activities that converts inputs into outputs

Understand Customer Needs

Customer Requirements

Process / Product Flow

EndUserReq..

Substitute Tech. Char.

Mfg. Tests

Product Planning Matrix

Converting

Coating

Extruding

DataPackage

Matrix

Qualification Matrix

Examples of Operational Processes

ManufacturingOrder EntryDeliveryDistributionBillingCollectionService

Examples of Statistical Thinking at the Operational Level

Work processes are flowcharted and documentedKey measurements are identified.

Time series plots displayed

Process management and improvement utilize:Knowledge of variation, andData

Improvement activities focus on the process, not blaming employees.

Examples of Managerial Processes

1. Employee Selection2. Training and

Development3. Performance

Management (including coaching)

4. Recognition and Reward

5. Budgeting

6. Setting Objectives and Goals

7. Project Management

8. Communications9. Management

Reporting10. Planning

Examples of Managerial Processes

Objectives & Goals

Planning

Budgeting

ManagementReporting

Core Business Processes

Customers

EmployeeSelection

Training &Development

Recognition& RewardsPerformance

Management

Communication

Examples of Statistical Thinking at the Managerial Level

.

Managers use meeting management techniquesStandardized project management systems are in place.Both project process and results are reviewed.Process variation is considered when setting goals.Measurement is viewed as a process.The number of suppliers is reducedA variety of communication media are used.

Examples of Strategic Processes

Strategic Plan DevelopmentStrategic Plan DeploymentAcquisitionsCorporate Budget DevelopmentCommunications - Internal and ExternalSuccession Planning and DeploymentOrganizational Improvement

Examples of Statistical Thinkingat the Strategic Level

Executives use systems approach.Core processes have been flow chartedStrategic direction defined and deployed.Measurement systems in place (i.e. BSC).Employee, customer, and benchmarking studies are used to drive improvement.Experimentation is encouraged.Learning is valued.

Robustness - An Underused Concept

Key aspect of Statistical ThinkingReduce the effects of uncontrollable variation in:

Product designProcess designManagement practices

Anticipate variation and reduce its effects

Robustness of Product and Process Design

A third way to reduce variationAnticipate variation

Design the process or product to be insensitive to variation

A robust process or product is more likely to perform as expected

Improved reliability

100% inspection cannot provide robustness

Robust Products are Designed in Anticipation of Customer Use

Unintended UseWashing machine topsCraftsman tools

User-friendly computers and softwareLow-maintenance automobiles5 mph bumpersMedical instruments for home use

Product and Process Robustness

Product Performance is insensitive to variations in conditions of manufacture, distribution, use and disposal.

Process Performance is insensitive to uncontrollable variation in process

InputsTransformations - activities - stepsExternal factors

Robustness in Management

Develop strategies that are insensitive to economic trends and cycles

Scenario Planning

Design a project system that is insensitive to Personnel changesChanges in project scopeVariations in business conditions

Respond to differing employee needsAdopt flexible work hoursProvide “cafeteria” benefits package

More ...

Robustness in Management(Continued)

Enable personnel to adapt to changing business needs

High Performance Organization (HPO)Change Acceleration Process (CAP)

Technological AcceptanceCultural Acceptance

Ensure meeting effectiveness is not dependent on facilities, equipment, or participants

Understanding Human Behavior

Different people have different methods and styles of working, learning and thinking Different people take in, process and communicate information in different waysPeople vary --- they are different:

Day to dayPerson to personGroup to groupSite to siteOrganization to organization

Process Robustness Analysis

Identify Those Uncontrollable Factors that Affect Process Performance

WeatherCustomer Use of ProductsEmployee Knowledge, Skills, Experience, Work HabitAge of Equipment

Design the Process to be Insensitive to the Uncontrollable Variations in the Factors

Three Ways to Reduce Variation and Improve Quality

Control the Process:Eliminate SpecialCause Variation

Improve the System:Reduce Common Cause Variation

Anticipate Variation:Design RobustProcesses and Products

Quality Improvement

Tips for Statistical Thinking

Start with the customer.Identify customer requirements and expectations. Identify market trends.

Start small.Pick a process that is not very detailed and does not involve many functions or work groups. Small “wins” build confidence and teamwork. Share successes; celebrate failures.

Tips for Statistical Thinking

• Flow Diagram• Pareto Charts• Cause & Effect • Histograms• Run Charts• Control Charts• Scatter Diagram

• Affinity Diagram• InterRelationship

Diagram• Tree Diagram• Prioritization Matrices• Matrix Charts• Arrow Diagram• Process Decision

Program Chart

7 Quality Tools 7 Management Tools

3 Types of Variation

Special Cause Common Cause Structural

Identify Process State

Process StatesIdeal State

Process in Control

100% Conforming Product

Maintain Control

Threshold StateProcess in Control

NonConformance

Change process or specs

Sort

State of Chaos

Out of Control

Out of Spec

Eliminate Special Causes

Brink of Chaos

Out of Control

100% Conforming

Investigate Special Causes

Tips for Statistical Thinking

If a process or system is not stable -- showing signs of Special Cause …

Use the tools of problem-solving to identify the root cause. Try to identify exactly when, where, how, and why the process changed.

If a Special Cause hurts the process, develop procedures to eliminate the return of the problem. If a Special Cause is beneficial, develop procedures to make it a permanent part of the process.

Tips for Statistical Thinking

If a process or system is stable -- showing only Common Causes of variation…

Use the tools of improvement to study all the data (not just the “good” or the “bad” points) and identify factors that cause variation. Determine what needs to be permanently changed to achieve a different level of quality.

Stratify the process - sort the data into groupsDisagregate the process - divide the process into its sub-

processes

RequestedRequestedQualityQuality

ExpectedExpectedQualityQuality

Not FulfilledNot Fulfilled

FulfilledFulfilled

Not Not SatisfiedSatisfied

SatisfieSatisfiedd

Kano Model of QualityKano Model of Quality

1. Demonstrate the Broad Application of Statistical Thinking D1Collect new case studies; Market Statistical ThinkingExpand the theory of Statistical Thinking

• Assist in the discovery process for new applications• Maintain the integrity of ST (license and trademark)• Publish new series, “Improving Processes…”

2. Integrate Statistical Thinking into Education & Training B2Pilot the “Pegasus” charter school project (Dallas, TX)

• PDCA the process; repeat with new school principals

3. Develop a Vibrant Information & Communication System A2Develop and implement a member nurturing processCreate and staff the Section Liaison position

• Develop a WebPages policy and e-commerce strategy

4. Design & Deliver Selected Useable Products B5Develop and disseminate Newsletter technical contentCreate a Clearinghouse of Statistical Stuff

• Beef-up our Short Course offerings; more variety; regional• Identify and start no more than 3 new publications

5. Have a Strong and Vibrant Division Infrastructure C3Division organization re-alignment; change By-Laws

• Develop a Division “Balanced Scorecard”

Statistical Thinking Everywhere1999 - 2000 STAT Tactics

Statistical Thinking Everywhereread more about it...

“Statistical Thinking” Special Publication (Spring 1996)“Data Sanity” Special Publication (Summer 1998)

available through QIC 1-800-248-1946 or qic@asq.org

“How to Teach Others to Apply Statistical Thinking”Quality Progress, June 1997, pg. 67 - 79

“Improving Performance through Statistical Thinking”ASQ Quality Press available November 1999