Managing Uncertainty to Improve
         Decision Making
      Statistical Thinking for Quality Control and Improvement


...
“In this world there is nothing certain
               but death and taxes.”

                                            ...
• All managing activities are subject to uncertainty and
   decisions have to be made in this environment.

  Uncertainty...
What is statistical thinking?

 • Statistical thinking is the philosophy of learning and action
   based on the following ...
• The definition above highlights three key components:
        – process thinking,
        – understanding and managing u...
Steps in implementing statistical thinking




s+a+oo
                                                                    ...
“Statistical thinking will one day be as
       necessary for efficient citizenship as
          the ability to read and w...
The meaning of quality and quality improvement

 • The importance of statistical thinking derives from the
   modern defin...
“If I had to reduce my message for
           management to just a few words,
           I would say it all had to do with...
s+a+oo
                                                                         10
Copyright © 2009, Statoo Consulting, Sw...
Data-driven decision making
 • Using statistical thinking and statistical methods to improve
   business performance:




...
Statistical methods for quality control and improvement




  Example production process inputs (e.g. temperatures,
  pres...
• Since variation can only be described in statistical terms,
   statistical methods play a central role in quality
   imp...
◊ „Design Of Experiments” (DOE): off-line technique for

        – discovering the key factors that influence the quality
...
◊ „Statistical Data Mining” (SDM): usage of historical data for

        – discovering unexpected relationships between pr...
Are you drowning in uncertainty and
                starving for knowledge?



                   Have you ever been Stato...
• Statoo Consulting is a software-vendor independent Swiss
     consulting firm specialised in statistical consulting and
...
Have you been Statooed?


                                    Dr. Diego Kuonen, CStat CSci
                               ...
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Managing Uncertainty to Improve Decision Making - Statistical Thinking for Quality Control and Improvement

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Managing Uncertainty to Improve Decision Making - Statistical Thinking for Quality Control and Improvement

  1. 1. Managing Uncertainty to Improve Decision Making Statistical Thinking for Quality Control and Improvement Dr. Diego Kuonen, CStat CSci Statoo Consulting Statistical Consulting + Data Analysis + Data Mining Services Morgenstrasse 129, 3018 Berne, Switzerland www.statoo.info s+a+oo 1 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  2. 2. “In this world there is nothing certain but death and taxes.” Benjamin Franklin s+a+oo 2 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  3. 3. • All managing activities are subject to uncertainty and decisions have to be made in this environment.  Uncertainty is everywhere and you can not escape from it.  It becomes essential to face up to uncertainty, not hide it away under false concepts, but to understand it and to act in the face of uncertainty.  As managing uncertainty leads to better decision making, the need for a formal tool to deal with uncertainty is greater now than ever before.  If you want to manage uncertainty, then you need to practise statistical thinking – there is no other choice. s+a+oo 3 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  4. 4. What is statistical thinking? • Statistical thinking is the philosophy of learning and action based on the following fundamental principles: – all work occurs in a system of interconnected processes – a process being a chain of activities that turns inputs into outputs; – variation, which gives rise to uncertainty, exists in all processes; and – understanding and reducing variation are keys to success. • All three principles work together to create the power of statistical thinking. s+a+oo 4 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  5. 5. • The definition above highlights three key components: – process thinking, – understanding and managing uncertainty, and – using data whenever possible to guide actions and to improve decision-making. • Statistical thinking is a philosophy – a mind-set. • Statistical thinking is a an overall approach to improvement and therefore more broadly applicable than statistical methods. It is a way of thinking, behaving, working, taking action and interacting with others. s+a+oo 5 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  6. 6. Steps in implementing statistical thinking s+a+oo 6 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  7. 7. “Statistical thinking will one day be as necessary for efficient citizenship as the ability to read and write.” Herbert G. Wells s+a+oo 7 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  8. 8. The meaning of quality and quality improvement • The importance of statistical thinking derives from the modern definition of quality: “Quality is inversely proportional to variation”.  If variation in the important characteristics of a product or a service decreases, the quality of the product or the service increases. • Quality improvement is the reduction of variation in processes. • Process variation affects not only quality but also operating cost, cycle time, profitability and customer satisfaction. s+a+oo 8 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  9. 9. “If I had to reduce my message for management to just a few words, I would say it all had to do with reducing variation.” W. Edwards Deming s+a+oo 9 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  10. 10. s+a+oo 10 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  11. 11. Data-driven decision making • Using statistical thinking and statistical methods to improve business performance: • The process focus of statistical thinking provides the context and the relevancy for broader and more effective use of statistical methods, which are required to deal with process variation and hence play a central role in improvement efforts. s+a+oo 11 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  12. 12. Statistical methods for quality control and improvement Example production process inputs (e.g. temperatures, pressures and other process variables are controllable; environmental factors or properties of raw materials provided by an external supplier are uncontrollable) and outputs. s+a+oo 12 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  13. 13. • Since variation can only be described in statistical terms, statistical methods play a central role in quality improvement efforts.  Modern quality assurance systems focus on three major areas. ◊ „Statistical Process Control” (SPC): – monitoring processes, reducing variation through elimination of assignable causes („special causes”); – systematic use of control charts is an excellent way to reduce variation; – on-line technique. s+a+oo 13 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  14. 14. ◊ „Design Of Experiments” (DOE): off-line technique for – discovering the key factors that influence the quality characteristics of interest in a process; – process optimisation by increasing process performance. s+a+oo 14 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  15. 15. ◊ „Statistical Data Mining” (SDM): usage of historical data for – discovering unexpected relationships between process factors and quality characteristics; – monitoring complex processes and investigating process excursions; – discovering the key factors that influence quality characteristics in complex processes and subsequent process optimisation. s+a+oo 15 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  16. 16. Are you drowning in uncertainty and starving for knowledge? Have you ever been Statooed? s+a+oo 16 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  17. 17. • Statoo Consulting is a software-vendor independent Swiss consulting firm specialised in statistical consulting and training, data analysis and data mining services. • Statoo Consulting offers consulting and training in statistical thinking, statistics and data mining in English, French and German. s+a+oo 17 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.
  18. 18. Have you been Statooed? Dr. Diego Kuonen, CStat CSci Statoo Consulting Morgenstrasse 128 3018 Berne Switzerland email kuonen@statoo.com web www.statoo.info s+a+oo 18 Copyright © 2009, Statoo Consulting, Switzerland. All rights reserved.

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