Using SPC to Make Better Management Decisions

Using SPC to Make Better Management Decisions Mark Graban Author, Lean Hospitals Co-Author, Healthcare Kaizen www.MarkGraban.com @MarkGraban

Key Management Questions• How are we performing? – Are we getting better or worse?• What action should we take?“Failure to understand variation is acentral problem of management.” – Dr. Lloyd S. Nelson Some rights reserved by Marco Bellucci

My Most Favorite Book Ever Donald J. Wheeler, PhD http://www.spcpress.com/

“No data have meaningapart from their context”

Comparisons in the News Fatalities per 100 Million Vehicle Miles Traveled (U.S. & CT) 2 U.S. 1.5 1 CT 0.5 0 1992 1995 1998 2001 2004 2007 2010

Need to Look for Trends“You dont want tomake a big conclusionbased on just oneyear.” – Jonathan Adkins of the Governors Highway Safety Association “Office Space”

Two-Point Comparisons in Politics

Did We Improve?

Run Charts Show More Context

Need to Avoid Bad Conclusions “The average patient satisfaction increased from 87.2 to 89%”

A Better DashboardLimited information you need to make decisions

Not This…

Overwhelming Data Sept „06 ? Can we predict September? Can We See Trends?

The Good News…There is a better way

SD = Standard Deviation, a measure of variation “X” Control Chart (Chart for Individual Values) Goal = 25 minutes “Every system is perfectly designed to get the results it gets.” (Deming)

X and MR Chart Combo

Small Business Example Revenue as a Stable Process?X chartMR chart

Deming‟s 7 Concepts of Variation1. All variation is caused – specific reasons.2. There are 4 types of causes: 1. Common causes 2. Special causes 3. Tampering 4. Structural3. Managers must distinguish amongst these – Each one requires different managerial actions.

Deming‟s 7 Concepts of Variation4. For special causes, get timely data5. For common causes, all data are relevant. – In-depth knowledge of the process being improved is needed – statistics, flow charts, Pareto, stratification analysis, DOE6. When all variation is common cause, the system is said to be “stable” and “predictable.”7. SPC limits let a manager predict future performance with some confidence.

The Funnel Experiment• Lloyd Nelson, 1987 – Suspend a funnel on a stand a few inches off the ground – Drop 50 marbles x

A “Stable” System• Does NOT mean: – Zero variability – System meets customer requirements• Means only: – Causes of variation are basically constant over time

We Have to Try Harder!!!• 4 different rules for adjusting the funnel Adjust relative Adjust relative No adjustment to last position to center Learn more – online simulator at http://www.symphonytech.com/dfunnel.htm

So we should do nothing?“Don’t just do something, stand there.” -- Deming

Responding to Daily Changes60 Daily Production Average50 Praise PT PT40 Team GOAL30 Kick KB20 Butt KB10 0 Are we helping? Is this process stable? 3/1/07 3/2/07 3/3/07 3/4/07 3/5/07 3/6/07 3/7/07 3/8/07 3/9/07 3/10/07 3/11/07 3/12/07

0 10 20 30 40 50 3/1/2007 60 3/3/2007 3/5/2007 3/7/2007 Lower Control Limit Upper Control Limit 3/9/20073/11/20073/13/20073/15/20073/17/2007 Creating a Control Chart3/19/2007

Step 1: Initial Data• Generally need 20 data points to calculate control limits

Step 2: Mean & MRs• Calculate mean of the first 20 points• Calculate the moving range of the first 20 points – Ex: =ABS(E5-E4)

Step 3: Draw Initial Chart (with Mean line) LeanBlog.org Daily Page Loads2500200015001000 500 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Step 4: Add Control Limits• Calculate “MR-bar” – Average of the 1st 19 MRs• Calculate Control Limits – LCL = Mean – 3*(MR bar)/1.126 – UCL = Mean + 3*(MR bar)/1.126

Step 5: Review Chart LeanBlog.org Daily Page Loads2500200015001000 500 Special Cause? 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Step 6: Revise Limits

Step 7: Evaluate Over Time LeanBlog.org Daily Page Loads30002500200015001000500 0 1 2 3 4 5 6 7 8 9 101112131415161718192021222324252627282930313233343536373839404142434445464748495051

Step 7: Shift the Limits LeanBlog.org Daily Page Loads30002500200015001000500 0 1 2 3 4 5 6 7 8 9 101112131415161718192021222324252627282930313233343536373839404142434445464748495051

“Western Electric” Rules (1956)• 8 consecutive points on same side of mean• 6 consecutive points moving same direction• 14 alternating up/down points in a row• Any single point above or below 3-sigma LCL or UCL – Full rules  http://bit.ly/WErules

Process Shifts 35 35 Daily TAT 30 30 Process Shift 25 25 20 20 15 15 10 10 5 5 0 1 4 7 10 10 13 13 16 16 19 19 22 22 25 25 28 28 31 31 34 34 37 37 40 40 43 43 46 46 49 49 52 52 0 1 4 7• If you made a change that you expected to improve the system, use a control chart to test the hypothesis

Long-Term Process Shifts

NOT Understanding Variation Leads To…• Pressuring people to get better results by working harder within the same system• Wasting time looking for explanations of a perceived trend when nothing has changed• Taking other actions when it would have been better to do nothing• Not focusing on systemic improvements

Isn’t it always the system?It’s (almost) always the system.

Q&A / Contact Info• Email: – mark@constancy.us• Blog: – www.leanblog.org• Twitter: – @MarkGraban• Books: – www.LeanHospitalsBook.com – www.HCkaizen.com

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Using SPC to Make Better Management Decisions

by Mark Graban

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