Using SPC to Make Better Management Decisions
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Using SPC to Make Better Management Decisions

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In this webinar (sponsored by Gemba Academy), Mark Graban, author of Lean Hospitals, will show how simple statistical process control (SPC) methods can be used by managers and leaders to make better ...

In this webinar (sponsored by Gemba Academy), Mark Graban, author of Lean Hospitals, will show how simple statistical process control (SPC) methods can be used by managers and leaders to make better decisions about their businesses.

Using examples from manufacturing, healthcare, and services industries, Mark will illustrate the basic SPC rules and will show you how to create and interpret a control chart, allowing you to spot statistically valid trends and avoid overreacting to common cause variation in your performance measures.

Please join us for a lively discussion and interactive Q&A!

http://www.MarkGraban.com

http://www.GembaAcademy.com

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  • Nelson worked with Deming -- ASQ's 20th Honorary Member
  • What is a “quality panel”? Keep in mind this is supposed to be a public metric in the LOBBY for visitors to see. What is the scale? What is a good score? What’s a good score compared to others? Why is the target what it is? The target is SUSPICIOUSLY close to the actual. Comparing a number to a target provides very little context… so does comparing a number to last year or last quarter… as we often see in the news.
  • Test scores are down, teen smoking rates are up… Big changes aren't necessarily signal -- Small changes aren't just noise. 2.9% decline might be somewhat trivial (but good), while a 42% increase in CT *might* be statistically significant. Each state’s “JUMP” could be statistical noise. Look at the chart (made from NHTSA data) – are our roads safer (chart) or more dangerous (headline). A 42% increase in CT – what’s going on there?
  • Weird that the time scale goes right to left. What looks like an increase from 43 to 47% disapproval, could statistically be a drop from 46% to 44%.
  • Executive time series -- Take into account noise in the system and common cause variation the picture is much less clear
  • Consulting firm case study from a hospital… the early and late data point comparison…. Or you can try the linear trend. But by SPC standards, this is a stable process… not statistically valid improvement
  • Another reason charts are preferable is that they are VISUAL and much more easily interpreted by people
  • I wish I could say I just won about a bet about incorporating Knight Rider into the webinar… but I just like the picture. Sorry.
  • So we could CHART the data and make it more visual. But how do we manage?
  • Driving to work….
  • Management is prediction
  • Topic that people didn’t like? Website down?  Stop SOPA Day
  • Special cause of Jan 2 – holiday weekend, so that was eliminated. Not the most stable process, but can generally predict daily page loads would be between 1200 and 2200 without there being any special cause
  • Expect one “false positive” signal every 371 data points with just this rule (“Shewhart Rule”)
  • This is how I would test if a client is not only sustaining gains, but also improving
  • You’re different story

Using SPC to Make Better Management Decisions Presentation Transcript

  • 1. Using SPC to Make Better Management Decisions Mark Graban Author, Lean Hospitals Co-Author, Healthcare Kaizen www.MarkGraban.com @MarkGraban
  • 2. 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
  • 3. My Most Favorite Book Ever Donald J. Wheeler, PhD http://www.spcpress.com/
  • 4. “No data have meaningapart from their context”
  • 5. 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
  • 6. 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”
  • 7. Two-Point Comparisons in Politics
  • 8. Did We Improve?
  • 9. Run Charts Show More Context
  • 10. Need to Avoid Bad Conclusions “The average patient satisfaction increased from 87.2 to 89%”
  • 11. A Better DashboardLimited information you need to make decisions
  • 12. Not This…
  • 13. Overwhelming Data Sept „06 ? Can we predict September? Can We See Trends?
  • 14. The Good News…There is a better way
  • 15. 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)
  • 16. X and MR Chart Combo
  • 17. Small Business Example Revenue as a Stable Process?X chartMR chart
  • 18. 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.
  • 19. 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.
  • 20. The Funnel Experiment• Lloyd Nelson, 1987 – Suspend a funnel on a stand a few inches off the ground – Drop 50 marbles x
  • 21. A “Stable” System• Does NOT mean: – Zero variability – System meets customer requirements• Means only: – Causes of variation are basically constant over time
  • 22. 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
  • 23. So we should do nothing?“Don’t just do something, stand there.” -- Deming
  • 24. 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
  • 25. 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
  • 26. Step 1: Initial Data• Generally need 20 data points to calculate control limits
  • 27. Step 2: Mean & MRs• Calculate mean of the first 20 points• Calculate the moving range of the first 20 points – Ex: =ABS(E5-E4)
  • 28. 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
  • 29. 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
  • 30. 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
  • 31. Step 6: Revise Limits
  • 32. Step 7: Evaluate Over Time LeanBlog.org Daily Page Loads30002500200015001000500 0 1 2 3 4 5 6 7 8 9 101112131415161718192021222324252627282930313233343536373839404142434445464748495051
  • 33. Step 7: Evaluate Over Time LeanBlog.org Daily Page Loads30002500200015001000500 0 1 2 3 4 5 6 7 8 9 101112131415161718192021222324252627282930313233343536373839404142434445464748495051
  • 34. Step 7: Shift the Limits LeanBlog.org Daily Page Loads30002500200015001000500 0 1 2 3 4 5 6 7 8 9 101112131415161718192021222324252627282930313233343536373839404142434445464748495051
  • 35. “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
  • 36. 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
  • 37. Long-Term Process Shifts
  • 38. 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
  • 39. Isn’t it always the system?It’s (almost) always the system.
  • 40. Q&A / Contact Info• Email: – mark@constancy.us• Blog: – www.leanblog.org• Twitter: – @MarkGraban• Books: – www.LeanHospitalsBook.com – www.HCkaizen.com