Problem Solving Tools and Techniques by TQMI

Tools and Techniques
Business Problem Solving -

CONTENTS
• Introduction
• The Problem Solving Process
• Brainstorming
• Cause and Effect Analysis
• Checksheets
• Concentration Diagrams
• Process Flowcharts
• Data Handling and Display
• Pareto Analysis
• Force Field Analysis
• Ranking and Rating
• Solutions Effect Analysis
• Failure Prevention Analysis
• Problem Solving Summary
• What is Continuous Improvement?
• Checklist

INTRODUCTION
All organisations need to improve continuously. There is increasing pressure from customers,
competitors, regulators and employees to do things better, faster and at lower cost.
CONTINUOUS IMPROVEMENT
Community Shareholders Competitors
SuppliersGovernment
Other
Partners
Employees Technology Regulators
Customers

INTRODUCTION
The ability to prevent and solve problems is one of the essential skills which people need to help
them address these challenges.
This guide explains a simple problem solving process and the tools you will need to help solve and
prevent day-to-day, workplace problems. It will help you learn what the tools are, what they are
used for, how to use them and their benefits.
We have included a range of examples so that you have the opportunity to see the tools applied
in different situations. They work just as well in manufacturing and service organisations, and in
the public, private and non for profit sectors.
The problem solving process and tools can be applied by individuals and teams wherever they
work in an organisation and whatever their role.

WHATEVER MADE
YOU SUCCESSFUL
IN THE PAST WON’T
IN THE FUTURE

INTRODUCTION
WHAT IS A PROBLEM?
Put simply, a problem is “a deviation from normal expectations.” So, if what you’ve got is not
what you expected, or what you want, it’s a problem.
CURRENT SITUATION
DESIRED SITUATION
PROBLEM

INTRODUCTION
People often get muddled between problems, symptoms and solutions so it helps to understand
the difference:
• A PROBLEM is a deviation from normal expectations
• A SYMPTOM is an effect of a problem
• A SOLUTION is a way to correct a deviation from normal expectations
The differences may seem subtle, but they affect the way you go about defining and solving
problems. If you are not careful, you may be starting in the wrong place!
“Our problem is we need new equipment” This is a SOLUTION
“Our problem is poor morale” This is likely to be a SYMPTOM of more
specific problems
“Our problem is how to speed up the ordering
process”
This is leaping to solutions, without having
defined the PROBLEM
“Our problem is which supplier to choose This requires a DECISION, not a problem to be
solved

THE PROBLEM SOLVING PROCESS
What is it?
The Problem Solving Process is a methodical and effective approach for analysing problems and
generating workable solutions to them.
When to use it
It can be used whenever you recognise that a problem exists and that a work process needs to be
improved. It will enable you to define a problem fully, conduct an analysis of the causes of the
problem and work through to the point of identifying and implementing improvement solutions.
It can be used by individuals, but most powerfully, by teams.

Why use it?
To dive headlong into implementing solutions often generates short-term improvements.
However, this can fail to eradicate the problem entirely because only the symptoms, not the
ROOT CAUSES of the problem have been dealt with. The problem solving process ensures you can
identify quick fixes as well as permanent solutions to the ROOT CAUSES.
The Problem Solving Process
1. Identify
Possible
Cause
2.
Investigate
& Fix
3. Analyse
Data &
Identify Root
Causes
4. Identify
Possible
Solutions
5. Select &
Test Solutions Define the problemImplementation stages
If viable:
Review/re-start
If not viable

The problem solving process has three separate
phases. Firstly we must DEFINE THE PROBLEM.
Then we can use the PROBLEM SOLVING WHEEL
to come up with workable solutions to our
problem. Finally, we go into the
IMPLEMENTATION STAGES where we put our
solutions into effect and see if they have solved
our problem.
One or more of the tools and techniques, such as
Cause and Effect Analysis, Pareto Analysis or
Checksheets may be applied throughout the
process. Each of the tools is described more fully
on the following pages.
DEFINE THE
PROBLEM
IMPLEMENTAION
STAGES
PROBLEM
SOLVING
WHEEL

But first, let’s look at the problem solving process in more detail:
Define the Problem
It is often necessary to step back from your first thoughts on what a problem is, so that you truly
understand what it is that needs to be solved.
Problem Definition questions provide a framework to specify more closely what a problem is. By
asking what, where, when, who, how big?, we can begin to define a problem and understand its
impact.
• What exactly is the problem?
• Where is the problem?
• When does the problem occur?
• Who is affected by the problem?
• How big is the problem?
It can also be helpful to ask questions
about “what is outside the
problem?” This helps identify the
boundaries to a problem and may
suggest where to look for solutions.

Problem definition example
From this Problem Definition we might want to find out what happened 6 days ago and why
other teams aren't affected.
INSIDE THE PROBLEM OUTSIDE THE PROBLEM
WHAT? Backlogs of XYZ claims have increased Backlogs of ABC claims have
remained static
WHERE? In Special Claims Processing Unit All other processing teams
WHEN? In the past 6 days Backlogs were acceptable
over the past 3 months
WHO? 5 staff in the SCPU Staff in other teams
HOW BIG? Backlog has increased to 40 claims and is rising by
5 per day
No noticeable increase in claim
volumes in other areas

THE PROBLEM SOLVING WHEEL
We use the five steps in the wheel to find workable solutions to a problem. It is a systematic way
to find root causes and solutions.
STEP 1: Identify Possible Causes
Aim: To generate a list of all the possible causes of a defined problem.
1. Identify
Possible Cause
2. Investigate
& Fix
3. Analyse Data
& Identify Root
Causes
4. Identify
Possible
Solutions
5. Select & Test
Solutions
How: Using idea generation tools, individuals or teams identify possible
causes that relate to the problem definition. Keep an open mind, do not
judge any suggestions at this stage and don’t get side-tracked into trying
to analyse other problems.

Main tools to use: • Brainstorming
• Cause and effect Analysis
Other possible tools: • Process Flowcharts

STEP 2: Investigate And Fix
Aim: To identify which possible causes actually contribute to
the problem, and fix those that can be acted upon
immediately.
How: Collect data about each possible cause and see if it is
linked to the problem.
Don’t rely on peoples’ opinions to rule out possible causes;
collect data and facts!
Implement any temporary fixes carefully and monitor the
effect of any changes you make. Make sure that quick fixes
are followed up with actions to address the root causes.
1. Identify
Possible Cause
2.
Investigate
& Fix
3. Analyse Data
& Identify Root
Causes
4. Identify
Possible
Solutions
5. Select &
Test Solutions

Main tools to use: • Checksheets
• Concentration Diagrams
• Pareto Analysis
Other possible tools: • Process Flowcharts
• Interviews and Questionnaires

STEP 3: Analyse Data And Identify Root Causes
Aim: To identify the root causes of a problem.
How: Use analysis tools to find the cause(s) which, if
removed, will ensure a problem is solved and stays solved.
Ensure you recognise the differences between “fixes” and
root causes.
1. Identify
Possible Cause
2.
Investigate
& Fix
3. Analyse Data
& Identify Root
Causes
4. Identify
Possible
Solutions
5. Select &
Test Solutions
Main tools to use: • Pareto Analysis
Other possible tools: • 5 Whys
• Process Flowcharts

Fixes vs. Root Causes – examples:
Problem Possible Fix Possible Root Causes
Errors On Expense Forms Re-train people Form needs simplifying and
redesigning
High Staff Absenteeism Monitoring and disciplinary
action
Poor leadership skills from line
managers
Equipment Breakdown Remedial maintenance No system of preventive
maintenance

STEP 4: Identify Possible Solutions
Aim: To identify possible solutions which could be used to
eliminate the identified root cause(s).
How: Use idea generation techniques and
involve those affected by the problem in
identifying possible solutions. Aim for as
many ideas as possible; don’t evaluate at
this stage. If you have done a thorough
analysis, the solution may be obvious though!
1. Identify
Possible Cause
2.
Investigate
& Fix
3. Analyse Data
& Identify Root
Causes
4. Identify
Possible
Solutions
5. Select &
Test Solutions
Main tools to use: • Brainstorming

STEP 5: Select And Test Solutions
Aim: To select an effective, practical and implementable
solution that will remove the root cause of a problem.
How: Use Ranking and Rating to select the best solution against
the criteria agreed by those involved. Assess the impact of the
chosen solution and ensure that it doesn’t
cause more problems than it solves. You may need to review
what you’ve done and re-start if you can’t find a viable
solution.
1. Identify
Possible Cause
2.
Investigate
& Fix
3. Analyse Data
& Identify Root
Causes
4. Identify
Possible
Solutions
5. Select &
Test Solutions

Main tools to use: • Ranking and Rating
• Solutions Effect Analysis
• Failure Prevention Analysis
Other possible tools: • Force Field Analysis
Financial tools such as Cost-Benefit Analysis and Payback Analysis can also be used to help with
the cost justification of any solutions. Ask a Finance person if you need help with this.

Implementation Stages
Once a viable solution has been identified, you can move on to the Implementation Stages. This
involves the implementation of the solution generated at the previous stage together with the
establishment of indicators to monitor the effectiveness of the solution.
Education, Training and Communication
• Involve all those affected by the problem solution
• Listen to feedback
• Consider education and training needs
Implementation Planning
• Identify planned activities and critical path
• Identify measures and resource requirements
• Involve and train those affected by the solution
Implementation and Follow Up
• Implement your solution
• Measure improvement
• Follow up – make sure it sticks
• Report on success

BRAINSTORMING
What is it?
Brainstorming is a technique that encourages creative thinking and the generation of ideas.
Why use it?
Rational or conventional thinking does not always solve a problem or get to the root cause.
Brainstorming is a motivating and involving process which has the potential for providing
innovative and alternative answers.
“WE CANNOT SOLVE OUR
PROBLEMS WITH THE
SAME THINKING
WE USED WHEN
WE CREATED THEM”
- Albert Einstein

BRAINSTORMING
What is it?
Brainstorming is a technique that encourages creative thinking and the generation of ideas.
Why use it?
Rational or conventional thinking does not always solve a problem or get to the root cause.
Brainstorming is a motivating and involving process which has the potential for providing
innovative and alternative answers.
When to use it
• To generate a list of potential problems to solve
• To identify possible causes of a problem
• To identify possible solutions to a problem
• To develop action plans

BRAINSTORMING
You will realise from this list, that
Brainstorming is an integral part of
many of the tools described here,
including Cause and Effect Analysis
and Process Flow Diagrams.
How can we
increase
sales?
Cold
Calling
Social
Media Email
Marketing
Online
Marketing Networking
Television
Advert
Radio
Advert

BRAINSTORMING
Rules for Brainstorming
• Choose the right team and have a leader
• Ensure everyone knows the rules
• Define the problem/topic clearly
• Allow time for individual thought before generating ideas as a group
• Ensure everyone participates
• Generate as many ideas as possible
• Ban discussion and evaluation during the idea generation stage
• Record every idea, on a Flipchart
• Allow incubation time before evaluating the ideas
• Keep a relaxed atmosphere

BRAINSTORMING
Variations
Allow individuals to Brainstorm onto Cards or Post-it Notes (one idea per card), stick all the ideas
on a wall, then arrange them into groups of similar ideas. This is sometimes known as an Affinity
Diagram.
Online
Sales
Social
Media
Email
Marketing
Offline
Sales
Television
Advert
Radio
Advert
Direct
Sales
Cold
Calling
Networking

FOR EVERY EFFECT
THERE IS A
ROOT CAUSE

CAUSE AND EFFECT ANALYSIS
What is it?
A Cause and Effect Analysis is a way of identifying the possible causes affecting a problem and of
recording these visually. Cause and Effect Diagrams show the relationship between a problem
(effect) and the factors which potentially affect it (causes). They are also known as Fishbone
Diagrams and Ishikawa Diagrams.
They assist the search for the root cause of a problem by organising, in a systematic way, your
knowledge and understanding of the factors which may contribute to a problem.

Cause and Effect Example
WHY IS THE
MONTHLY
REPORT
FREQUENTLY
INCORRECT?
PROCESS PEOPLE
TECHNOLOGY MATERIALS
Measured on
volume entered
No pre-entry checks
Batches too big
Not enough res-breaks
No automated checking
Boredom
No pre-entry checks
Untrained staff
New staff
Pressure of work
No time
Lack of regular breaks
‘Bugs’ in the
system Old technology
Keyboard ‘bounce’
‘Sticky’ keyboard
Poor environment / ergonomics
Inadequate software
Seating, lighting,
heating
Incorrect data
Faxes of faxes
Illegible handwriting
Illegible copy
Temp staff

How to use it
1. Name the problem in terms of its effects, ideally including quantification.
2. Identify the major categories of causes.
3. Brainstorm to identify all the possible causes under each of the main cause headings (follow
the rules of Brainstorming).
4. Analyse the possible causes and identify any linkages between the possible causes.
5. Evaluate the most likely causes, or combinations, and agree to focus on these for further
6. investigation or quick fixes.
PEOPLEPROCESS
Untrained staffNo process
Batches too big Does this
cause this?

Variations?
1. Write the possible causes on sticky notes or cards without reference to where they fit in the
diagram; then arrange the cards into a Cause and Effect Diagram.
2. Use a Process Flowchart and Brainstorm the possible causes of problems around each of its
steps.
Benefits
• Helps provide a systematic method for communicating with other people about a problem or
situation that needs to be improved
• Encourages you to distinguish between the problem and its possible causes
• Encourages you to identify all possible causes, thereby increasing the likelihood that you
won’t ignore the real causes

Ground rules for success
• Use large diagrams and ensure everyone can participate
• Examine the relationships and interactions between causes
• Define the problem effect clearly and don’t overload the diagram
PROBLEM
PROCESS PEOPLE
TECHNOLOGY MATERIALS

You may want to use the “5 Whys” technique to help you identify possible causes. This can help
you add extra levels of ideas on your diagram.
The 5 Why: “Monthly Report Was Late”
WHY? Because the printer didn’t work
WHY? Because the paper got jammed
WHY? Because someone used the wrong paper
WHY? Because no-one knows what the right paper is
WHY? Because there is no written procedure or
user training
Fixing the printer
is not the solution

CHECKSHEETS
What are they?
Checksheets are a systematic way to collect and record data using a pre-prepared form or matrix.
They list the items to be checked, with sufficient space for entering check marks against each of
the items. They have a number of uses, such as counting ...
• ... the number of defects or errors that occur
• ... the frequency of occurrence of events such as accidents, complaints, enquiries,
compliments
They are also useful for collecting data to identify trends before and after solving a problem.

CHECKSHEETS
A Checksheet for: “Reasons for late billing”
CAUSE JAN FEB MAR APR TOTAL
Unclear tariff rates 47
No information on addressee 6
Technical problems with system sold 18
Sales policy 3
Not informed of billing start date 6
Computer problems 5
Other 2
TOTAL 25 20 23 19 87

CHECKSHEETS
How to use them
1. Establish the categories in which to collect data
a. Brainstorm a list of potential categories, or
b. Examine some sample defects and attempt to classify them by category (i.e. identify
categories by looking at existing defects)
The final list of categories must cover all possible defect types and the categories must be
mutually exclusive.
2. Decide how long you will collect the data. Enough data must be recorded over a sufficiently
long period to represent the process being studied. A rule of thumb is record data long
enough to accumulate at least 100 check items.

CHECKSHEETS
3. Design the checksheet.
4. Brief those who have to collect the data. Everyone collecting the data must understand the
categories in the same way so that each person’s data recording is consistent with everyone
else’s.
5. Record information consistently and honestly, so that you have valid data to analyse.

CHECKSHEETS
Benefits
• They encourage you to distinguish between data categories
• They enable you to collect data in a systematic way
• They organise data in a form which makes it easy to use for other purposes; e.g.
development of a Pareto Diagram, or to identify trends
• Ensure the categories are comprehensive and mutually exclusive
• Let people know what the purpose is and what the data will be used for
• Those involved in solving a problem should help design the Checksheet
• Repeat the data collection after implementing improvement solutions

CHECKSHEETS
Variations
They may also be used for reminders of tasks to be carried out in a process; i.e. as Checklists.
Task Date Required Done Done By
Book venue 1st June RC
Invite customers 15th June IS
Arrange hospitality etc. 21st June

“THERE IS ALWAYS SPACE FOR IMPROVEMENT,
NO MATTER HOW LONG YOU’VE BEEN IN THE
BUSINESS.”
- Oscar De La Hoya

CONCENTRATION DIAGRAMS
What are they?
Concentration Diagrams are pictorial Checksheets and are among the simplest of tools to set up
for data collection. They are visual displays of how often and where faults, defects or problems
occur, on a product, on a form, or in a process. By recording the occurrence of defects, they tend
to show a concentration of problems in specific areas.
How to use them
1. Define the fault under investigation.
2. Provide a large drawing or picture of the product, form or process where the fault is
occurring.
3. Leave on display for an appropriate period and ask people to mark on the diagram each time
a fault occurs and where it has occurred.
4. After a sufficient period analyse the diagram to identify points of fault ‘concentration’.

Concentration Diagram Example
xx
x
x
x
x
x
x x
For example showing
production damages
and defects on apparel
production

Concentration Diagram Example
Source: https://www.police.uk/city-of-london/cp/crime/
Showing crime in
a London area

• Ensure the categories are comprehensive and mutually exclusive
• Let people know what the purpose is and what the data will be used for
• Those involved in solving a problem should help design the Checksheet
• Repeat the data collection after implementing improvement solutions
Variations
The diagram could be based on:
• A map or site plan • A diagram of a product or machine
• A Process Flowchart • A form or data entry screen

PROCESS FLOWCHARTS
What are they?
Process Flowcharts are used to show the steps in a process. These include the inputs and outputs
as well as the intermediate steps and decision points.
A process is a series of activities that converts an input to an output, by doing work. Process
Flowcharts create a common understanding of the steps involved in carrying out any process.
They can be used to highlight opportunities to streamline a process, making it both more
effective and more efficient.
PROCESS
INPUT OUPUT

PROCESS FLOWCHARTS
Sequence Flowchart
Raise
Recruitment
Request
Write Job
Advert
Authorise
Recruitment
Place Job
Advert
Receive
Applications
Select
Shortlist
Arrange
Interviews
Interview
Candidates
Select New
Recruit
Appoint New
Recruit
Separate
Process
No
If nobody suitable

PROCESS FLOWCHARTS
How to use them
1. Define the process – agree on the start and end boundaries.
2. Identify the actual process steps – brainstorm to identify the current steps (use Verb + Noun
names; e.g. Select Shortlist).
3. Arrange the process steps in sequence, linked by arrows; if some activities occur in parallel,
arrange them beside each other (if the flow is top to bottom) or below each other (if the flow
is left to right).
4. Analyse the resulting diagram – clarify any outstanding misunderstandings; transfer the
diagram to paper.

PROCESS FLOWCHARTS
Analysing the Flowchart
Look at the Diagram and ask:
• Are all the steps necessary?
• Are any steps missing?
• Where could delays or errors occur?
• Can the process be simplified?
• Do the outputs meet customer requirements?
For the process inputs and outputs:
• Are there clear, specified and agreed standards?
• Is there adequate feedback?
Processes only exist to
meet the requirements
of customers.
Who are the process
customers and what
do they think?

PROCESS FLOWCHARTS
For each process step:
• Do people have the necessary skills?
• Are the facilities/equipment adequate?
• Is it possible to measure performance?
• Is the step necessary? (what value does it add?)
• What impact would defects or errors have?
Benefits
• Capture and combine knowledge of everyone involved with a process
• Help ensure a common understanding of how a process works
• Reveal opportunities for improvement
• Develop ownership of the process through teamwork
The results we achieve
depend on how well
people design, operate
and improve our
processes.

PROCESS FLOWCHARTS
• Define the boundaries of the process before beginning to construct the Flow Diagram
• Involve people who operate the process and know the current situation
• Analyse the resulting diagram rigorously, using data and challenging questions
• Work logically and dispassionately – remember the aim is improvement
• Focus on how the process meets the needs of its customers, not on existing constraints or
organisation
• Don’t get “hung up” on producing the world’s most perfect Flow Diagram; use the symbols
only if they add to peoples’ understanding of the process
Variations
A variation on the linear, Sequence Flowchart above is the Responsibility Flowchart, which
identifies who does each step.

PROCESS FLOWCHARTS
Responsibility Flow
External
Sales
Internal
Sales
Costing
Dept.
Planning
Dept.
Receive
Enquiry
Complete
Request
Form
Produce
Cost
Estimate
Sign Off
Cost
Estimate
Pass To
Planning
Produce
Lead Time
Estimate
Respond
To
Customer
Produce
Completed
Estimate

“YOU CAN’T MANAGE
WHAT YOU DON’T MEASURE”
- W. Edward Deming

DATA HANDLING AND DISPLAY
What is it?
Various techniques designed to help you gather and display data in pictorial form.
Why use it?
A picture is “worth a thousand words!” and therefore aids communications and adds impact to
your readers. In addition, it is more likely to highlight trends and relationships in data.
How to use it?
Techniques included are:
• Tally Sheets • Frequency Distribution • Histograms
• Line Graph • Pie Charts • Scatter Graphs

Tally Sheets
Provide a quick and adaptable way of recording data. They are also known as Checksheets.
Two quick conclusions can be drawn from this Tally Sheet. Complaints occur most frequently in
the last week of the month and on type “B” complaints.
Customer Complaints - May
Complaint Type Week One Week Two Week Three Week Four Total
A 9
B 24
C 5
D 2
Total 10 6 7 17 20

Frequency Distribution
169 170 171 172 173 174 175 176 177 178 179 180
Height of Males (centimetres)
Frequency The tally results produce a 'bell
shape' curve of the Normal
Distribution displaying AVERAGE
and SPREAD.

The normal measure of the average is known as the MEAN. The mean is calculated by adding all
the values together and dividing by the number of values. This gives you a summary measure of
the central point of the data.
Two other measures of the average are the MEDIAN and the MODE.
The median is the middle value when the values are arranged in ascending/descending order.
The mode is the most commonly occurring value in a set of data.
The simplest measure of spread is the RANGE between the highest and lowest values.
The most accurate way of measuring spread is the STANDARD DEVIATION, which is the average
difference between the values and the mean.

Frequency Histogram
Histograms show the frequency distribution over a range of values. They show how frequently
the measurement values occur. The main use of a histogram is to assess the variability in a
population, or in a process.
The height of the bars in a histogram indicates how frequently that value of data occurs. The
tallest bar is the most frequently occurring data value.
If you have a wide distribution, it is more likely that common causes of variation are present. It
may be difficult to remove enough of these causes to narrow the overall range of variation
present in a process.

Histogram
0
5
10
15
20
25
30
35
169 170 171 173 174 175 176 177 178 179 180
NumberofMen
Height in Centimetres
This Histogram was drawn from
the Frequency Distribution data.

Line Graph
A Line Graph (also known as a Run Chart) is a graphical representation of a variable, plotted over
time to show a trend. Line Graph uses include:
• Determining visually, but not statistically, the stability of a process; i.e. is it “in control”?
• Monitoring progress towards a desired goal
• Determining whether a process exhibits a cyclic or any other type of pattern

Line Graph
Week 1 2 3 4 5 6 7 8 9 10 Etc.
Shortages 32 78 128 84 60 2 136 120 110 42
0
20
40
60
80
100
120
140
160
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
NumberofItems
Date/Week Number
In this Line Graph we are
plotting the number of shortage
items from orders each week.
Shows a situation out of
control - but, nevertheless,
there is an underlying
trend.

Pie Charts
Shows a complete set of data and the proportions represented by each component of the whole,
at any one point in time.
Pie charts are used to emphasise a particular segment and relative proportions.
25%
20%
20%
25%
10% It can be used to show, for example:
% of different products sold
% of different error types
% of different customer groups
% of different stock items held
% of different staff grades

Scatter Graphs
The scatter graph is a graphical method of determining the relationship between two or more
variables, for example to see if there is a cause and effect relationship.
Draw the cause axis horizontally and the effect axis vertically.
Correlation is the term which indicates how the two variables are related. Scatter Graphs can be
used to show a positive or negative correlation between two variables, or to demonstrate that
there is no correlation.

Scatter Graphs
x
x
x
x
xx
x x
x
x x
x
xx
x x x
x
x
x
xx
x x
x
x x
x x
x
Strong Weak None
• Do we get more errors when we get more work?
• Do we get more complaints because we've sold more products?
• Do we get longer queues when we've got fewer staff?
Line of
best fit

Line of best fit
Having drawn the scatter diagram, can a straight line be drawn to represent the relationship
between the variables?
A line of best fit does not prove a cause and effect relationship between the two variables. It is
evidence that further investigation is worthwhile to test the theory further.
With a positive correlation, the value of one variable increases in line with the other variable.
With a negative correlation, the value of one variable decreases as the other one increases.

PARETO ANALYSIS
What is it?
The Pareto Principle, which underpins Pareto Analysis, says that a small number of causes of
problems (the vital few) have a great effect on performance, while a large number of causes (the
trivial many) have a much smaller effect. It is also known as the 80/20 Rule whereby 80% of
problems are the result of 20% of the causes. The principle is named after Vilfredo Pareto, a 19th
Century Italian economist whose research showed that 80% of the wealth was owned by 20% of
the population.

PARETO ANALYSIS
The main purpose of Pareto Analysis is to
enable the identification and separation of the
main issues from other less significant issues.
Attention can then be focused on finding the
causes of the most important problems. They
can also be used to make comparisons, e.g.
between different processes, or before and
after improvement.
20%
80%
The ‘Vital Few’
Causes

PARETO ANALYSIS
How to use them
1. Identify the problems to be investigated, the categories of data and the means of collecting
the data.
2. Develop a Checksheet for collecting the data.
3. Collect the data using the Checksheet.
4. Develop and complete a data sheet with the data arranged in decreasing order of size (e.g.
frequency, cost or time).
5. Construct the Pareto Diagram, including scales, bars, cumulative curve and cumulative values.

PARETO ANALYSIS
Pareto Data Table
This is the Pareto Data Table from the previous Checksheet example: 'Reasons for late billing'.
Causes Frequency
Cumulative
Frequency
% Cumulative
A Unclear tariff rates 47 47 54 54
B Technical problems with systems sold 18 65 21 75
C No information on addressee 6 71 7 82
D Not informed of billing start date 6 77 7 88
E Computer problems 5 82 6 94
F Sales policy 3 85 3 98
G Other 2 87 2 100

PARETO ANALYSIS
Pareto Diagram
0
20
40
60
80
100
120
0
5
10
15
20
25
30
35
40
45
50
A B C D E F G
%
Frequency
Causes
Frequency
Cumulative %
Cut Off
The data in this
graph relates to
the Pareto Data
Table on the
previous page.

PARETO ANALYSIS
Benefits
• Simplifies and clarifies your understanding of the problem you are trying to solve by focusing
on the areas of most importance
• It is easier to reduce the most frequently occurring problem by half than to reduce a rare
occurrence to zero
• Quick results build confidence
• Many causes produce multiple types of defects. Removing the causes of one problem often
also removes the causes and therefore occurrences of other problems
• Enables comparisons to be made between different processes

PARETO ANALYSIS
• Avoid dealing with the symptoms rather than the causes of problems
• Use categories in the diagram which are mutually exclusive
• Use Pareto Analysis as a means of increasing knowledge of a problem
• Make sure the data is representative of the problem, taking into account the effect of day-to-
day variation
• Don’t ignore problems that are not among the most frequently occurring. They may, for
example, have a big effect on cost and perhaps be fixed easily

FORCE FIELD ANALYSIS
What is it?
Force Field Analysis is a tool for identifying the forces which help or hinder a change you want to
make.
Why use it?
• To improve any situation that requires a change
• To understand what is working for and against any proposal
• To identify which forces cannot be changed
• To help plan how to overcome barriers to change

How to use it
1. Construct a Force Field Diagram, with the improvement target defined and brainstorm
positive and negative forces.
Positive
Negative
+
-
Desired Improvement Target

How to use it
2. Analyse the diagram using an analysis sheet to determine the degree of ability to change and
the effect of each force.
3. Decide a course of action which encourages the positive and discourages the negative forces
by selecting those forces which have received a high score on the analysis sheet.
Variations
Rather than doing a full scoring analysis, ask people to vote on the strongest positive and
negative forces (3 votes for each). Then focus on actions in the six highest scoring areas.

Force Field Analysis Example
Positive
Negative
+
-
Target: Improve accuracy of
expense claims
Knowledge
of Company
Policy
Knowledge
of Revenue
Rules
Thoroughness
of
Claimants
Thoroughness
of Approver
Clarity of
Claim Form
Ease of use of
Claim Form
System
Knowledge
Complexity
of Company
Policy
Complexity
of Revenue
Rules
Dishonesty System
Complexity
No. of
Payment
Methods

Analysis Sheet
Ability to
Influence
Effect Overall
Knowledge of Company Policy 5 6 30
Knowledge of Revenue Rules 5 2 10
Thoroughness of Claimants 3 6 18
Thoroughness of Approver 2 3 6
Clarity of Claim Form 10 8 80
Ease of use of Claim Form 8 6 48
System Knowledge 5 1 5
Cannot influence: Complexity of Revenue Rules; Dishonesty
Ability to
Influence
Effect Overall
Complexity of Company Policy 1 4 4
Complexity of System 5 2 10
No. of Payment Methods 4 1 4
Positive Forces Negative Forces

• Be clear about the target for improvement
• Ensure maximum participation in brainstorming the forces
• Identify those forces which can and can’t be influenced
• Include action on both the positive and negative forces

RANKING AND RATING
What is it?
Ranking is the structured process of placing a number of options in order of preference, by using
a scoring system called rating. It is a decision-making tool.
Why use it?
• To assist the choice of the best option (e.g. which problem to solve, which solution to
implement)
• To make the choice less emotional and more logical
• To increase the ownership of the chosen option
• To maximise the effective use of available resources

RANKING AND RATING
How to use it
1. List the options.
2. List the selection criteria.
3. Categorise the criteria into “essential” and “desirable”.
4. Test the options against the “essential” criteria.
5. Rate the remaining options against the “desirable” criteria.
• List the options and agree the criteria before doing any evaluation
• Separate out the essential and desirable criteria

RANKING AND RATING
Ranking and Rating: Example
Selection Criteria Possible Projects
Essential A B C D E F
Improves Service
Highly Visible
3 – 5 Months To Do
Saves Time
Desirable Weight
Saves Money 10 10 10 4 6
Low Cost 7 5 4 0 5
2 – 3 Months To Do 7 7 7 0 2
Totals 22 21 4 13

RANKING AND RATING
In the example above we are trying to decide which is the best project to carry out. Project A
meets all the essential criteria and scores best against the desirable criteria. It is our first choice
project, closely followed by Project B.
• List the options and agree the criteria before doing any evaluation
• Separate out the essential and desirable criteria

SOLUTION EFFECT ANALYSIS
What is it?
A Solution Effect diagram is a Cause and Effect diagram in reverse.
Why use it?
• To check if your solution solves the problem
• To compare effects of different solutions
• To ensure your problem does not cause bigger problems
• To identify what other actions may be necessary to implement your solution successfully

How to use it
1. Identify the solution to be tested (e.g. Implement new I.T. system).
2. Identify the major categories to be used (e.g. Money, Materials, People, Process).
3. Brainstorm to identify the effects of the solution, for each of the major categories.
4. From the diagram, analyse the potential effects and identify the key actions required to ensure
successful implementation.
Effect
MONEY TECHNOLOGY
PEOPLE PROCESS

Solution Effect Analysis
Implement
Problem Solving
Training
MONEY MATERIALS
PEOPLE PROCESS
Lost production Consultants
Overtime
Quality improved
Rooms
Pens
Flipchart
Projectors
Co-ordinator
Ensuring
attendance
CommunicationsManager
briefings
Working
together
Attitudes
Skills
Trainers
Furniture
Follow up
Evaluation
How
many?
Cover / Temps
Paper
Screen

Variations
Brainstorm positive effects on one side of each line and negative effects on the other, or use
different coloured pens (green for positive, red for negative).
• Use large diagrams
• Test your proposed solution in theory, before implementation
• Involve a representative selection of those affected by a proposed solution
• Check whether the effects are not worse than the original problem
• Identify unexpected results – be creative
• Do not ignore any adverse effects
• Follow Brainstorming rules

FAILURE PREVENTION ANALYSIS
What is it?
Failure Prevention Analysis is a tool which will help you to anticipate problems before they
happen.
When to use it
• On any new activity
• Whenever a significant change is planned
• Where consequences of failure are potentially major
How to use it
1. Identify the potential problems by brainstorming “what could go wrong?”
2. Rank each possible failure by designating a probability and consequence factor, using a scale
of 0-10 for each. Calculate an overall risk rating by multiplying the two factors together.

FPR Example: Launch a New Product
Possible Failure Probability Consequence Overall Rating Ranking
Late delivery of raw materials 8 1 8 6
Unable to obtain raw materials 1 10 10 5
Machine not suitable 3 10 30 2
Machine not available 5 10 50 1
Paperwork not available 6 3 18 5
Operator training not carried out 3 2 6 7
Methods of measurement not
determined
3 7 21 3
The highest
risk
of failure here
is that the
‘machine
won't
be available'
when needed.

3. Examine the root causes of the key potential failures.
4. Identify actions that prevent failure (or re-think the decision to implement if failure cannot be
avoided or minimised).
In some cases, it must be recognised that there will always be a risk of failure, because all the
root causes cannot be eliminated. In these cases action should be taken to minimise the risk of
failure or minimising the effects of any failure.
In other words, you may need to identify both:
• Preventative Actions
• Contingency Actions

• Have a clear understanding of the activity to be analysed
• List the possible failures before evaluating them
• Rank the potential failures, noting both probability and consequences
• Be clear whether internal (e.g. cost), or external (e.g. customer satisfaction) consequences are to be
compared
• Look to eliminate root causes
• Involve those who may be affected by a solution in identifying 40 and analysing the risks
FPA is a great technique to involve all those people who say:
• "We tried it before and it didn't work"
• "It'll never work because..."
• "They'd never let us do it"
• "It's a good idea but..."

PROBLEM SOLVING SUMMARY
The problem solving process and tools should be used:
• By individuals and teams
• By all functions within an organisation
• As part of a Continuous Improvement strategy
Good problem solving is the result of:
• An effective, systematic process
• Disciplined use of appropriate tools
• Teamwork and collaboration

Effective teams result from:
• Strong leadership
• A supportive environment
• Strong communication between team members
• The ability to listen
• The ability of team members to build on one another’s ideas
The Matrix on the following page will help you identify which tools to use at each stage of the
Problem Solving process.

Define the
problem
Identify possible
causes
Investigate
and fix
Analyse data and
identify root cause
Develop possible
solutions
Select and test
solutions
Implementation
stages
Brainstorming
Cause and Effect Analysis
Checksheet
Concentration Diagrams
Process Flowcharts
Data Handling and Display
Pareto Analysis
Force Field Analysis
Ranking and Rating
Solutions Effect Analysis
Failure Prevention Analysis

WHAT IS CONTINUOUS IMPROVEMENT?
Continuous Improvement is a process that enables organisations to ensure they are continuously
meeting agreed customer requirements, at the lowest cost, by releasing the potential of all
employees.
It means:
• Our customers decide what the standards are
• We may need to balance the different needs of customers, partners and other stakeholders
• Reducing our total costs by getting things on time and right first time, every time
• Avoiding waste and delays by eliminating errors
• Only doing the right things – that meet customers’ and partners’ needs – adding value not
cost
• Continuously challenging the way we do things to see if there is a better way
• Harnessing everyone’s commitment to improvement, including leaders, employees, suppliers
and other partners

It is not
• A luxury
• Just meeting our own standards
• Doing things on the cheap
• Optional
The Problem Solving Process, plus the tools and techniques, are essential elements of a
Continuous Improvement strategy.
1. Identify
Possible
Cause
2.
Investigate
& Fix
3. Analyse
Data &
Identify Root
Causes
4. Identify
Possible
Solutions
5. Select &
Test
Solutions
Define the problemImplementation stages
If viable:
Review/re-start
If not viable

Successful Continuous Improvement needs to be controlled and managed just like any process.
Some of the most common causes of failure of the Continuous Improvement process include:
• Lots of activity and few early results
• Lack of strategic focus and planning
• No key targets and measures
• Seen as a “bolt-on” to the daily work
The key is to focus on achievement and avoid the “activity trap”, where everyone appears busy,
but nothing improves.
There are some fundamental things that need to be in place to support Continuous Improvement
and ensure success.

CONTINUOUS IMPROVEMENT
Leadership Plans
and
Priorities
Teams
And
Tools
Support
For
People
The Problem
Solving
Process
fits here.

In this Guide we have focused on a problem solving process and a set of basic improvement tools
that can be used by teams and individuals.
In addition to this, we need:
• Clear direction and leadership from managers at all levels
• A way to prioritise improvement opportunities and include these in our overall plans
• Time, training, encouragement and support for people when they get involved in
improvement activities
Some of the most successful organisations have used problem solving as a starting point for their
improvement processes. Today it is integral to the way they address areas for improvement.

Improvement process evolution
Most organisations go through a series of distinct phases in their Continuous Improvement
journey ...
Phase 1: Survival
• Recognising threats and business challenges
• Prioritisation of key areas for improvement by senior management
• Managers and staff are trained in problem solving
• Teams and individuals work at solving problems, using the tools
• Quick wins and improvements are achieved
• Quantified benefits are demonstrated – failure costs are reduced
• Facilitators work with, and provide support to, improvement champions

Phase 2: Prevention
• Key business processes are identified
• Managers and staff are trained in process management
• Processes are owned, managed and brought under control
• Customer satisfaction improves as a result of process improvements
• Managers coach staff in improvement skills
Phase 3: Continuous Improvement
• Customer delight is the goal
• Staff are truly empowered and fully involved in improvement activities
• Processes are benchmarked and achieve world class performance
• Self-Assessment using an Excellence Model is integral with business
• planning
• Achieving award winning scores in national quality awards

The road to Excellence is never-ending.
Continuous Improvement is a journey,
not a destination.

CHECKLIST
Yes No Comments
1. Defined the problem fully?
2. Decided who to involve in helping to solve the
problem?
3. Identified all the possible causes?
4. Carried out any quick fixes to sort it out now?
5. Collected data to quantify the problem?
6. Analysed the data to identify the root causes?
7. Identified possible solutions?
8. Chosen a workable solution?
9. Tested your solution?
10. Put together a plan for implementation?
11. Implemented your solution?
12. Measured the results to see if your solution worked?

ABOUT TQMI Ltd
TQMI Ltd. – The Continuous Improvement Specialists
TQMI is a management consultancy and training provider specialising in Continuous
Improvement. We help organisations achieve excellence through consulting, coaching and
training. Our extensive experience covers all Continuous Improvement tools and approaches
including: Kaizen, Six Sigma, Lean, Lean Six Sigma and the EFQM Excellence Model. We have
worked with some of the country’s leading organisations to help them outperform, improve
processes, engage staff, delight customers and maximise results.
CONTACT DETAILS
TQMI Ltd - Charter House, 63 Main Street, Frodsham, Cheshire, WA6 7DF
Tel: 01928 734 266
Fax: 01928 736 628
www.tqmi.co.uk

Image Credits
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