Statistical Thinking

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statistical_thinking.jpgThe 3rd in a series of articles which deal with the basics of quality management & Six Sigma.

 

Six Sigma is defined as a process improvement methodology based on statistical thinking. But what is Statistical Thinking? Well it is not essentially the way a statistician thinks, nor does it have anything to do with complex formulae and visualizing graphs in our minds. In fact many times we get into the mode of statistical thinking, but may not be aware of it. Statistical thinking comprises of three simple steps:

 

1. Recognize all activity as a Process

 

2. Recognize that these processes have inherent variation and also a lot of non-value adding steps and

 

3. Use data to understand the variation or waste and drive decisions to improve the process.

 

Before we address these three points, it’s important to understand the definition of a process, which is very simple. A process is an activity that takes an input adds value and gives an output. For example-

 

Juice making process: fruits are fed (Input) into the processor, the machine is operated (value addition) and you get fruit juice (output). Consider the Ticketing Process in a railway station- the inputs are the filled in form and money, there is a computerized value adding activity and the output is the ticket.

 

Having understood what a process is, we can look at the 3 steps leading us to statistical thinking. We will understand the 3 steps by taking common activities from our day to day life; let’s look at the activity of going to office everyday by the company bus :

 

Recognize this activity as a process: How do we look at it as a Process? It’s simple; let’s look at the inputs and the outputs. The inputs are starting time, the route and the vehicle you use. Value addition is transporting you from home to the office, and the output is the actual time you reach the office.

 

Recognize the variation and the non value adding steps: No doubt there is variation in this process, because we don’t take the same time every day. If the variation is acceptable, we may not do anything about it. But if the variation is large and we need to cut down the timing, it’s good to look at the non-value adds and the wastes. The non-value adding steps can be the signal points, the humps, the traffic blocks, waiting at the different stops etc.

 

Collect data to understand the waste and drive improvements: By collecting data from our daily trips, we can find out that the inputs have a great impact on our outputs and by avoiding many non-value added steps we can reach earlier and also more consistently. For example after the study we may find that the existing route of driving through a particular part of the town has more of road humps, cattle, stray dogs, signals, schools ( especially the school starting time). On the contrary a study on another route, say the Ring Road may take about 20% more distance but has relatively less hindrance

 

So based on this we can either totally change the process by using the Ring Road or make changes in the route within town to avoid roads that are congested or has a school starting during our journey via that road.

 

Many times we get into the mode of statistical thinking, but may not be aware of it.

 

 

If we look at the transformation that’s taken place in our banks today, we will see the same philosophy. Let us look at the cash withdrawal process in a Bank. The request (input) is processed and cash is tendered (output). Most of us might have experienced the trauma in the banks with the token given on receipt of the request, and awaiting our call to collect cash. Later with the Teller system becoming popular the process time was slashed and lot of non-value adding steps like token issual were eliminated. Today with the ATMs in place the process time has been completely slashed.

 

We could start using this thinking while we plan to buy household appliances, durables or even vehicles. Suppose we want to buy a water filter, we could use statistical thinking to understand the process and select the right filter. Let us evaluate a high end water purifying equipment

 

1. What are the inputs- Water, Sediments, Salts, Hardness, Bacteria and the output is Potable water.

 

2. What could be the non-value adding process? This depends on the inputs- is the water from a river source, a bore well, a lake or any other source? If the water has no hard salts present, but we have a softening agent; probably that’s a non value adding activity. We are using a softening agent by spending a lot of money, while we may only need filters and agents to kill bacteria.

 

3. In this process, the data we collect to understand waste, is nothing but analysis of the water sample. The decision of buying the right filter depends on the inputs, so that the process steps are just suited for that.

 

Today organizations view Processes itself as non value adding and focus on eliminating it. Just like in our company we have eliminated the process of printing salary slips; we can view our salary statements on the intranet, thereby saving a lot of stationery and man hours

 

As we get more into the statistical thinking mode, we look at every thing as a process and also identify the interacting processes. This approach is called a Process Approach and it breaks down departmental barriers and red tapism in organizations and help processes flow like water. n

 

Pradeep Kumar ET - Master Black Belt in
Six Sigma, is Manager- Quality assurance with Tyco Electronics Corporation India Pvt. Ltd.
e-mail: pradeep@businessgyan.com

 

Issue BG57 Dec05

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