Understanding VARIATION

1530 reads

Every day we are flooded with data, be it stock index, billing figures, scrap rates or cricket scores.  We also see the there is variation in all the data we receive, but the capability to understand and handle variation is very important.

 

I can't think of any process which doesn't exhibit any sort of variation, or even if we don't see any, it would be our incapability to measure the variation. Managers who are presented with data need to make decisions using data and the variation in data from day to day, month to month or quarter to quarter.  One may have come across managers who appreciate and award team members when there is a month's dip in scrap level or a rise in billing figures; at the same time get tough when they see a dip in trend the following month.

 

Managers use data trends not just to make business decisions but also to award or even fire people

 

 

What is important however is to know when to act on variation and when to leave the process alone. If the data from a system is plotted as a graph and control limits plotted, then trend of data points with respect to the centre and the control limits will give an indication if the process is stable with time and in control.  Anybody with basic knowledge of statistics or the ability to use any statistical software can plot a graph with control limits.  What is important is not how to calculate and plot the control limits, but to understand that some variation is acceptable and some are not.

 

A process is stable and in control only when it is under the influence of Common Causes; and a process which is out of control is said to exhibit Special Cause Variation. So every process does exhibit variation but one needs to act only if the variation is caused by special causes; else action will be mere tampering with the process which is also called as over adjustment. 

 

Common cause (also called Noise) is present in every process and is produced by the process itself; and to remove or lessen noise a fundamental change in process is required. On the other hand, Special Cause (also called Signals) is unpredictable and typically large in comparison with common cause.  Special Cause is caused by unique disturbances or a series of them and can be removed or lessened by basic process control or monitoring.

 

To understand this conceptually, let us look at an example. Consider an office bus which is scheduled to reach office every day at 8 am.  The bus in its normal course picks up staff at various points in the city and arrives at office around 8 am daily, not exactly at 8 am, but hovers around an average of 7.55 am.  Let us say the arrival could vary from say 7.50 am to 8 am, so we see an overall variation of about 10 minutes in this case.  On a given day the arrival varies from the average of 7.55 by 0 to 5 minutes in either direction and there can be no assignable reason for this variation. Under this situation the process is said to be under the influence of common or chance cause variation.  If the vehicle has a flat tyre on a particular day surely there is an assignable or special cause and the vehicle could come late by say about 30 minutes; and in another instance if there is a city wide strike and all schools and government establishments are closed, the bus could reach by say, 7.40, again due to a special cause.

 

This knowledge of variation and common and special cause is very important for mangers to take the right decision and not to mislead by variation under in stable process, and also sporadic brilliance at times. This is applicable for all process including cricket scores, and surely the Indian team scores will be hovering around an average, though could vary depending on the game being played on the home ground or outside, and also depending on the opponent. But for sure there is an average and a variation and there can be some sporadic incidents which I call magic or misery depending on the case.  To make a shift from the average either there has to be a continuous improvement or a breakthrough.  For breakthroughs there has to be a proper analysis of the process and of the root causes of problems, to enable breakthrough improvements.

 

To summarize I would say understand variation, understand the central value or average, don't be perturbed by shifts in a controlled variation; but plan for breakthroughs to make a significant change and also to reduce variation.

 
 

Pradeep Kumar E.T. A Master Black Belt in Six Sigma , is the Country Manager- Operational Excellence with Tyco Electronics Corporation India Pvt Ltd. Feedback can be e- mailed to pradeep@businessgyan.com 

 

Issue BG73 Apr07

Trending

824
Harvey Mackay's picture

Develop high performance habits

Are you performing up to your potential?  Are you afraid to jump to the next level?  Are your habits pushing you forward or holding you back?The most important book on self-motivation and achieving more than you imagined hit the bookstores
791
Harvey Mackay's picture

Your business depends on your personal touch

Mamie Adams always enjoyed going to a branch post office in her town because the postal employees there were friendly.  She went there to buy stamps just before the holidays one year and the lines were particularly long.  Someone pointed
710
vnbhattacharya's picture

What will you do in this difficult situation?

Instead of writing about my views on business strategy as I do every month, I would like to present an exciting and tricky problem today.It is an issue of decision making similar to what many senior and top managers have to deal with from time to
698
johnsullivan's picture

The New New Thing: Blockchains and Recruiting

If reading about AI is making you feel like Alice in Wonderland, then take heart, there’s something new on the horizon — Blockchains. The technology has been around since 2008 but is now getting more mainstream in business applications, though...
696
hindustantimes's picture

Year of Culture: India’s diversity rocks London audience

 Sufi music, opera singing and Indian folk dances merged seamlessly with British hip-hop and tap dance as more 150 artistes put on a vibrant performance at one of the last events of the UK-India Year of Culture 2017.Billed as the Independence
650
davecrenshaw's picture

How To Get Work Done Without Stretching Yourself Thin – Pick Dave’s Brain

Could you pass the insanity test? This week’s question comes from David in Salem, West Virginia. He asks: I’m following your time management training program, yet often I find I’m putting appointments on my calendar and then not completing them—
636
jackcanfield's picture

5 Leadership Traits of Great Leaders

Whether you’re climbing the corporate ladder, building a network marketing downline, working for social change, or even coaching a Little League team or organizing a civic event, knowing leadership traits of effective leaders will make you more
636
anandmahindra's picture

youtube.com/watch?v=7SNwhZ…

From: twitter.com Via: twitter.com This could constitute a serious threat to Mahindra Odyssea, our boat building company. https://t.co/AwzTQVLp1lYou
626
johnsullivan's picture

AI or IA? Intelligence Augmentation for Recruiting

IBM’s Watson is synonymous with AI. Perhaps IBM should have named it Sherlock. Anyone familiar with the Sherlock Holmes stories knows that Watson wasn’t very bright. But he did have his uses. He was good at collecting and summarizing information,...

Pages