AnalyzeAnalyze ImproveImproveDefineDefine MeasureMeasure ControlControlRoot

Cause

Root

Cause

LEANSIX SIGMA

LEANSIX SIGMA

Tools for Identifying Root Cause

Pareto Analysis of Collected Data

‘Separating the vital few from the trivial many.’

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Learning Objectives

Learn how to identify root causes using Pareto Analysis of collected data

AnalyzeAnalyzeContext: A Brief Recap of Our Problem-Solving Effort to Date

We’ve defined a specific problem (i.e., a process) and determined it is important to solve. “Our team is on it!”

We’ve outlined and described (“mapped”) the steps in that process, to give everyone better understanding, and created a preliminary Cause-and-Effect Diagram.

We’ve brainstormed ideas on measurements we wished to gather, to better understand the process, its inputs, and its outputs.

We’ve diligently executed a detailed data collection plan.

We now seek to analyze the collected data, first visually (through charts and graphs) and then critically (through challenges, questions and experience).

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So…Data, Data Everywhere! Now What!

Scenario: You’ve spent precious weeks collecting specific data on your process’s operational activities: Product Codes or Lot Numbers Dates of Production Batch or Lot Sizes Process Cycle Times Queue or Wait Times Scrap Rates; Scrapped and Reworked Units Scrap Codes Etc.

Great! You’ve got a lot of data, lots of guesses, but not a lot of extra time or resources. How do you figure out, exactly what is important?

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So…Now What? (con’t)

How do you know which specific inputs or factors will drive visible, significant improvement? First, Stratify and Segment the Data! Show Graphical Displays of the Data

Time-series Plots, Run Charts, Control Charts Histograms (and Scatter Plots, Dot Plots, Box Plots)

Perform Statistical Summaries of the Data Mean, Median and Mode Min, Max, Range and Standard Deviation

Let’s also learn about the 80/20 Rule!

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Pareto’s Law: The “80/20 Rule” In 1906, Italian economist Vilfredo Pareto created a

mathematical formula to describe the unequal distribution of wealth in his country. Pareto observed that 20% of the people owned 80% of Italy’s wealth.

In manufacturing, just a few contributors to a process control the vast majority of that process’s results. 20 percent of the customers generate 80 percent of total sales. 80 percent of your stock comes from 20 percent of your suppliers. 20 percent of the defects cause 80 percent of the problems. 80 percent of your warehouse is taken up by 20 percent of stock.

Pareto's Law can be a terrific tool to help you manage effectively, “separating the vital few from the trivial many,” allowing you to focus on what is truly important to control.

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Pareto Chart

A Pareto chart is a graphical tool to detect and prioritize multiple quality problems in a process.

Pareto ChartPareto Chart

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Pareto Chart (con’t) The Pareto principle (80/20 Rule) states that 80% of

our problem can be explained by just 20% of the causes. We just have to figure out which 20% are the critical ones!

The Pareto chart makes clear which “vital few” problems (causes) should be addressed first: Manufacturing

A quality engineer wants to know which defects occur most frequently.

Transactional A human resources manager wants to know which day of the

week the majority of resumes are received. A salesperson wants to review last quarter’s sales figures by

product line.

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Pareto Chart (con’t) Pareto charts help you identify which of your problems are

most significant, so you can focus your improvement efforts on areas where the largest gains can be made.

Pareto charts are a special type of bar chart in which the horizontal axis represents categories of interest (e.g., material types, sizes, scrap codes, process centers), rather than a continuous scale (e.g., 0-100). The categories are often “defects”, sources of defects, or inputs into a process. The vertical axis represents some type of count or frequency (e.g., occurrences, incidents, parts, time). By ordering the bars from left-to-right, largest to smallest, a Pareto

chart can help you visually determine which of the defects comprise the “vital few,” and which represent the “trivial many.”

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OthersClassificationIncorrect FreightIncorrect

Codes

Zip CodesDestinationIncorrectMissing

CodeNon-coreCarrier

2 1 2 41518 4.8 2.4 4.8 9.535.742.9

100.0 95.2 92.9 88.1 78.6 42.9

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Freight Billing Errors

Sample Chart – Freight Billing Errors

We should consider focusing our improvement

efforts on ‘non-core carriers’ and ‘missing codes’.

The Pareto chart bars are divided into causes of freight billing errors.

The vertical axis shows a count of each error type.

The red line is a cumulative percentage.

“Non-core carrier” is the most frequent problem, representing 42.9% of the total errors.

Next-largest contributor: “Missing code”

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Sample Chart – Order Processing Delays

The ‘top 3’ processes will get the most

attention for improvement efforts

here.

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How to Create a Pareto Chart Collect data on different types or categories of

problems. Use check sheets, daily scrap reports, production reports, etc.

Tabulate the scores. Determine the total number of problems and/or the total impact (time to fix, cost, etc.). Also, determine the counts or impact for each category. If there are a lot of small or infrequent problems, consider

adding them together into an “other” category.

Sort the problems by frequency or by level of impact. Draw bars for each category, starting with the largest

and working down. The “other” category goes last, even if it is not the smallest bar.

Add in the cumulative percentage contribution line (sum of each category’s contribution / totals).

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Interpreting a Pareto Chart

CarrierNon-core

CodeMissing Incorrect

DestinationZip Codes

CodesIncorrect Incorrect Freight

ClassificationOthers

18 15 4 2 1 2

42.9 35.7 9.5 4.8 2.4 4.8

42.9 78.6 88.1 92.9 95.2 100.0

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Clear Pareto Effect?

No Clear Pareto Effect?

Any ideas?

Defects

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Interpreting a Pareto Chart (con’t)

Clear Pareto Effect: Just a few categories account for about 80% of the count or impact. Great! Focus improvement efforts on those specific

categories.

CarrierNon-core

CodeMissing Incorrect

DestinationZip Codes

CodesIncorrect Incorrect Freight

ClassificationOthers

18 15 4 2 1 2

42.9 35.7 9.5 4.8 2.4 4.8

42.9 78.6 88.1 92.9 95.2 100.0

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Interpreting a Pareto Chart (con’t) No Clear Pareto Effect: Though some bars are taller

than others, it takes a lot of categories to account for about 80% of the count or impact. No cause (or category) you’ve identified is much more important than any other. Re-do any Pareto charts using counts by focusing on the

impact of the categories (time/delay, quality/rework, cost, etc.), to see if the change in focus creates a clear Pareto effect.

Revisit your cause-and-effect (fishbone) diagram or list of potential causes, then: Ask which factors could be contributing to all potential

causes; Think about other stratification factors you may not have

considered, and then re-do the Pareto analysis with them in mind.

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Everyday Usage

Where could you use Pareto analysis to identify priorities in your area?

Any ideas?

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Takeaways

We often see the “80/20 Rule” in action – where the majority of the impacts come from only a small fraction of the sources.

A Pareto chart is a visual tool used to help identify which problems are most significant, so that improvement efforts can be focused where they will have the greatest impact.

We can use the Pareto chart to manage effectively, by focusing on the area of pain where we can have the greatest financial impact in the least amount of time or with the fewest required resources.

AnalyzeAnalyze ImproveImproveDefineDefine MeasureMeasure ControlControlRoot

Cause

Root

Cause

LEANSIX SIGMA

LEANSIX SIGMA

Tools for Prioritizing Root Causes and Making Decisions

Cause-and-Effect Diagram

5 Why’s

Multi-Voting

Pareto Analysis

Cause-and-Effect Matrix

Criteria-based Decision Matrix

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Learning Objectives

Learn how to prioritize among multiple root causes and decision paths using cause-focused brainstorming and decision-making tools

Understand how to improve project focus by using a Cause-and-Effect (C&E) Matrix

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Cause-Focused Brainstorming Tools

Cause-and-Effect (Fishbone) Diagram

5 Why’s

Multi-Voting

Pareto Analysis

C&E (Cause-and-Effect) Matrix

Criteria-based Decision Matrix

quick reviews

new tool

not covered

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Cause-and-Effect Diagram (review)

Represents the relationship between an effect (problem) and its potential causes.

Pushes teams beyond symptoms to uncover potential root causes and avoid the “theme” effect.

Provides structure in cause identification (6Ms, 4Ps, etc.).

Repeat the process on each specific root cause to ‘drill-down’ to identify Key Process Input Variables and controllable factors.

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5 Why’s (review)

Ask "why" each major cause happens at least 5 times.

Follow up each answer with a question about that answer.

Only stop when the team reaches a potential cause that the team can act upon.

Pushes people to think about root causes.

Prevents a team from being satisfied with superficial solutions that won’t be sustainable or won’t fix the problem in the long run.

________________1. Why?

2. Why?3. Why?

4. Why?5. Why?

________________1. Why?

2. Why?3. Why?

4. Why?5. Why?

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Multi-Voting (review) A method for selecting or narrowing a set of alternatives.

Improves the team’s ability or allows each member to express ‘strength of opinion’ through voting.

List all alternatives and count them (N=# of alternatives).

Give each member N / 3 votes (or whatever # seems reasonable given the number of alternatives). Cast all, some, or none of your votes for any alternative. When all votes (the sum) are cast, the member is done voting.

Rank order the alternatives based on total votes received.

Repeat the process until clear prioritization can be viewed.

Issue / Idea A IIII

Issue / Idea B III

Issue / Idea C IIII

Issue / Idea D II

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Pareto Analysis (review)

Specialized bar charts that help you focus on the “vital few” sources of trouble.

Helps determine which categories will yield the biggest gains if addressed.

OthersClassificationIncorrect FreightIncorrect

Codes

Zip CodesDestinationIncorrectMissing

CodeNon-coreCarrier

2 1 2 41518 4.8 2.4 4.8 9.535.742.9

100.0 95.2 92.9 88.1 78.6 42.9

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Freight Billing Errors

AnalyzeAnalyzeC&E MatrixApplication Examples

Distribution – A call center analyst needs to understand which factors in the customer profile have the greatest ability to deliver products sooner

Administrative – A customer service manager wants to determine which process inputs and steps have the most impact on customer satisfaction and order processing

Billing – A credit analyst wants to know which items on a customer invoice have the greatest effect on the customer response to price

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C&E Matrix ExampleTemp

of Coffee Taste Strength

Customer Requirements / Process Outputs

8 10 6 Importance

Process Step Process Input Total

1. Clean Carafe 0 3 1 362. Fill Carafe with Water 0 9 9 1443. Pour Water into Maker 0 1 1 164. Place Filter in Maker 0 3 1 365. Put Coffee in Filter 0 9 9 1446. Turn Maker On 3 1 0 347. Select Temperature Setting 9 3 3 1208. Receive Coffee Order 0 0 1 69. Pour Coffee into Cup 3 1 3 5210. Offer Cream & Sugar 3 9 3 13211. Complete Transaction 1 1 1 2412. Say Thank You 0 0 0 0

Correlation of Input to Output

Coffee Delivery at Diner

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C&E Matrix

What

A Cause-and-Effect Matrix relates Process Steps to Process Inputs and correlates to Process Outputs. Each step is ranked (scored) to determine relative importance (impact).

Customer requirements are ranked by order of importance and then inputs and outputs are rated by their interaction impact.

The C&E Matrix relates the key Inputs to the key Outputs (customer requirements) using the Process Map as the primary source. 1 2 3 4 5 6 7 8

••

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SIPOC – Process Map

SIPOC – Process Map

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C&E Matrix (con't)

Why

The C&E Matrix uses the voice of the customer (and experience and collected data) to determine where we should focus our improvement efforts.

To identify which input variables (causes) most influence the key process output variable (effect).

To determine what Key Process Input Variables (KPIVs – should number less than 5 factors!) should be the source of focus for performance improvement to best meet Key Process Output Variables (KPOVs) and customer requirements.

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C&E Matrix (con't) How (con’t)

Rate Inputs (or process steps) based upon the strength of their relationship with Output variables and give a Correlation score:

0 = No correlation between Input and Output;

1 = Remote correlation between Input and Output;

3 = Moderate correlation between Input and Output; and

9 = Strong correlation between Input and Output.

Cross-multiply Correlation scores with Priority scores, and add across for each Input.

Create a Pareto chart using these scores, and focus investigation and improvement efforts on the variables with the highest scores.

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Analyzing the C&E Matrix

Coffee Delivery at Diner

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Temp of

Coffee Taste Strength

Customer Requirements / Process Outputs

8 10 6 Importance

Process Step Process Input Total

1. Clean Carafe 0 3 1 362. Fill Carafe with Water 0 9 9 1443. Pour Water into Maker 0 1 1 164. Place Filter in Maker 0 3 1 365. Put Coffee in Filter 0 9 9 1446. Turn Maker On 3 1 0 347. Select Temperature Setting 9 3 3 1208. Receive Coffee Order 0 0 1 69. Pour Coffee into Cup 3 1 3 5210. Offer Cream & Sugar 3 9 3 13211. Complete Transaction 1 1 1 2412. Say Thank You 0 0 0 0

Correlation of Input to Output

Coffee Delivery at Diner

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Everyday Usage

Where could you use the C&E Matrix to identify and prioritize problems and issues in your area?

Any ideas?

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Takeaways

Cause-focused brainstorming and decision-making incorporate both data and experience to identify and resolve issues.

The C&E Matrix uses the voice of the customer (and experience and collected data) to determine where we should focus our improvement efforts.

The Criteria-based Decision Matrix allows team members to debate and quantify the importance of selected criteria, and identify the best possible option after reviewing how each alternative addresses the issues and concerns.