Using SPC to Make Better Management Decisions

Mark GrabanAuthor, Lean Hospitals

Co-Author, Healthcare Kaizenwww.MarkGraban.com

@MarkGraban

Key Management Questions• How are we performing?– Are we getting better or worse?

• What action should we take?

“Failure to understand variation is a central problem of management.”

– Dr. Lloyd S. Nelson Some rights reserved by Marco Bellucci

My Most Favorite Book Ever

http://www.spcpress.com/Donald J. Wheeler, PhD

“No data have meaning apart from their context”

Comparisons in the News

1992 1995 1998 2001 2004 2007 20100

0.20.40.60.8

11.21.41.61.8

2

Fatalities per 100 Million Vehicle Miles Traveled (U.S. & CT)

U.S.

CT

Need to Look for Trends

“You don't want to make a big conclusion based on just one year.”

– Jonathan Adkins of the Governors Highway Safety Association

“Office Space”

Two-Point Comparisons in Politics

47%46%

44%44%

Did We Improve?

Run Charts Show More Context

Need to Avoid Bad Conclusions“The average patient satisfaction

increased from 87.2 to 89%”

A Better Dashboard

Limited information you need to make decisions

Not This…

Overwhelming Data

Sept ‘06

?

Can we predict September?

Can We See Trends?

The Good News…

There is a better way

“X” Control Chart(Chart for Individual Values)

“Every system is perfectly designed to get the results it gets.” (Deming)

Goal = 25 minutes

SD = Standard Deviation, a measure of variation

X and MR Chart Combo

Small Business ExampleRevenue as a Stable Process?

X chart

MR chart

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. Structural

3. Managers must distinguish amongst these– Each one requires different managerial actions.

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, DOE

6. 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.

The Funnel Experiment

• Lloyd Nelson, 1987– Suspend a funnel on a stand a

few inches off the ground– Drop 50 marbles

x

A “Stable” System

• Does NOT mean:– Zero variability– System meets customer

requirements

• Means only:– Causes of variation are basically constant over time

We Have to Try Harder!!!• 4 different rules for adjusting the funnel

No adjustmentAdjust relativeto last position

Adjust relativeto center

Learn more – online simulator at http://www.symphonytech.com/dfunnel.htm

So we should do nothing?

“Don’t just do something, stand there.” -- Deming

0

10

20

30

40

50

60

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

Responding to Daily Changes

KB

GOAL

Daily Production AveragePraise Team

PT PT

Are we helping? Is this process stable?

KBKick Butt

Creating a Control Chart

0

10

20

30

40

50

603/1/2007

3/3/2007

3/5/2007

3/7/2007

3/9/2007

3/11/2007

3/13/2007

3/15/2007

3/17/2007

3/19/2007

Upper Control Limit

Lower Control Limit

Step 1: Initial Data• Generally need 20 data

points to calculate control limits

Step 2: Mean & MRs• Calculate mean of the

first 20 points• Calculate the moving

range of the first 20 points– Ex: =ABS(E5-E4)

Step 3: Draw Initial Chart(with Mean line)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 220

500

1000

1500

2000

2500 LeanBlog.org Daily Page Loads

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

Step 5: Review Chart

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 220

500

1000

1500

2000

2500LeanBlog.org Daily Page Loads

Special Cause?

Step 6: Revise Limits

Step 7: Evaluate Over Time

1 2 3 4 5 6 7 8 9 1011121314151617181920212223242526272829303132333435363738394041424344454647484950510

500

1000

1500

2000

2500

3000LeanBlog.org Daily Page Loads

Step 7: Evaluate Over Time

1 2 3 4 5 6 7 8 9 1011121314151617181920212223242526272829303132333435363738394041424344454647484950510

500

1000

1500

2000

2500

3000LeanBlog.org Daily Page Loads

Step 7: Shift the Limits

1 2 3 4 5 6 7 8 9 1011121314151617181920212223242526272829303132333435363738394041424344454647484950510

500

1000

1500

2000

2500

3000LeanBlog.org Daily Page Loads

“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

Process Shifts

• If you made a change that you expected to improve the system, use a control chart to test the hypothesis

0

5

10

15

20

25

30

35

1 4 7

10

13

16

19

22

25

28

31

34

37

40

43

46

49

52

0

5

10

15

20

25

30

35

1 4 7

10

13

16

19

22

25

28

31

34

37

40

43

46

49

52

0

5

10

15

20

25

30

35

1 4 7

10

13

16

19

22

25

28

31

34

37

40

43

46

49

52

0

5

10

15

20

25

30

35

1 4 7

10

13

16

19

22

25

28

31

34

37

40

43

46

49

52

0

5

10

15

20

25

30

35

1 4 7

10

13

16

19

22

25

28

31

34

37

40

43

46

49

52

Process Shift

Daily TAT

Long-Term Process Shifts

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

Isn’t it always the system?

It’s (almost) always the system.

Q&A / Contact Info• Email:

– mark@constancy.us • Blog:

– www.leanblog.org• Twitter:

– @MarkGraban• Books:

– www.LeanHospitalsBook.com– www.HCkaizen.com