13-Mar-2021 Understanding variation: the key to managing chaos summary Maximiliano Prezas

When running a company of any kind managers are interested in keeping its processes at a performing level to
ensure that the business stays afloat and grows. To know the level of performance of a process, a key variable
(key process indicator) is selected and monitored, that is, data is collected. Some examples of these variables may
be the number of defective parts produced in a day, total good parts produced, machines’ downtimes, expedited
freights in a month, etcetera. Once data is gathered, the questions rises: now what? What do I do with all these
numbers if we want to know how the company is doing? This book, in its core, answers to this question.

We start by understanding that data by itself lacks any meaning: numbers from a given set can make you believe
one thing… or may as well make you believe the exact same opposite. Therefore, the first task is to properly define
what the context of the data is and present it in such context. The most important piece of context of data is its
timer order. The best way to give time context is to arrange data in a time series graph. It will give a broad and
strong overview of the behavior of the studied variable. Broad because it will show at the glimpse of an eye all the
elements of the set and strong because it will show how and how much these elements moved across time. It will
make it possible to quickly evaluate whether any point is an outlier or not, which is already a very important part
of the desired answer. Other forms of context that should accompany time series graphs as annotations are the
raw data tables, description of the source (who, how, when, where was data collected) and numerical summaries
like averages and ranges.

After arranging data in a time series graph it will be evident that there is variation present. This variation has two
components: normal variation natural to the process that produces the data, and exceptional variation that is
caused by external causes. At this point it is possible to make two mistakes: interpreting the variation of the
current point as exceptional or as normal, when really the opposite is true for both cases. In the first case,
resources would be wasted trying to explain what happened and in the second, operation would be inefficient,
or, even worse, business could be lost. A method is needed to translate what the data is showing.

The process behavior chart is a method that minimizes the occurrence of both errors explained above. It is created
by adding three reference lines to the time series chart: the average of the data set, an upper limit, and a lower
limit. If all the points lie between the limits and are well behaved, they shall be considered a product of natural
variation and the process is then considered to be predictable. If they fall outside the limits or display a pattern,
it is taken as a signal that a fundamental change to the process has taken place and actions should be taken to
investigate and correct the source of the variation. In other words, the process behavior chart filters out the noise
within the data and let us see the warnings that the process gives out, effectively answering the question of how
the process is doing.

Now this book also makes an important distinction between the voice of the customer and the voice of the
process. It explains that the two voices are two independent entities, the first one being the performance level
that is required from a process and the second one what the process can actually deliver. Failing to recognize this
truth will lead to waste of resources, efforts, decrease in morale, and finally to the distortion of the system, when
the two voices are not aligned. In Mexico we have a saying: “do not ask the oak for pears”. It is the job of the
engineers to introduce positive fundamental changes to the process that reduce the normal variation (and
perhaps location) and bring the two voices into alignment.

The process behavior chart is a powerful tool that will give us a way to objectively determine if a process (and a
business in the end) is running well; we shall use it to understand data and act accordingly to what it tells us so
that our processes meet the customer requirements. Adopting this method as a discipline will also put us in the
way for continuous improvement as it provides an excellent way of measuring performance.

No disclosure to third parties!