EM 8771 • January 2002

$2.50
PERFORMANCE EXCELLENCE
IN THE WOOD PRODUCTS INDUSTRY

Part 3: Pareto Analysis and Check Sheets

S. Leavengood and J. Reeb

Part 1 in this series introduced the reader to Statistical Process Control,

and Part 2 provided an overview of how and why SPC works.
Part 3 begins the step-by-step process of building the practical skills
necessary for hands-on implementation of SPC. This report discusses Pareto
analysis, a tool we can use to help decide how and where to begin using
SPC. We also discuss check sheets, which are data collection tools that may
be used in Pareto analysis.
Part 4 discusses flowcharts. Future publications in the series will discuss
case histories of wood products firms using SPC, providing real-world
evidence of the benefits of SPC and examining pitfalls and successful
approaches.

Where to begin an SPC program?

Most manufacturing processes are sufficiently complex that at first glance
it may seem impossible to decide where to begin using SPC techniques. SPC
programs that attempt to monitor too many process variables are quickly
overwhelmed by the time and labor required to collect, analyze, plot, and
interpret the data. In such cases, SPC seems too time consuming and expen-
sive to be of any benefit.
The life expectancy of SPC in a company depends heavily on the results
of the first few projects undertaken. With this kind of pressure, how do you
decide where to begin?
Obviously, we cannot measure everything. We must focus initially on the
most important quality problems to get the “biggest bang for the buck.” This
is especially true in the early stages of an SPC program when personnel are
likely to be skeptical of SPC and hesitant to make the necessary changes.

Scott Leavengood, Extension wood products,

Washington County; and James E. Reeb,
Extension forest products manufacturing
specialist; Oregon State University.
STATISTICAL PROCESS CONTROL

Prioritizing quality problems for the company is a good first

step. Then, determine which projects will have the highest return
on investment and therefore should be the initial focus of quality
improvement programs. Pareto analysis enables us to do all this.

Pareto analysis
Pareto1 (pronounced “pah-RAY-toe”) analysis uses the Pareto
principle, also called the 80:20 rule, to analyze and display data.
Quality expert J.M. Juran applied the principle to quality control
and found that 80 percent of problems stem from 20 percent of the
possible causes. The numbers 80 and 20 are not meant to be abso-
lutes. The main point, as Juran stated, is that we should focus on
the “vital few” problems (those in the 20-percent category) rather
than on the “trivial many” to make the most significant improve-
ments in product quality.
Pareto charts are the graphical tool used in Pareto analysis. A
Pareto chart is a bar chart that displays the relative importance of
problems in a format that is very easy to interpret. The most impor-
tant problem (for example, the one highest in cost, frequency, or
some other measurement) is represented by the tallest bar, the next
most important problem is represented by the next tallest bar, and
so on. A check sheet is a useful tool for collecting data for Pareto
charts.

Check sheets
Check sheets are relatively simple forms used to collect data.
They include a list of nonconformities2 and a tally of nonconformi-
ties. Check sheets should also include the name of the project for
which data is being collected, the shift when the items were pro-
duced, the names of persons collecting the data, dates of data
collection and of production (if known), and the location of data
collection (e.g., in house or at a customer’s).

1
Vilfredo Pareto was a 19th-century Italian economist who studied the
distribution of income in Italy. He found that about 20 percent of the population
controlled about 80 percent of the wealth.
2
A nonconforming product is one that fails to meet one or more specifications,
and a nonconformity is a specific type of failure. A nonconforming product
may be termed defective if it contains one or more defects that render it unfit or
unsafe for use. Confusion of these terms has resulted in misunderstandings in
product liability lawsuits. As a result, many companies have adjusted their
internal terminology and now use the terms “nonconforming” and
“nonconformity” in favor of “defect” and “defective.”

2
 PARETO ANALYSIS AND CHECK SHEETS

Check sheets aren’t mandatory to construct Pareto charts. How-

ever, because check sheets require you to standardize your list and
definitions of nonconformities, they provide several benefits.
First, people often do not agree on the major categories of
nonconformities. Therefore, developing a list of common
nonconformities (i.e., quality problems) is not as easy as it sounds.
A good way to develop this list is to brainstorm with production
personnel, management, QC personnel, and, most important, your
Do not
customers.
underestimate...
Second, people often do not agree on precisely what constitutes
“nonconforming.” In other words, how bad does it have to be to the importance of
get thrown in the scrap or rework pile? developing a standard
Last, different people often will put a given item in different list of nonconformities
categories. For example, one person may call an item with torn and precise definitions
grain a machining defect, another might call it fuzzy grain, and for each.
another may call it reaction wood. Without standard terminology
and definitions, it becomes very difficult to conduct a Pareto
analysis.
To get an idea of the effect on your company of lack of standard-
ized terminology and definitions for nonconformities, try a simple
experiment. Select several items at random and ask different
people to examine them and record nonconformities item by item.
One experiment at a secondary wood products manufacturer
involved five quality inspectors. The inspectors did not agree on
the number of items that should be rejected due to quality prob-
lems (the scrap/rework rate varied from 34 to 49 percent) nor did
they agree on the reasons for rejecting the products. Had we looked
only at data collected by inspectors 1, 2, and 3, we would have
concluded that torn grain and blue stain were the biggest quality
problems. Had we looked only at data collected by inspectors
4 and 5, we would have concluded that dents (handling damage)
and reaction wood were the biggest quality problems. Do not
underestimate the importance of developing a standard list of
nonconformities and precise definitions for each.
The following demonstrates how to construct and interpret
check sheets and Pareto charts.

Example
The Quality Improvement Team at a manufacturer of wood compo-
nents visited a customer and examined items in the scrap and
rework bins. After looking at each item and talking with the cus-
tomer, the team agreed on categories of nonconformities and
developed precise definitions for each category. They created a

3
STATISTICAL PROCESS CONTROL

check sheet, then inspected each item and tallied the number of
occurrences (frequency) for each cause of nonconformity. Figure 1
presents the results.

Project Quality Improvement Project Name QIT Shift All

Location Customer A Dates January 2002
Rel. Cum
Reason Freq. Freq. (%) Freq
Size out of specification
194
Loose knots 18
Raised grain 4
Dents 3
Stain/rot 31
Fuzzy grain 105
Splits 11
Machine tear-out 61
Burn marks 44
Oil/grease marks 2
Total 473
Figure 1.—A sample check sheet.

Nonconformities were sorted from highest to lowest frequency,

and the relative frequency for each was determined (Figure 2).
For example, “size out-of-specification” was 194 out of 473 non-
conformities, and so the relative frequency for size-out-of specifi-
cation was:
194/473 = 0.41 = 41%

An optional final step is to calculate cumulative relative fre-

quency. Cumulative relative frequency helps the user to readily see
the combined effect of the “vital few” problems. For example, you
could see that the top three quality problems were responsible for
nearly 80 percent of the problems overall. To calculate cumulative
relative frequency, add the relative frequency for each category of
nonconformity to the sum of all preceding relative frequencies. For
example, there were 194 occurrences of size out-of-specification or
41 percent (relative frequency) of the total. There were 105 occur-
rences of fuzzy grain. Fuzzy grain was therefore responsible for
22 percent of the total. Size out-of-specification and fuzzy grain
combined (cumulative relative frequency) were responsible for
63 percent of the total. Size out-of-specification, fuzzy grain, and
machine tear-out combined were responsible for 76 percent of the

4
 PARETO ANALYSIS AND CHECK SHEETS

total. The cumulative relative frequency for the least frequent

category (oil/ grease marks, in this example) should be 100 per-
cent, however it is slightly less due to rounding. Figure 2 shows the
check sheet with the nonconformities arranged in descending order
of frequency and with relative frequency and cumulative relative
frequency calculated.
m. Rel.
q. (%)
Project Quality Improvement Project Name QIT Shift All
Location Customer A Dates January 2002
Rel. Cum. Rel.
Reason Freq. Freq. (%) Freq. (%)
Size out of specification 194 41 41
Fuzzy grain 105 22 63
Machine tear-out 61 13 76
Burn marks 44 9 85
Stain/rot 31 7 92
Loose knots 18 4 96
Splits 11 2 98
Raised grain 4 0.8 98.8
Dents 3 0.6 99.4
Oil/grease marks 2 0.4 99.8
Total 473 99.8
Figure 2.—A sample check sheet showing nonconformities in descending order as well as relative frequency and
cumulative relative frequency.

Figure 3 (page 6) is the Pareto chart for the data in Figure 2. The
left vertical axis indicates the number (frequency) of each type of
nonconformity. Always plot nonconformities in descending order
of frequency, with the most frequent at the left vertical axis. The
right axis indicates cumulative frequency.
The Pareto chart makes it easy to see that size out-of-specifica-
tion, fuzzy grain, and machine tear-out are the major nonconformi-
ties. Quality improvement that focuses on these items will give the
“biggest bang for the buck.”
Frequency, however, is not the only important consideration.
Certain types of nonconformities, even if infrequent, may be very
costly to scrap or rework. Therefore, the Pareto analysis should
take into account both cost and frequency.
Though scrap and rework often involve very different costs, it’s
possible to calculate an average scrap and rework cost based on the

5
STATISTICAL PROCESS CONTROL

percentage of product in each category of nonconformity. For

The Pareto analysis... example, let’s say we estimate that 10 percent of material with size
out-of-specification must be scrapped, but the remaining 90 per-
should take into cent can be reworked to produce a usable product. Further, let’s say
account both cost that scrapping the product represents a loss of approximately $20
and frequency. per item, and reworking costs approximately $11 per item. There-
fore, our estimate of the average scrap and rework cost for size
out-of-specification is:
(scrap cost) x (% scrap) + (rework cost) x (% rework)
= scrap & rework cost
($20) x (10%) + ($11) x (90%) = $12

To account for frequency as well as scrap and rework costs,

multiply relative frequency by cost to obtain relative cost. For
example, we already determined that approximately 41 percent of
nonconformities were size out-of-specification. Therefore, the
relative cost due to size out-of-specification is:
0.41 x $12 = $4.92

Pareto chart

200 100

160 80

Cumulative frequency (%)

120 60
Frequency

80 40
Machine tear-out

Oil/grease marks
Size out-of-spec

Raised grain
Loose knots
Fuzzy grain

Burn marks

40 20
Stain/rot

Dents
Splits

0 0
Cause of nonconformity
Figure 3.—Pareto chart for the data in Figure 2.

6
 PARETO ANALYSIS AND CHECK SHEETS

Rel. Cost Rel. Freq. Cum. Rel.

Nonconformity ($) (%) Freq. (%)
Size out-of-spec. 4.92 38 38
Machine tear-out 2.34 18 56
Fuzzy grain 1.76 13 69
Stain/rot 1.75 13 82
Loose knots 1.00 8 90
Burn marks 0.72 6 96
Splits 0.32 2 98
Dents 0.09 0.7 98.7
Raised grain 0.06 0.5 99.2
Oil/grease marks 0.03 0.2 99.4
Total 12.99 99.4
Table 1.—Nonconformities and relative costs.

Table 1 shows the relative costs, and Figure 4 shows the corre-
sponding Pareto chart.
We can see that size out-of-specification is the primary noncon-
formity from the standpoint of frequency (Figure 3) as well as
relative cost to scrap or rework (Figure 4). Therefore, to get the

Pareto chart

5 100

4 80
Cumulative frequency (%)
Relative cost

3 60

2 40
Machine tear-out

Oil/grease marks
Size out-of-spec

Raised grain
Loose knots
Fuzzy grain

Burn marks

1 20
Stain/rot

Dents
Splits

0 0
Cause of nonconformity
Figure 4.—Pareto chart for the data in Table 1.

7
STATISTICAL PROCESS CONTROL

“biggest bang for the buck,” it would be wise to begin the SPC
program by focusing on problems that lead to size out-of-
specification.

Conclusions
We now know the primary nonconformities and therefore where
to focus initial efforts of an SPC program. We do not yet know,
however, the specific processing steps that lead to a given noncon-
formity—that is, where and how the problem arises—and therefore
we do not yet know where or what to monitor.
To help us discover the specific steps in the process that lead to
a given nonconformity, it is helpful to develop a flowchart for the
process. Flowcharts are the subject of the next report in this series.

For further information

Brassard, M. and D. Ritter. 1994. The Memory Jogger II: A Pocket
Guide of Tools for Continuous Improvement & Effective Plan-
ning (Methuen, MA: Goal/QPC). 164 pp. http://www.goalqpc.
com/
Grant, E.L. and R.S. Leavenworth. 1988. Statistical Quality Con-
trol, 6th ed. (New York: McGraw Hill). 714 pp.
Ishikawa, K. 1982. Guide to Quality Control (Tokyo, Japan: Asian
Productivity Organization). 225 pp.
Montgomery, D.C. 1996. Introduction to Statistical Quality Con-
trol, 3rd ed. (New York: John Wiley & Sons). 677 pp.
Walton, M. 1986. The Deming Management Method (New York:
Putnam Publishing Group). 262 pp.

8
 PARETO ANALYSIS AND CHECK SHEETS

PERFORMANCE EXCELLENCE
IN THE WOOD PRODUCTS INDUSTRY

ABOUT THIS SERIES

This publication is part of a series, Performance
Excellence in the Wood Products Industry. The various
publications address topics under the headings of wood
technology, marketing and business management,
production management, quality and process control,
and operations research.
For a complete list of titles in print, contact OSU
Extension & Station Communications (address below) or
visit the OSU Wood Products Extension Web site at
http://wood.orst.edu

Ordering information
To order additional copies of this publication, send the complete
title and series number, along with a check or money order for
$2.50 payable to OSU, to:
Publication Orders
Extension & Station Communications
Oregon State University
422 Kerr Administration
Corvallis, OR 97331-2119
Fax: 541-737-0817

We offer a 25-percent discount on orders of 100 or more copies

of a single title.
You can view our Publications and Videos catalog and many
Extension publications on the Web at http://eesc.orst.edu

9
STATISTICAL PROCESS CONTROL

10
PARETO ANALYSIS AND CHECK SHEETS

11
STATISTICAL PROCESS CONTROL

© 2002 Oregon State University

This publication was produced and distributed in furtherance of the Acts of Congress of May 8 and June 30, 1914.
Extension work is a cooperative program of Oregon State University, the U.S. Department of Agriculture, and
Oregon counties.

Oregon State University Extension Service offers educational programs, activities, and materials—without discrimi-
nation based on race, color, religion, sex, sexual orientation, national origin, age, marital status, disability, or
disabled veteran or Vietnam-era veteran status. Oregon State University Extension Service is an Equal Opportunity
Employer.
Published January 2002.

12
 EM 8772 • January 2002
$2.50
PERFORMANCE EXCELLENCE
IN THE WOOD PRODUCTS INDUSTRY

Part 4: Flowcharts
S. Leavengood and J. Reeb

Part 1 in this series introduced the reader to Statistical Process Control, and Part 2
provided an overview of how and why SPC works. Part 3 began the step-by-step
process of building the practical skills necessary for hands-on implementation of
SPC. It discussed Pareto analysis, a tool to help decide where to focus initial efforts.
Part 4 discusses flowcharts. Part 5 in the series will continue building implemen-
tation skills by discussing cause-and-effect diagrams. Future publications in the
series will discuss case histories of wood products firms using SPC, providing real-
world evidence of the benefits of SPC and examining pitfalls and successful
approaches.

What’s the next step in implementing SPC?

After achieving top management’s commitment to using SPC, the next step in
beginning an SPC program is to determine where to focus initial efforts to get the
“biggest bang for the buck.” In Part 3, we presented Pareto analysis as a tool to
locate the primary causes of nonconformities and therefore where to focus initial
efforts. Now we need to know which specific activities in the process cause the
nonconformity and which quality characteristic(s) to monitor.
An example will help to clarify the above discussion and the objective of this
report. The Pareto analysis conducted in Part 3 of this series revealed “size out-of-
specification” as the major nonconformity, from the standpoint of both frequency
and relative cost to scrap or rework. We now need to know:
• The specific step or steps in the process (e.g., dry kilns, rip and chop, moulding)
responsible for causing size out-of-specification
• The quality characteristic (e.g., moisture content, width, thickness, motor amps,
or proportion of nonconforming parts) to measure

Cause-and-effect diagrams are commonly used to identify specific activities

responsible for causing nonconformities. However, we have chosen to discuss
flowcharts first, postponing a discussion of cause-and effect diagrams until Part 5 in

Scott Leavengood, Extension wood products,

Washington County; and James E. Reeb,
Extension forest products manufacturing
specialist; Oregon State University.
STATISTICAL PROCESS CONTROL

this series. Our choice is based on the fact that flowcharts have
Flowcharts can been found to be valuable tools for initiating discussion during
reveal… cause-and-effect analysis and for ensuring that everyone under-
non-value-added stands and agrees on what really happens—rather than what’s
activities such as supposed to happen—in the manufacturing process.
inspection, rework,
redundant steps, and Flowcharts
bottlenecks. Flowcharts graphically represent the steps in creating a product
or service. The process of creating a chart is often beneficial
because personnel may be unaware of all the “nitty-gritty” details
involved in producing the product. Also, people often are surprised
to learn of the differences between the ideal process flow and what
actually occurs in the mill. This is particularly true when the team
developing the chart includes representatives of all departments of
the plant, not just production personnel.
In addition to understanding processing steps, flowcharts pro-
vide other benefits. If detail is sufficient, flowcharts can help to
reveal non-value-added activities such as inspection, rework,
redundant steps, movement, unnecessary processing loops, and
bottlenecks. From the standpoint of SPC, flowcharts also help to
reveal the stages in the process where data may be collected.
Flowcharts are also excellent tools for training new hires.
Brassard and Ritter (1994) list six steps to flowchart development.
1. Determine the start and stop points the chart will cover.
2. List the major steps (inputs, decisions made, activities, inspec-
tion, delays, and outputs) in the process.
3. Put the steps in the proper order.
4. Draw the flowchart.
5. Test the flowchart for accuracy and completeness.
6. Look for opportunities to improve the process (i.e., reduce non-
value-added activities).

Developing a flowchart: An example

We will demonstrate flowchart development using a secondary
wood products manufacturer as an example.

Background
XYZ Forest Products Inc. produces wooden handles for push
brooms. Their customers produce finished brooms by adding a
rubber grip to the top of the handle, inserting a threaded metal
ferrule to the bottom of the handle, and attaching the broom head.

2
 FLOWCHARTS

Last year, business began to fall off for XYZ; orders dropped
40 percent in just 6 months. Several customers stated that the
competition’s quality was better. A few customers had begun
asking XYZ to provide documentation of process performance—
namely histograms, control charts, and process capability indices
(see Part 2 in this series for an overview of these subjects). There-
fore, XYZ was inspired to use SPC.
Because customers reported several different quality problems
(fuzzy grain, size out-of-spec., warp, etc.), XYZ personnel did not
know precisely how and where to start their quality improvement
program. They conducted the Pareto analysis, as presented in Part
3 in this series, to help them decide where to focus initially. Size
out-of-specification was found to be the primary quality problem.
Following the Pareto analysis, the general manager of XYZ con-
vened a team of personnel from engineering, sales, production,
quality control, and management to develop a flowchart for their
process. We will summarize their activities using the six steps
described above.

Creating the flowchart

Step 1. Determine the start and stop points that the chart
will cover.
Because XYZ had never developed a flowchart for the process,
the team decided to chart the process from start to finish. The start
point was green lumber receiving, and the stop point was finished
product storage. The team agreed to create a macro-flowchart; that
is, a chart showing only the general flow of the process with
minimal detail. The team decided that once they’d created a cause-
and-effect diagram for the problem, and had determined the spe-
cific steps in the process most likely responsible for the problem,
they would then create a flowchart with a narrower focus and more
detail.

Steps 2 and 3. List the major steps in the process, and put
the steps in the proper order.
The team brainstormed (see Brassard and Ritter for a discussion
of brainstorming) to develop the steps involved in the process.
Then, they put the steps in the proper sequence. (Brassard and
Ritter list steps 2 and 3 separately because, in a group setting,
people usually name the activities most familiar to them, which

3
STATISTICAL PROCESS CONTROL

generally leads to a list of steps that is out of sequence). In our

It is imperative… example, the team identified these steps.
• Receive rough green lumber; tally.
to list what actually
• Sticker lumber.
happens during
• Move stickered lumber to green storage.
production versus the
• Move lumber to dry kilns.
ideal for the process.
• Kiln dry lumber.
• Unsticker, tally, and stack dry lumber.
• Move lumber to dry storage.
• Move lumber to planer.
• Unload and plane lumber.
• Crosscut surfaced lumber.
• Rip lumber to handle blank widths.
• Tally handle blanks.
• Shape broom handles from blanks.
• Inspect handles with go/no-go gauge; tally and scrap no-go.
• Load and move good handles from shaper to taperer.
• Taper ferrule end.
• Round grip end of handles.
• Inspect handles for appearance; tally and send nonconforming to
scrap and rework.
• Load and move handles to sander.
• Sand handles.
• Load and move handles to packaging.
• Package.
• Move packaged handles to finished product storage.

Note: It is imperative to list what actually happens during

production versus the ideal for the process. For example, if lumber
leaving the planer goes to storage, as opposed to going directly to
the crosscut saws as listed above, this should be specified.

Step 4. Draw the flowchart.

Symbols are used in flowcharting to identify different categories
of activity. For example, ovals may be used to indicate inputs/
outputs, and boxes indicate a processing step (Figure 1).
It is important to maintain a consistent level of detail in the
flowchart. Brassard and Ritter suggest the amount of detail to
include in a flowchart. Macro-level flowcharts show key action
steps but no decision boxes. Intermediate-level flowcharts show
action and decision points, and micro-level flowcharts show
intricate details.

4
 FLOWCHARTS

Each step in the process should be labeled. Arrows should be

used to indicate the flow of steps. To make the chart easier to read, Inputs
it is helpful when using yes/no decision boxes to have the “yes” and
boxes branch down and the “no” boxes branch to the left. This outputs
will, of course, depend on the amount of space available. For
future reference, names of team members, the date, and the pur- Processing
pose for creating the chart should be included (Figure 2, page 6).

Step 5. Test the flowchart for accuracy and completeness.

The team should make certain that symbols are used correctly, Decision
process steps are identified clearly, and that process loops are
closed (that is, every path flows to a logical end). Also, if the chart
contains any process boxes with more than one output arrow, the Storage
team may wish to consider adding a decision diamond. As a final
check, someone outside the team should be asked to verify the
chart’s accuracy and completeness.
Delay
Step 6. Look for opportunities to improve the process
(reduce non-value-added activities). Data entry
This is where the team seeks opportunities to optimize the
process. An ideal process flowchart should be made and compared
to the actual process flowchart. The team should then examine the
non-value-added activities, which might include the following.
• Unnecessary redundancy. (Two machines performing the same Movement
operation might be necessary redundancy if they increase
throughput without creating bottlenecks; multiple inspection
points for the same quality characteristic are often unnecessary Inspection
redundancy.)
• Inspection Figure 1.—Flowchart symbols.
• Delay
• Many movements (for example, movement to a staging area,
then to storage, then to another holding area, and then to
production).

Montgomery suggests several ways to eliminate non-value-

added activities.
• Rearrange the sequence of worksteps.
• Rearrange the physical location of the operator in the system.
• Change work methods.
• Change the type of equipment used in the process.
• Redesign forms and documents for more efficient use.
• Improve operator training.

5
 STATISTICAL PROCESS CONTROL

• Improve supervision.
• Identify more clearly the function of the process to all employ-
ees (flowcharts are good visual aids for explaining the process to
employees).
• Eliminate unnecessary steps.
• Consolidate process steps.

A macro-level flowchart (Figure 2) lacks the necessary detail to

identify non-value-added activities. Once XYZ team members
have constructed a cause-and-effect diagram for the defect cate-
gory, they will know the step(s) in the process for which they need
a more detailed flowchart. Consider, for example, that the team
determines shaping through sanding as the processing steps that
deserve a closer look for size out-of-specification troubles. Their
flowchart for this part of the process may look like the charts in
Figures 3 and 4.

Macro-flowchart Green Storage

lumber Sticker Kiln dry
XYZ, Inc.
12/17/01
Team members
S. Johnson Storage Unsticker Dried
Plane lumber
B. Jones and stack
T. Williams
B. Simonsen
E. Fredricks
Handle Shape
W. Harold Crosscut Rip
blanks
Purpose
Address customer
concerns re: size Finished
out-of-spec. handles Sand Round Taper

Package Storage

Figure 2.—Sample macro-flowchart.

6
 FLOWCHARTS

From Handle Load blanks

Micro-flowchart ripsaws blanks on pallet
XYZ, Inc.
01/4/02 Move Move Move
pallet to pallet pallet to
Team members shaper 1 to shaper 3
shaper 2
S. Johnson
B. Jones Load blanks Load blanks
Load blanks
into shaper 1 into shaper 3
T. Williams into shaper 2
B. Simonsen
E. Fredricks
W. Harold Shape Shape
Shape
Purpose
Address customer
concerns re: size Load handles Load handles
on pallet Load handles on pallet
out-of-spec. on pallet
Focus on shaping
through sanding

Delay Load handles Delay

into taperer

Check
Inspect. shape with
go/no-go
gauge.
Shape OK?
No?

Yes?

Tally
Taper

Scrap
Continued
on page 8

To
chipper

Figure 3.—Sample micro-flowchart, part 1.

7
STATISTICAL PROCESS CONTROL

Potential areas for improve-

From
page 7 ment are revealed in Figure 3.
Notice the delay at the taper
machine. Three shapers feed
one taper machine which
Round appears to lead to a bottle-
neck. More detailed data
(downtime, throughput, costs,
Load handles etc.) would need to be col-
on pallet lected to determine a solution.
Move pallet
Another area to examine is
to sander dept. the two inspection points, one
before the taper machine and
Inspect. the other before the sander.
Free from nonconformities? Handles are inspected for
conformance to size specifica-
tions at the infeed to the taper
No?
machine and are checked for
Yes?
appearance at the infeed of the
Inspect. sander. The team might
Reworkable? address numerous questions,
Load handles
including:
into sander 1. Are both inspection points
No? Yes? necessary? Could the
product be inspected for
Sand both size and appearance
before the taper machine?
2. Could appearance be
Tally Tally
checked earlier in the
Finished
handles process? It probably isn’t
cost effective to check for
Scrap Rework conformance to appearance
specifications after signifi-
Tally cant value has been added
to the product.
To To 3. If there is a problem with
chipper patchline Load handles conformance to size specifi-
on pallet cations before the taper
machine, can it be deter-
Move pallet mined which of the shapers
Figure 4.—Sample micro-flow chart, to packaging
part 2. is the likely source of the
problem? Are size data fed
back to the operators?
8
 FLOWCHARTS

4. Can the handles be checked with calipers instead of go/no-go

gauges? Much more information is obtained using measurement
data than go/no-go information. For example, a go/no-gauge
might reveal that handles are “small” after they go out of speci-
fication. Charting data obtained with calipers, on the other hand,
would enable the operator to detect trends and make corrections
before the product went out-of-spec.
Let’s examine one more potential area for improvement. Notice
all the movements in Figure 3. This company probably has a fleet
of forklifts. Product is loaded on pallets, moved, and unloaded
many times. How might throughput increase if the process flow
were improved by, for example, using just in time (JIT) or lean
manufacturing techniques such as work cells, which are groups of
machines dedicated to producing a particular product or part.
That question can be addressed by creating another type of
flowchart known as a value stream map. These maps track the flow
of value and information from customer order all the way back to
first-tier suppliers. Value stream maps add a dimension—time—
that flowcharts don’t cover. By tracking process cycle times,
equipment uptimes, and inventories, companies can estimate the
amount of time they spend doing things the customer would not be
willing to pay for (movement, queues, delays due to large batches,
problems related to the scheduling system, rework, etc.) versus
time spent altering the product in ways the customer will pay for
(generally, those are process cycle times). The current value stream
map is used to redesign the process to reduce non-value-added
time (thus eliminating waste) and reduce customer lead time.
A detailed discussion of value stream mapping is beyond the
scope of this report. For more information, see Rother and Shook.

Conclusion
We now have graphical representations of the steps involved in
creating the product. In the process of creating the chart, we have
had the opportunity to increase company personnel’s understand-
ing of “how we do things around here” and perhaps also to stream-
line the process and reduce non-value-added steps. We now also
have a valuable tool for initiating discussion during cause-and-
effect analysis, the next step in beginning an SPC program.

9
STATISTICAL PROCESS CONTROL

For further information

Brassard, M. and D. Ritter. 1994. The Memory Jogger II: A Pocket
Guide of Tools for Continuous Improvement & Effective Plan-
ning (Methuen, MA: Goal/QPC). 164 pp. http://www.goalqpc.
com/
Grant, E.L. and R.S. Leavenworth. 1988. Statistical Quality Con-
trol, 6th ed. (New York: McGraw Hill). 714 pp.
Ishikawa, K. 1982. Guide to Quality Control (Tokyo, Japan: Asian
Productivity Organization). 225 pp.
Montgomery, D.C. 1996. Introduction to Statistical Quality Con-
trol, 3rd ed. (New York: John Wiley & Sons). 677 pp.
Rother, M. and J. Shook. 1999. Learning to See: Value Stream
Mapping to Add Value and Eliminate Muda, v. 1.2 (Brookline,
MA: The Lean Enterprise Institute). 102 pp. http://www.lean.org
Walton, M. 1986. The Deming Management Method (New York:
Putnam Publishing Group). 262 pp.

10
 FLOWCHARTS

PERFORMANCE EXCELLENCE
IN THE WOOD PRODUCTS INDUSTRY

ABOUT THIS SERIES

This publication is part of a series, Performance
Excellence in the Wood Products Industry. The various
publications address topics under the headings of wood
technology, marketing and business management,
production management, quality and process control,
and operations research.
For a complete list of titles in print, contact OSU
Extension & Station Communications (address below) or
visit the OSU Wood Products Extension Web site at
http://wood.orst.edu

Ordering information
To order additional copies of this publication, send the complete
title and series number, along with a check or money order for
$2.50 payable to OSU, to:
Publication Orders
Extension & Station Communications
Oregon State University
422 Kerr Administration
Corvallis, OR 97331-2119
Fax: 541-737-0817

We offer a 25-percent discount on orders of 100 or more copies

of a single title.
You can view our Publications and Videos catalog and many
Extension publications on the Web at http://eesc.orst.edu

11
STATISTICAL PROCESS CONTROL

© 2002 Oregon State University

This publication was produced and distributed in furtherance of the Acts of Congress of May 8 and June 30, 1914.
Extension work is a cooperative program of Oregon State University, the U.S. Department of Agriculture, and
Oregon counties.

Oregon State University Extension Service offers educational programs, activities, and materials—without discrimi-
nation based on race, color, religion, sex, sexual orientation, national origin, age, marital status, disability, or
disabled veteran or Vietnam-era veteran status. Oregon State University Extension Service is an Equal Opportunity
Employer.
Published January 2002.

12
 EM 8984-E • August 2009
PERFORMANCE EXCELLENCE
IN THE WOOD PRODUCTS INDUSTRY

Part 5: Cause-and-Effect Diagrams

Scott Leavengood and James E. Reeb
PERFORMANCE EXCELLENCE
Our
IN focus for the first
THE WOOD four publications
PRODUCTS in this series has been on introducing
INDUSTRY
you to Statistical Process Control (SPC)—what it is, how and why it works, and
then discussing some hands-on tools for determining where to focus initial efforts
to use SPC in your company. Experience has shown that SPC is most effective
when focused on a few key areas as opposed to the shotgun approach of measuring
anything and everything. With that in mind, we presented check sheets and Pareto
charts (Part 3) in the context of project selection. These tools help reveal the most
frequent and costly quality problems. Flowcharts (Part 4) help to build consensus
on the actual steps involved in a process, which in turn helps define precisely where
quality problems might be occurring and what quality characteristics to monitor to
help solve the problems.
In Part 5, we now turn our attention to cause-and-effect diagrams (CE diagrams).
CE diagrams are designed to help quality improvement teams identify the root
causes of problems. In Part 6, we will continue this concept of root cause analysis
with a brief introduction to a more advanced set of statistical tools: Design of Ex-
periments.
It is important, however, that we do not lose sight of our primary goal: improving
quality and in so doing, improving customer satisfaction and the profitability of the
company.

We’ve identified the problem; now how can we solve it?

In previous publications in this series, we have identified the overarching qual-
ity problem we need to focus on and developed a flowchart identifying the specific
steps in the process where problems may occur. We now need to narrow our focus
so that we know what is causing the problem—and therefore how it can be solved.
Continuing our example from Parts 3 and 4, we determined that “size out of spec-
ification” for wooden handles was the most frequent and costly quality problem.
The flowchart showed that part size/shape was inspected with a “go/no-go” gauge
at the infeed to a machine that tapers the handles. The results of go/no-go inspection
are either that the shape is acceptable (“go”), in which case the parts were loaded
into the tapering machine, or that the shape is not acceptable (“no go”), in which
case the parts are scrapped. However, customers are still indicating that the sizes of
the handles are not meeting their specifications.

Scott Leavengood, director, Oregon Wood Innovation Center,

Oregon State University; and James E. Reeb, Extension
forester, Lincoln County, Oregon State University.
Statistical Process Control

In short, our prior efforts have helped us identify what the problem is and where
it might be occurring in the process. We still do not know, however, what to do to
solve the problem because we do not know what might be causing the problem.
Once we identify and confirm a solution, we can take steps to closely monitor the
situation such that the solution is maintained over time.

Cause-and-Effect Diagrams
A cause-and-effect (CE) diagram is a graphical tool for organizing and dis-
playing interrelationships of various theories of the root cause of a problem. CE
diagrams are also commonly referred to as fishbone diagrams (due to their re-
semblance to a fish skeleton) or as Ishikawa diagrams in honor of their inventor,
Kaoru Ishikawa, a Japanese quality expert.
Like flowcharts, CE diagrams are typically constructed as a team effort; and as
with many team efforts, the process is often more important than the end prod-
uct. When a team is brought together to study potential causes of a problem, each
member of the team is able to share their expertise and experience with the prob-
lem. The team approach enables clarification of potential causes and can assist
with building consensus for most likely causes. By empowering the team to iden-
tify the root cause and its solution, the team gains ownership of the process and is
far more motivated to implement and maintain the solution over the long term.
Perhaps most importantly, using a team to develop a CE diagram can help
to avoid the all-too-common challenge of pet theories. Pet theories might arise
when someone asserts that he or she already knows the cause of a problem. The
person(s) presenting this theory may well be right, and if they are in a position of
authority, chances are their theory will be the one that gets tested! There are risks,
however, in simply tackling the pet theory. If the theory is in fact wrong, time and
resources may be wasted, and even if the theory is correct, future team efforts will
be stifled, since team members may feel their input to problems is neither needed
nor valued. Further, the theory may be only partially correct: It might address a
symptom or secondary cause rather than the actual root cause.
CE diagrams, instead, bring the team together to identify and solve core problems.
Brassard and Ritter (1994) list two common formats for CE diagrams:
• Dispersion analysis: The diagram is structured according to major cause cat-
egories such as machines, methods, materials, operators, and environments.
• Process classification: The diagram is structured according to the steps involved
in the production process such as incoming inspection, ripping, sanding, mould-
ing, etc.
We will discuss the developing a CE diagram via an example.

Developing a cause-and-effect diagram

XYZ Forest Products Inc. produces wooden handles for push brooms. Com-
pany representatives visited a customer facility and examined the contents of the
scrap and rework bins. Through the use of a check sheet and a Pareto chart, they

2
 Cause-and-Effect Diagrams

were able to identify “size out of specification” as the most frequent and costly
quality problem. A flowchart helped build team consensus on the actual (vs. ideal)
steps involved in the manufacturing process and enabled the team to identify
points in the process where the problems might occur, as well as where measure-
ments were currently being taken.
To be able to address this problem, the team members must now identify the
root cause and then determine and test potential solutions. For the long term, they
will need a plan to ensure that their solution to the problem becomes standard
operating procedure.
CE diagrams are often developed via a brainstorming exercise. Brainstorming
can be either a structured or unstructured process. In a structured process, each
member of the team takes a turn in presenting an idea. In unstructured brainstorm-
ing, people simply present ideas as they come. Either approach may be used,
however the advantage of the structured approach is that it elicits ideas from
everyone—including more shy members of the team.
The following steps are taken to develop a CE diagram:
1. Clearly define the problem (effect): Ensure the problem is clearly stated and
understood by everyone. In the example here, it would be good to ensure that
everyone understands specifically what “size out of specification” means.
In this case, the team might create a definition such as, “The diameter of the
broom handle measured at the bottom tip is either too large or too small to meet
our customers’ specifications of ± x inches.” The bottom line for CE diagrams
is that there is only one clearly defined effect being examined. The process fo-
cuses primarily on the causes—of which there will likely be far more than one.
2. Decide on format: The team should determine if the dispersion analysis or pro-
cess classification (described above) is most appropriate for the situation. Either
approach is acceptable. The primary concern is which format works best for the
group and the problem being explored. For our purposes, we will focus on the
dispersion analysis approach.
3. Draw a blank CE diagram: The diagram should look like Figure 1. The effect
or problem being studied is entered in the box on the right-hand side. The main
backbone is then drawn, followed by angled lines for the various cause catego-
ries. In this case, we have entered the common dispersion analysis categories of
machine, methods, materials, operator, and environment.
4. Brainstorm causes: The team can now begin brainstorming potential causes of
the problem. It is typical for causes to come in rapid-fire fashion unrelated to
categories on the diagram. The meeting facilitator will have to enter the causes
in the appropriate place on the diagram. If ideas are slow in coming, however,
the facilitator might address each of the categories one at a time with ques-
tions such as, “Could our machinery be leading to handle size being outside the
specifications?”
5. “Go for the root” (cause): As the team discusses some of the causes, it will
become apparent that there are underlying causes for some items. For example,

3
Statistical Process Control

under materials, someone might mention wood moisture content (MC). Within
this item, there could be a problem of MC variation within a wood species as
well as differences between species. There may also be MC variation due to
mixing purchased materials (dried by a vendor) with material dried in-house.
In addition, MC could be explored further with regards to the other catego-
ries such as incoming inspection failing to check MC (an issue involving both
operators and methods) and/or extended storage of the material in areas without
temperature and humidity control (related to environment). The basic idea is to
ensure that causes are explored in enough depth such that the fundamental or
root cause(s) is identified.

Of course, at some point, the process will come to a natural conclusion. This
can happen either when the team has exhausted all possibilities, or some consen-
sus is reached that the root cause has been identified.
The completed CE diagram might look like the one in Figure 2. Due to space
limitations, many of the items listed here are quite cryptic. When working on
a flipchart or whiteboard, a team would want to use more detail in describing
potential causes. As discussed in Step 5 above, notice that some causes appear in
multiple categories. For example, causes related to moisture appear in “materi-
als,” “methods,” “environment,” and “operator.” This is to be expected, since the
issues themselves are multidisciplinary. Moisture content of wood, for example,
is a material property that is influenced by the environment, and proper control
requires the right methods as implemented by the operator.
Also notice the secondary branches. For example, under operator, “size checks”
is listed, with potential causes including “frequency” (i.e., the operator checks the
part size but not often enough) and “skipping” (i.e., the operator doesn’t do the
checks at all.)

Figure 1. Blank cause-and-effect diagram

4
 Cause-and-Effect Diagrams

Conclusion
Now that the team has completed the diagram, how do they know which cause
is the root cause? As stated above, the process is as important as the end product.
It is not the diagram per se that tells the team what the root cause might be, but
rather the discussion while constructing the diagram that will help lead the team
to a cause or two worthy of further exploration.
In this case, the fact that “moisture content” appeared in so many places on
the diagram might lead us to speculate that the team spent a fair amount of time
discussing this issue. That fact, combined with a basic knowledge of wood (i.e.,
wood shrinks and swells with changes in moisture content) might lead the team
to decide to collect data and/or conduct an experiment to verify one or more of
the items on the diagram. For example, the team might decide to gather baseline
data—measure the moisture content within species and between species and con-
struct a histogram. They could then conduct an experiment to examine the impact
of changes in moisture-check methods on moisture content variability and verify
the effect of these changes by constructing additional histograms. If the changes
appear to work, they would then need to ensure that the changes become standard
practice (and of course, are followed). If the changes do not seem to work, how-
ever, the team might then move to the next most likely cause.
In that regard, it should be noted here that merely reaching consensus on the
cause of a problem certainly doesn’t guarantee accuracy. In fact, the team’s deci-
sion on the root cause might be wrong. In some situations, more advanced statisti-
cal tools may be needed to identify causes and conduct and interpret the results of
experiments. Design of experiments (DOE) is a set of statistical methods and tools
for ensuring the efficient and effective conduct of experiments. Our next publica-
tion in this series will present a brief overview of DOE. Using DOE, however,
requires more advanced statistics than are within the scope of this series. We will

Machine Methods Materials

variation between
machine maint. quality of or within species
bad bearings setup proced. knives moisture content
knife grinding mixing purchased w/in-
damaged
knives moisture checks house
dull sanding Size out-of-
frequency specification
size checks
skipping incoming
moisture checks moisture content
setup material storage
skipping conditions

Operator Environment

Figure 2. Completed cause-and-effect diagram

5
Statistical Process Control

merely introduce DOE to give you some familiarity with the topic and to help you
decide if you want to pursue formal training in the subject.

For more information

Brassard, M. and D. Ritter. 1994. The Memory Jogger II: A Pocket Guide of Tools for
Continuous Improvement & Effective Planning (Methuen, MA: Goal/QPC). http://www.
goalqpc.com

Ishikawa, K. 1982. Guide to Quality Control (Tokyo, Japan: Asian Productivity

Organization).

PERFORMANCE
PERFORMANCE EXCELLENCE
EXCELLENCE
ININTHE WOOD PRODUCTS INDUSTRY
THE WOOD PRODUCTS INDUSTRY

ABOUT THIS SERIES

This publication is part of a series, Performance
Excellence in the Wood Products Industry. The various
publications address topics under the headings of wood
PERFORMANCE EXCELLENCE
technology, marketing and business management,
IN THE WOOD PRODUCTS INDUSTRY
production management, quality and process control,
and operations research.
For a complete list of titles in print, visit the OSU
Extension Service catalog at http://extension.oregonstate.
edu/catalog

PERFORMANCE EXCELLENCE
© 2009 Oregon State University
IN THE WOOD PRODUCTS INDUSTRY
This publication was produced and distributed in furtherance of the Acts of Congress of May 8
and June 30, 1914. Extension work is a cooperative program of Oregon State University, the U.S.
Department of Agriculture, and Oregon counties.

Oregon State University Extension Service offers educational programs, activities, and materi-
als—without discrimination based on race, color, religion, sex, sexual orientation, national origin,
age, marital status, disability, or disabled veteran or Vietnam-era veteran status. Oregon State
University Extension Service is an Equal Opportunity Employer.
Published August 2009.PERFORMANCE EXCELLENCE
IN THE WOOD PRODUCTS INDUSTRY
6