Fishbone Diagrams

The fishbone diagram is one of the simplest - and yet powerful approaches to root cause analysis one can find in the traditional 7 Quality Tools package. It is also called Ishikawa Diagram (due to its creator Kaoru Ishikawa) and cause-and-effect diagram. The tool provides the quality practitioner with two powerful features: 1) it is visual and easy to understand, 2) in most cases, it is built during a brainstorming session - which means it involves the people related to the topic being studied. Ishikawa diagrams are qualitative in nature, and should be supported by data and data analysis through the use of other statistical tools. Nevertheless, it offers process improvement teams (PITs) a methodical way of looking into the possible cause(s) related to an outcome. The first step needed to create the diagram is to write down the problem or undesirable result in the "head" of the fish. Then the diagram should be completed by adding "branches" (or bones) that are relevant to the issue being investigated. The figure below suggests six important and commonly used branches.

Materials is the branch related to the physical assets that may be related to the issue or problem statement. Raw materials for example, could be the cause(s) of a poor quality product. Methods refer to the standards and procedures in place that may not be performing well. Machines is the branch that covers the equipment utilized in this particular process - obsolescence as well as wear and tear may be the cause(s) of the the fishbone diagram's problem. Measurements may be related to calibration as well as system and/or machinery metrics that are not delivering accurate readings of the process. Environment can be looked at as both internal environment in which the process performs and the external environment in which either the product itself or the inputs to the process may be contributing to a undesirable outcome. People: is the lack of training, skills, and even motivation causing the process to be a poor one?

Keep in mind that depending on the issue being studied, these headings can be easily adjusted. The most important aspect of a cause-and-effect diagram is to identify the possible cause(s) of a problem. Notice that in the depicted figure above there are sub-branches for each major branch. The quality manager should explore and break down the possible cause(s) as much as possible until the true root cause(s) of the problem has(have) been identified.

As mentioned at the beginning of this post, the Ishikawa diagram is a powerful, easy to understand, and pictorial tool that can be used by any organizational setting, either as a part of a large process improvement study or in a quick meeting that needs to address a small  and specific issue. Give it a try! As usual, our team at eZSigma is available to help in case you need a hand.

Balanced Scorecard (BSC)

We are very excited to announce that our Strategic Management program has now been officially launched. eZSigma is now offering two streams of work within the Strategic Management program: consulting and training. More information can be found on our website (see link on the right hand side). We would like to take advantage of this opportunity to address the methodology behind our new offering: Balanced Scorecard (BSC). Although it is nearly impossible to touch on all aspects of BSC in one post, we hereby address the main idea behind this powerful approach to managing organizations. The BSC methodology was created in the early 90's by two Harvard professors - Norton and Kaplan. The main idea behind the BSC is that a firm should not only be concerned about its financial achievements but rather, it should seek excellence in other areas that will ultimately support the company in achieving its financial performance. The approach did break a paradigm in a sense that it supports the concept that no longer a firm would be focused on and concerned about its financial performance only. The methodology calls for a few critical points:

1. The translation of the strategic mandate into operational metrics

2. The alignment between operational metrics and the company's strategic objectives

3. The causal relationship among the four perspectives (briefly described below)

4. The spread of accountability and autonomy to all employees ("everyone's job")

The BSC method is built upon four perspectives: financial, customers, internal processes, and learning and growth. There are variations of these perspectives, mainly in the wording, but these four are easily found in any BSC development in any industry. The four perspective are:

Financial: Norton and Kaplan do not disagree that firms can only move forward and reinvest in themselves through monetary funds. But financial performance can only happen with  satisfied customers. For not-for-profits, revenues are still important for the organization's further development and the BSC approach can also be applied.

Customers: simply put, no company can survive without customers, and no company can thrive without satisfied customers. The BSC approach calls for attention when it comes to keeping your customers happy. In turn, these customers will continue to do business with the company and provide it with earnings longevity. As a side note, depending on the type of company and industry, the BSC practitioner can be dealing with internal and/or external customers (the next step in a process or the final consumer).

Internal processes: no customers can be satisfied through processes that lack quality in them. Pursuing excellence in any internal process - be it in a manufacturing setting or at a service organization, is the key to customer satisfaction. The previous post on cost of quality touched on the various ways that the lack of excellence in processes can contribute to customers' dissatisfaction.

Learning and growth: companies are made out of people. Processes and products, even those that are highly automated demand people to control and operate them. Engaged, well trained, and committed employees are the foundation of the firm's ultimate success. Think about the best products available on the market today. They were designed by people, they were created by people, they were advertised by people's minds.

The visual aid used in the BSC approach is the Strategy Map which we will address in another post eventually. We hope that this post has given the readers a glimpse of what this powerful approach can do in any organizational setting. As usual, we are available to discuss how this and other eZSigma's programs can transform your organization in a excellence-driven one.

Cost of Quality

How does one put a dollar figure to quality-related activities? In this post, we address the main areas of concern when it comes to financially measuring quality (or the lack of). Cost of quality refers to the costs of not producing a quality product or service. It is an important measure that showcases how much, dollar-wise, a firm is spending on activities that need to be performed in order for the product or service be of an acceptable quality. With a bit of variation in the literature on cost of quality, the main four areas of concern, and  the areas in which you can build a case for justifying doing things right the first time, are:

Prevention costs: what are the costs related to avoiding an issue with a product or service? Consider quality planing, training, preliminary process evaluation, management systems development, product design inspection (or verification), and so on. These are the costs a company must address even before it starts to produce a good or deliver a service.

Appraisal costs: calibrating, auditing, acceptance-testing, inspecting, and any other cost associated with the checking phase of a product or service development. Companies that are TQM-oriented usually educate employees to be a constant checker, however there are still clearly identifiable appraisal costs in any organizational setting.

Internal failure: these costs include scraping, reworking, downgrading, down-valuing, and material-reviewing to name a few. This is perhaps the most easily and visually identifiable costs of any process. It is important to mention that for the service industry, these can also be related to data loss, disruption in service, and errors in processing orders.

External failure: the costs that any organization want to avoid at all costs (no pun intended). Not only this is about cash outflow but it also refers to issues in which a company does not want to have. Warranty issues, product recall, defects, returns, complaints management, and the one we should be most concerned about: the loss of reputation.

Be mindful that sometimes certain costs (such as prevention costs) may deliver a reasonable benefit after all. Perhaps it is there that quality practitioners should be more focused on, in order for the product's or service's other costs be minimal. Evaluating the right costs is an important piece of any quality or process improvement engagement. eZSigma can help your organization in successfully achieving this milestone.

5 Whys - A Simple Tool for Root Cause Analysis

It turns out that as kids we knew better: ask Why? 5 or more times to discover the reasons behind the need to go to bed earlier or to understand why dad needs to leave the house in the morning every single work day. But what have we learned about asking Why? over and over again since our childhood, and how can we use this knowledge as process improvement practitioners? This approach is very intuitive indeed, but perhaps not so much utilized as an effective, easy-to-understand, hassle-free tool for quickly identifying the root cause of a problem. Formally described as the 5 Whys technique, it was made popular in the 70's by Toyota and its Toyota Production System (TPS). By asking Why? 5 or more times, one can dig deeper into the cause(s) that are actually creating the symptom. Just as we did by often asking our parents Why? a dozen times in a role - on any subject matter, we can now apply this simple tool in our workplace. Let us use a simple example to understand the power behind such a modest concept. In this post, we also address the next steps to be taken after the root cause of a problem has been found.

Issue: loss of a customer in a busy downtown coffee shop.

Why did we lose the customer?

Because there was a very long line around rush hour.

Why did we have a long line around rush hour?

Because one of our new baristas could not make coffee as fast as requested by our standard.

Why couldn't this barista perform as fast as requested by the standard?

During training, our main coffee maker was not working properly. The barista never really learned how to effectively make coffee as per our standard.

Why wasn't this coffee maker working properly?

The technician responsible for fixing it did not show up to fix it.

Why didn't this technician show up to fix it?

Because we haven't paid the last bill from the service provider.

The points of this fun exercise are twofold: 1) often we think we know the root cause of a problem but not very often we study what really happened. In this example, the first thing that comes to mind is that it was rush hour, and the demand in the coffee shop was higher than usual - an easy to accept excuse to explain the loss of a customer. 2) the root cause of a problem can be sometimes something completely different from the first one we tend to elect as the root cause. As human beings we naturally tend to jump to conclusions but as process improvement experts we should always investigate the issue a bit further, and always dig deeper into the many other possible causes of problem, even when they seem to be so convincing at a first glance. 

What comes next? An action plan to address the root cause(s). This action plan must at least identify a person accountable for the action, a deadline to complete the action, and a follow-up report on it: this will provide your organization with the lessons learned for the future.

We are experts in process excellence. Please contact eZSigma for any further discussion on how we can help your organization to perform better.