Creating a Pareto Chart in Excel (Video Lesson)

Wilfredo Pareto was an economist who looked at the wealth distribution of Italy in a different manner. He created the famous 80/20 rule in which the critical few and the trivial many need to be separated. Pareto's principle has been applied to many different industries and situations over the years. According to Pareto, in most cases, 20% of a process potential cause(s) may contribute to 80% of the process potential symptoms. The tool has been extremely important in providing the quality practitioner with focus and prioritization when dealing with any process improvement program.

While many of us have advance software to quickly plot data into quality tools such as the Pareto Chart, there are some who do not have access to these tools. With that in mind, we have prepared a 10-minute video lesson on How to Create a Pareto Chart in Excel without the need to install any ad-ons or specific macros. Enjoy the video lesson posted below (a link is also provided at the bottom of this post). Please let us know if we can be of any further help. If it looks a bit blurry at the beginning, just give the HD quality a few seconds to load. 

We would also like to wish everyone in our community of learners a very successful and peaceful 2014. We hope to see you in one of our webinars, open enrolment courses, or consulting engagements. Happy New Year everyone!

Video Lesson on YouTube: 

https://www.youtube.com/watch?v=TuVeQ9Q5Eqs

An All Inclusive Strategy Development Approach

Should strategies be developed within the four walls of a boardroom or should they be discussed with key players of the organization? Should they be imposed to all levels of the organization or should they be shared equally throughout the organization? Is there a better way of doing it? It is difficult to believe that strategies should be developed by a few whom, rightfully so, are in charge of the organization. The formulation of strategies needed to take the firm to where it intends to go, should be an all inclusive exercise, especially in mid-size organizations where the process of developing strategies can easily involve most of the organization's human resources.

When developing strategies for the organization, the owner(s) or senior leadership should consider the following steps, which somewhat mirror what Norton and Kaplan suggest in their popular BSC (Balanced Scorecard) method (previously addressed within this blog).

 1. Interview senior managers as well as operational key players. Ask them “what is going on right now” and where they see the organization headed, and why they feel that way. Needless to say, the “operator” (be it the customer service representative or the sales person) often knows much more about what goes on at the operational level than the owner of the organization.

2. List all similarities discovered in the process. Is there a common theme in the employees’ answers? Is there a common issue? Does what you hear from the shop floor align with what senior management have in mind for the organization?

3. Focus on a few critical performance indicators that are in fact aligned with the overall goals of the organization. You can use these indicators as the basis for your strategic plan.

4. Brainstorm with those who have provided you with input. Why the similarities? Why the discrepancies?

5. Reflect on whether or not what you had in mind for your main strategy (or strategies) is actually doable, reasonable, and more importantly, what your customers expect of your organization. For one reason or another, you may be taking the organization to a completely different destination when compared to what your employees and the market are seeing it going.

The exercise of involving various key players in the strategy formulation will serve you with, at least, a good picture of what’s intended by leadership and what’s perceived by the employees throughout the entire organization when it comes to its direction (the firm's strategies.) Involving other levels (rather than senior management only) in the strategy formulation process can be a powerful tool for alignment and understanding. Think of a soccer team that has been told what to do in the field but yet have no idea about what the rewards (and roadblocks) involved in the task are. The team can still get the job done, but it would be much easier and rewarding for all if the team players have a common purpose in mind.

eZSigma has recently launched its Strategic Management programs. To learn more about them, please visit www.ezsigmagroup.com. We have also started an early bird promotion for all Open Enrolment (OE) courses. Please contact us for more information on how you can get discounts on all courses offered by eZSigma Group.

The Seven Quality Tools

More often than not, we find ourselves dealing with problems and improvement opportunities at our workplaces. But equally interesting, not everyone looks into these issues from a more statistically-sound perspective. The result is that inevitably, decisions sometimes are made based on opinions, desires, misinterpretation of facts, and "gut feeling". As quality practitioners and as process improvement champions, we should always look for factual data analysis that support decision making. One of the simplest approaches we can utilize to tackle unresolved and/or unknown problems is the development of a process improvement team (PIT) with the help of simple and yet powerful basic quality tools. If your organization is currently facing issues that have yet to be resolved, you may find the information on the Seven Traditional Quality Tools of great relevance.

The Seven Traditional Quality Tools are:

Stratification: (some authors replace this quality tool with Flowcharts): the simple act of segregating data in a meaningful way so that the user can properly study the data collected. This technique allows the analyst to group different data into homogeneous stratums. Many quality practitioners use this quality tool as the very first step in a process improvement team (PIT) approach to problem solving.

Check-sheet: basic document that offers the analyst with the opportunity of checking the number of occurred events. Imagine that a count on the number of complaints an airline customer representative needs to log per day must be performed. Although it sounds like a rather simplistic tool, the data collected through the check sheet can be of valuable insight by for example, serving as an input to other quality tools (such as the Histogram).

Scatter Diagram: a useful tool to understand the relationship between two variables. Questions associated with Scatter Diagrams are: what happens to X when Y increases or decreases? How strong is the relationship between the two variables? What is this relationship telling the analyst? And what is true or false in the relationship? Example: the hotter it is outside the more water one drinks. Is the opposite also true? (More on Scatter Diagrams on this blog, please check the archive on the right hand side bar).

Histogram: this bar-type chart measures the frequency in which events occur. It is a very valuable tool when the practitioner needs to study how often a certain event occurs, and how the repetition of such events behave within a certain period of time, in other words, it studies the distribution of data over a period of time. Think about a study in which you need to understand when your peak sales occur more often. It also is a great visual tool for those who are not very familiar with statistical analysis.

Control Chart: this line graph shows the user how the data behave over a period of time (often continuously). The user can set up rules to identify abnormal behaviours (e.g. out of limits or seven points climbing or descending in a row) and analyze the process as it happens over time. This is a powerful tool that can predict issues in many processes.

Ishikawa Diagram: also called “Cause and Effect” or “Fishbone” diagrams. This graphical representation of the relationship between the symptom of the problem and its various possible causes is a great way of discovering more about the root cause of an issue. It helps the user in digging deeper and truly analyzing the root cause of the problem. (More on Ishikawa diagrams on this blog, please check the archive on the right hand side bar).

Pareto Diagram: a bar-type chart that helps the user in identifying the critical few versus the trivial many (Pareto’s 80/20 rule). Many times managers focus their energy on things that are problematic per se but not of great impact at the bottom line (bottom line as not only financial performance but also employee engagement, safety, and so on). The Pareto diagram helps the analyst in focusing on what really matters.

The eZSigma Group has recently launched a course on the Seven Quality Tools. Please visit the link below to learn more about this learning opportunity.

http://www.ezsigmagroup.com/products-page/courses/the-seven-quality-tools/ 

Lean, Six Sigma and Sustainable Technologies

Once upon a time, there was a manager who needed to hone his skills on teamwork. Back then, the only option he had was to sign up for classes in which the student and the professor interacted face-to-face in a rather lecturer-listener setting. Through the evolution of the internet, and most importantly e-learning, nowadays students and practitioners have many options to choose from when it comes to self development. There are courses, certificate programs, masters and even doctoral degrees being delivered fully or partly online. The internet has undoubtedly changed the way we learn. But not only has the internet changed the way we learn, it has also changed the way we access and use information on a daily basis. Think about booking a trip, shopping for a new car, getting tickets for a concert, and even conversing with a loved one on the other side of the planet. As well, technology has changed the way we work. It has changed the way we control processes, the way we deliver services, and the way we communicate with each other.

Now that we have touched on how technology has changed the world, let's address what we know best: process improvement methodologies and techniques. As Lean and Six Sigma practitioners, we are very aware of how we need to approach customers to deliver the best in process improvement. But what about the sustainability of such programs? As we all have seen, many initiatives fail to stay if champions are not present to keep them going - which is indeed a major factor. But what about the technology behind these initiatives? Can software solutions contribute to the continuance of Lean and Six Sigma programs? Can they at least help somehow? Or is it just about the organization's culture? Have you experienced issues with Lean and Six Sigma implementation due to the lack of a tool or solution that could help the organization with the program's longevity?

This post is a bit different from the ones posted before. We would like to provoke the reader with this question: as we move towards a quasi-completely technology-driven business environment, can improvement process programs and methodologies such as Lean and Six Sigma be sustainable in the long run without the adoption of some sort of technology suite that will ensure that such programs stay, and are not considered the flavour of the month? Please vote on our first poll on the top right hand side of this blog and let us know what you think. And please feel free to comment on this post if you feel like it - we'd love to hear from you.