3 Key concepts of Statistical Thinking

All work occurs in a system of interconnected processes

Processes are one of the key foundations of a business. A process transforms inputs (from suppliers) into outputs (what the customer wants and needs). The fundamental of business iimprovement is therefore revolved around studying and improving underlying processes.

Variation exists in all processes

Variation is inherent in all processes. Variation may be much smaller in automated processes than manual processes but they still exist. There are two types of variation, common cause and special cause variations. Common cause variation is random and systematic variation that iis inherent to the process. Special cause variation is non-random and is caused by assignable factors.

Understanding and reducing variation are keys to success

By reducing variation we gain a greater degree of predictability about process capability. Predictability also allows for better utilisation of resources which translates to a better management of cost. The customer also has a better sense of what to expect as a performance standard. It is important to analyse and identify the different types of variation because the strategy to reduce them is different.

For example, the dotted-line curve shows the level of the current process performance whilst the narrower shaded curve shows the level that could be achieved through improvement and the reduction of “variation”.