Presentation on theme: "Analytical Problem Solving"— Presentation transcript:
1 Analytical Problem Solving Gemini Skills WorkshopAugust 1998
2 Learning objectivesUnderstand the key steps in the problem solving process.Learn tools and techniques that are available for each step of the process.
3 Analytical Problem Solving “The significant problems we face cannot be solved at the same level of thinking we were at when we created them” - Albert Einstein“The difficult is what takes a little time; the impossibleis what takes a little longer” - Fridtjof Nansen
4 As consultants we need to have a structured approach to problem-solving We work in groups.We work with complex problems.Other consultants or clients may have to continue our work (e.g. in later phases of the project or when implementing the solution).Need to know “where we are” and what has been doneNeed to understand the process that leaded to the result/recommendationA structured approach helps the client follow “where we are”Our solution will be shared with people that did not take part in the problem solving process.It is easy to miss a step.Current steps often seem less important than future steps.
5 Key steps in the problem solving process Implement SolutionFollow-up and MeasureDetermine Decision CriteriaEvaluate SolutionsIdentify SolutionsInvestigate CausesClarify Problem1. Determine what we know and what we don’t2. Gather information3. Identify constraints4. Determine if you should proceed1. Identify possible causes2. Design tests3. Perform tests4. Determine causes or re-test5. Determine to proceed1. Determine criteria2. Determine decision process1. Determine solution approach2. Develop solutions1. Compare with decision criteria2. Decide on solution(s)3. Validate1. Prepare action plans2. Prepare follow-up plan and measures3. Implement1. Measure expected benefits2. Collect feedback3. Incorporate feedback into ongoing workThere are many variations of this process, but these are the basic steps you should follow.
6 Determine Decision Criteria STEP 1: CLARIFY PROBLEMClarify the problemDetermine Decision CriteriaFollow-up and MeasureClarify ProblemInvestigate CausesIdentify SolutionsEvaluate SolutionsImplement Solution1. Determine what we know and what we don’t2. Gather information3. Identify constraints4. Determine if you should proceedStepsWhat we know/What we don’t5 W`s and 1 H (What, Where, When, Who, Why and How)5 WhysSWOT (strengths, weaknesses, opportunities, threats)Tools (examples)
7 Clarifying the problem is the most important step in this process STEP 1: CLARIFY PROBLEMClarifying the problem is the most important step in this processA problem can be defined as a gap between where we are and where we want to be. This gap should be measurable.Be aware that “perception is reality”. Although some client problems we encounter are very logical and factual, such as machine breakdowns, most client issues are based on people’s perceptions of problems, such as poor customer service.Because of this, most problems will no require an optimal solution, but will have many adequate solutions.Ensure that the problem statement accurately depicts the client situation. It will determine your entire course of action.
8 These are the steps involved in clarifying the problem STEP 1: CLARIFY PROBLEM - EXAMPLEThese are the steps involved in clarifying the problem1. Determine what we know and what we don’t. Using a table with What, Who, When, Where, How, and Why can help define what information needs to be gathered.Example: Urgent customer requests are not being addressed.What We Know What We Don’t KnowWhat Customers are complaining about Are requests being lost, forgotten, or not lack of responsiveness answered initially?Who Only customers with urgent , voic ,or telephone requests or rush orders communications?Where Headquarters Customer place of originWhen Problem only in last two monthsWhy No documentation of requests or System error? Not recorded by service orders agent? Message not received?How
9 Steps to clarify problem (continued) STEP 1: CLARIFY PROBLEMSteps to clarify problem (continued)2. Gather the information you need in order to define the problem statement. You may begin to identify possible causes, but that should really be done at a later step.3. Identify constraints - Who is the client for this problem and what is important to that client? Consider time frame (short-term vs long-term), costs, resources required, level of effort vs value-added, etc.4. Define the problem statement. Validate the problem with the client. Do we agree that this is really the problem at hand?5. Determine how to proceed. Seriously consider if the time and effort involved creates enough benefit or if this problem will disappear as the result of other activities.Most importantly, this step frames the investigation before we begin tackling the causes.
10 Client problems may require several iterations of the 5 Whys. STEP 2: INVESTIGATE CAUSES - EXAMPLEOne very easy way to understand and define a problem is to ask “Why?” 5 times (5 Whys)Real Client Example:Why are we shipping orders late? Because we can’t meet our production schedule.Why can’t we meet our production schedule? Because we are constantly changing it.Why do we change it? To accommodate late orders from our customers.Why do we have late orders? Because many of our customers don’t know what their orders are by the order cut-off date.Why do we have a cut-off date? So we can create a production schedule and meet our shipping dates.Client problems may require several iterations of the 5 Whys.
11 Strengths, Weaknesses, Opportunities, and Threats (S. W. O. T Strengths, Weaknesses, Opportunities, and Threats (S.W.O.T.) can clarify complex issues and define directionS.W.O.T. analysis is a general tool that can be used across key areas:Product mixProfit/pricingPromotionsSpace managementSupply chainDefinitions:Exploited strategic capabilities and/or market positioning providing a competitive advantage in the market place.Exploited strategic capabilities and/or market positioning possessed by competitors creating a competitive disadvantage in the market place.Unexploited strategic capabilities and/or market positioning which could provide a competitive advantage in the market place.Unexploited strategic capabilities and/or market positioning which could provide a competitor a competitive advantage in the market place.StrengthsOpportunitiesWeaknessesThreats
12 Investigate causes ( or perform analysis) STEP 2: INVESTIGATE CAUSESInvestigate causes ( or perform analysis)Determine Decision CriteriaFollow-up and MeasureClarify ProblemInvestigate CausesIdentify SolutionsEvaluate SolutionsImplement Solution1. Identify possible causes2. Design test3. Perform test4.Determine causes or retest5. Determine to proceedStepsHypothesisSurveys and interviewsFishbone (cause and effect)ParetoRoot cause analysis toolsDuPont treeFinancial, statistical, database analysesTools (examples)We use two general methods to approach problems - using analogies to previous experience and breaking the problem down into smaller pieces.
13 Step 2 is to investigate causes of the problem STEP 2: INVESTIGATE CAUSESStep 2 is to investigate causes of the problem1. Identify possible causes. We need to do this in order to carve out a manageable piece of work by narrowing the scope of the problem to the most probably causes.There are many tools we can use to investigate causes. The two basic ways to analyse problems for causes are:Use analogies. We naturally relate the current problem to our previous experiences. As experts, we should be able to develop plausible hypotheses to explain the problem.Break the problem into smaller subsets of problems (chunking). In conjunction with our hypotheses we can also dissect the problem into its variable components and determine which of these components is most likely to be causing the problem.
14 Now we are ready to test our possible causes STEP 2: INVESTIGATE CAUSESNow we are ready to test our possible causes2. Design tests or analytics. Tests can include surveys, interviews, process flows, pareto analyses, control charts, etc. it is unlikely that you will have to create an entirely new analytic because so many already exist, in Gemini and externally. Well-designed tests should directly prove or disprove hypotheses and should consider one problem variable at a time.3. Perform tests. Ensure that the test will not be a burden for the client and that they want to do it. Otherwise, the results may not be accurate.4. Determine causes based on test results. (Or re-test, if necessary)5. Determine how to proceed. Is the cause within our sphere of influence? How does it compare with our constraints?It seems logical that the next stop would be to develop solutions. but to make our time more effective, we should plan ahead to determine what a “good” solution looks like.
15 CAUSES FOR A CAR NOT TO START: STEP 2: INVESTIGATE CAUSES - EXAMPLEThe Fishbone or Cause and Effect Diagram is simple tool for investigating causesCAUSES FOR A CAR NOT TO START:ManMachineDead batteryNo gas• Left lights on• Bad Switch• ElectricalLost keysBad chokeWorn outWrong fuelLemonNo oilVapor LockCar will not startOut of tuneDon't knowhow to startToo cold• RentalParts StolenNo antifreezeRepo'dGets wet in the rainMaterialMethodsMilieu (Environment)“5“ M fishbone - Man, Machine, Materials, Methods and Milieu (Environment)
16 Supply Chain fishbone is an ‘mental model’ for looking at a business STEP 2: INVESTIGATE CAUSES - EXAMPLESupply Chain fishbone is an ‘mental model’ for looking at a businessProcurementPurchasing & Vendor Mtg.PartnershipSupplier selectionPerformance measuresEDIVendor alliancesSourcing termsCertificationAuditingLead timeSupplier base reductionNew product developmentContractor managementMROQuality materialJITTQMForming consortiumsAll-in-one costTransportationCycle timeProduction Control, InventoryCapacityReliabilitySafety stockMaintenanceLead timeChange overCycle timeBOMQualityMonitoring turnsLabour trainingForecastingComplexityStock accuracySchedulingStandardised codingLabour climateReal timeData accuracyConsumption rateManagement reportsInformation Mgt.Common databasesNetworkingAccessibilityTransparentingReal timeBar codingAligned with operationsUser trainingTiming of processingCycle timeMeasurementsReliabilityData accuracyTrust in the systemData captureRaw material packagingSupply ChainEffectivenessOrder sizeModes & lead timesReturn logisticsDriver trackingLabour climateModes of freight & packingDriver trainingWarehousingTransportationVehicle maintenanceNetwork/routingDRP optimisationCost of fuelLTL vs. FTLRegulationsIntermodel networksElectronic trackingInventory managementInsuranceCross-dockingDamaged goodsService pointOutsourcingSchedulingGoods in transitSourcingHVOV’sOrderBreak-even timeSales & op. planningCustomer loyaltyCorporate scorecardPlanning & objective settingCSF’sOEEKPI’sSOP’sABMEnd-to-end measuresCost of qualityQuality & availability of measuresBudget variancesTracking & reportingCompensation rewardsTotal consumption systemsContinuous improvementCycle timeMTBF/MTTFFrequencyEDIBar codingCost orderSegmentationPricingVerificationKnow your customerLead time on ordersPerfect ordersOrder processingTransportation costsPayment termsECRDistribution/logisticsPromotionsOrder error rateAccounts receivablesDiscountsInventoriesVendor mgt.Credit controlCustomerOrder status recordConnectivity to other core processesOrder FulfilmentDistribution LogisticsPerformance Measures
17 A “DuPont” tree is a structured way to look at causes STEP 2: INVESTIGATE CAUSES - EXAMPLEA “DuPont” tree is a structured way to look at causesCost of capitalEarningsEVABetaRisk premiumRisk-free rateAve cost of capitalRevenueCostsCost of equityCost of debtTotal debtTotal equityPriceVolumeMaterialsProductionOverheadsMarketingSalesCapital employed
18 Please circle The way it is Please circle The way it should be We rely heavily on surveys and interviews to gain information quickly - Example Culture SurveyPlease complete the following questions by circling the appropriate number on a scale from 1 to 6, where 1=strongly disagree and 6=strongly agree. Answer the statements according to the ‘way it is’ in your organisation at the moment on the left column. Then move to the right-hand column and respond according to ‘the way it should be’ in your opinion. There are no right or wrong answers. Please answer all questions from your own perspective.Strongly disagree Disagree Agree Strongly AgreePlease circle The way it isPlease circle The way it should be1. People here act when they see things that need to be done2. People in this organisation try to resolve their differences constructively3. People here readily accept responsibility for their actions and decisions4. Cost is one of the most important factors taken into account before decisions are made here5. Inconsistencies exist between what is said and done. Managers don’t ‘walk the talk’6. People here constantly explore new and better ways of doing things7. People here listen to customers and respond to their needs8. There is a concerted effort to perform better than the competition
19 We use focus interviews on every Analysis and Design project Focus Interview GuideGeneral Information1) Years with Company:: _______________________________Years in current position: _______________________________Number of reports: _______________________________2) a) What is your understanding of your company’s top three business objectives?b) What is your company’s vision?3) a) What are your group’s top three business objectives?b) How are they (or will they be) measured?efer back to the scope graphic on page 1 if the concept of GTS is not clear.)4) What do you consider to be your group’s three greatest strengths?Your GroupOverall
20 Pareto’s Law states that 20% of the sources cause 80% of the problem Customer Service Complaints Pareto Analysis$35M302520Number of Occurrences/month1510522111No one Answers PhoneRouted to wrong personDon’t know the answerUnhelpfulDon’t return callsHard to understandGum chewingDiscourteousCustomer Complaints about our Customer ServiceWe can use this principle to determine where to focus our improvement efforts217
22 The third step is to determine our decision criteria STEP 3: DETERMINE DECISION CRITERIAThe third step is to determine our decision criteriaDetermine the decision criteria. Refer back to the constraints. Consider:Needs vs. wantsLong-term vs. short-termInterim stepsRisksCostsTimingDesired benefitsRanking or prioritizing the decision criteria (most important to least important)Determine decision process. Who needs to be involved in the decision? Who has final say? What method will we use - voting, client chooses, numerical rankings, a dart board?Doing this now avoids looking foolish later.
23 Quadrant Analysis provides a framework for making decisions Quadrant analysis is a general tool that can be used across different levels of analysis:Corporate portfoliosCustomersProductsYou can compare any two axes relevant to your problem:Quality vs. costMarket share vs. market potentialVolume vs. marginMarket ShareSleepersWinnersQuestionablesOpportunity GapsMarket Growth
24 Possible Category Roles And then helps determine possible actions based on your findings - Example Quadrant Decision MatrixQuadrantPossible Category RolesPossible ActionsOpportunity gaps(Higher growth/low share)Profit contributorVariety imageReview planograms - are category and fastest movers underspaced?Review pricing mix - is pricing of key items too high versus market?Review promotions - are category and key items under-promoted versus market?Review product mix - is mix wrong for target customer segments? Any new, faster-moving items not being carried?Tie-in promotions with higher margin consumption itemsWinners(High share/higher growth)Traffic drawCash generatorPrice imageContinue current programsIncrease promotional supportReview space management to ensure minimal out-of-stock potentialAdd good performing items not carried but available in marketBe first with new itemsReview pricing and gross margins to see if selected price reductions can enhance image and increase growth and shareSleepers(Good share/lower growth)Profit contributorTransaction builderReview product mix versusQuestionables(Low share/lower growth)Profit contributorVariety imageReview product mix versus market (variety index)Delete poorest performance items (brands, flavors, sizes)Raise prices if appropriatePromote category to meet marketMinimize space allocated
25 Key steps in the problem solving process Determine Decision CriteriaFollow-up and MeasureClarify ProblemInvestigate CausesIdentify SolutionsEvaluate SolutionsImplement Solution1. Determine solution approach2. Determine solutionsStepsVarious Gemini methodologiesTools (examples)
26 Finally, we can develop solutions STEP 4: IDENTIFY SOLUTIONSFinally, we can develop solutions1. Determine solution approach. This can be almost anything, like:BrainstormingBenchmarkingBest practicesModelling techniques, e.g., decision modelling, business modelling, process modellingVision engineeringOrganisation designAny number of Gemini methodologies2. Develop solutions. It is good practice to develop alternative scenarios, if applicable.
27 Benchmarking can provide a gauge of “what good looks like” - Purchasing KPI Benchmarks Average BenchmarkBenchmarkRangeKey Performance Indicator• Purchasing function expense as a percentage of sales• Purchasing function expense as a percentage of purchase value• Purchasing headcount as a percentage of total company headcount• Active suppliers per purchasing employee• Percentage of all active suppliers that account for 90% of total purchase valueAverage actual time to develop/negotiate a contract• Percent of deliverables received on-time within the most recent 12 month period0.3 %1.2 %1.1%5020%9 wks88%0.06% -> 3.0%0.7% -> 7.0%0.3% -> 4.5%6 -> 1825% -> 75%2 -> 26 wks63% -> 98%121: Median = 39 2: Median = 91Source: Center for Advanced Purchasing Status
28 We can also benchmark best practices - Purchasing Best Practices CompanyBest Practice/StrengthOutboard Marine CorporationFord Motor CompanyMotorolaPartnering: establishes 3-5 year contracts with suppliersPartnering: 70% of North American Automotive Operations’ contracts are long term (3-5 years)New product development: with preferred suppliers, Ford uses “black box” design responsibility. Ford specifies a parts function and lets suppliers figure out the best way to manufacture itPartnering: suppliers participate in developing design guidelines for new productsSupplier management: communications sector trimmed its supplier base from 4,200 in 1985 to 1,155 in 1989Technology: supports a common global database for critical material purchasesSupplier management: has created “Motorola University”, an education and training center in Schaumburg, Illinois where suppliers and its own employees brush up on basic quality concepts as well as learn the more advanced techniques in quality controlSource: Purchasing
29 Key steps in the problem solving process STEP 5: EVALUATE SOLUTIONSKey steps in the problem solving processDetermine Decision CriteriaFollow-up and MeasureClarify ProblemInvestigate CausesIdentify SolutionsEvaluate SolutionsImplement Solution1. Compare with decision criteria2.Decide on solution(s)3. ValidateStepsImpact/Effort matrixTools (examples)
30 STEP 5: EVALUATE SOLUTIONS Evaluating solutions becomes easy because we have already laid the groundwork1. Follow the decision process and compare with decision criteria2. Decide on solution(s)3. Validate solutions with initial constraints and your sphere of influence
31 Level of impact (results) Level of effort required An Impact/Effort Matrix is a useful tool for prioritizing work and identifying “early wins”HighAction 4Action 3Level of impact (results)Action 1Action 5Action 6Action 2LowHighLevel of effort required
32 Key steps in the problem solving process Determine Decision CriteriaFollow-up and MeasureClarify ProblemInvestigate CausesIdentify SolutionsEvaluate SolutionsImplement Solution1. Prepare actionj plans2.Prepare followup plan and measures)3. ImplementStepsWorkplansRACI chartingTools (examples)
33 Step 6 is to implement the solution(s) STEP 6: IMPLEMENT SOLUTIONSStep 6 is to implement the solution(s)1. Prepare action/implementation plans. Include responsibilities and time frames2. Prepare follow-up plan and measures3. Do it!
34 Key steps in the problem solving process Determine Decision CriteriaFollow-up and MeasureClarify ProblemInvestigate CausesIdentify SolutionsEvaluate SolutionsImplement Solution1. Measure expected benefits2.Collect feedback3. Incorporate feedback into ongoing workStepsKey performance indicatorsBalanced ScorecardBenefits dashboardTools (examples)
35 Don’t forget to measure and follow-up! STEP 7: MEASURE AND FOLLOW UPDon’t forget to measure and follow-up!1. Measure improvements and compare with expected benefits2. Collect feedback3. Incorporate feedback into on-going workYou will learn more about performance measurement in later sessions
36 In everything we do, Plan (think) - Do - Review Implement SolutionFollow-up and MeasureDetermine Decision CriteriaEvaluate SolutionsIdentify SolutionsInvestigate CausesClarify ProblemTHINKDOTHINKDOTHINKDOREVIEW