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Gemini Skills Workshop Analytical Problem Solving August 1998.

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1 Gemini Skills Workshop Analytical Problem Solving August 1998

2 - 2 - Anal Prob ol v5.ppt Understand the key steps in the problem solving process. Learn tools and techniques that are available for each step of the process. Learning objectives

3 - 3 - Anal Prob ol v5.ppt 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 impossible is what takes a little longer” - Fridtjof Nansen

4 - 4 - Anal Prob ol v5.ppt 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 done –Need to understand the process that leaded to the result/recommendation A 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 - 5 - Anal Prob ol v5.ppt Key steps in the problem solving process 1.Determine criteria 2.Determine decision process Implement Solution Follow-up and Measure Determine Decision Criteria Evaluate Solutions Identify Solutions Investigate Causes Clarify Problem 1.Determine what we know and what we don’t 2.Gather information 3.Identify constraints 4.Determine if you should proceed 1.Measure expected benefits 2.Collect feedback 3.Incorporate feedback into ongoing work 1.Identify possible causes 2.Design tests 3.Perform tests 4.Determine causes or re- test 5.Determine to proceed 1.Determine solution approach 2.Develop solutions 1.Compare with decision criteria 2.Decide on solution(s) 3.Validate 1.Prepare action plans 2.Prepare follow-up plan and measures 3.Implement There are many variations of this process, but these are the basic steps you should follow.

6 - 6 - Anal Prob ol v5.ppt Clarify the problem Implement Solution Follow-up and Measure Determine Decision Criteria Evaluate Solutions Identify Solutions Investigate Causes Clarify Problem 1.Determine what we know and what we don’t 2.Gather information 3.Identify constraints 4.Determine if you should proceed Steps What we know/What we don’t 5 W`s and 1 H (What, Where, When, Who, Why and How) 5 Whys SWOT (strengths, weaknesses, opportunities, threats) Tools (examples) STEP 1: CLARIFY PROBLEM

7 - 7 - Anal Prob ol v5.ppt Clarifying the problem is the most important step in this process A 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. STEP 1: CLARIFY PROBLEM

8 - 8 - Anal Prob ol v5.ppt These are the steps involved in clarifying the problem What We KnowWhat We Don’t Know WhatCustomers are complaining about Are requests being lost, forgotten, or not lack of responsivenessanswered initially? WhoOnly customers with urgent , voic ,or telephone requests or rush orderscommunications? WhereHeadquartersCustomer place of origin WhenProblem only in last two months WhyNo documentation of requests or System error? Not recorded by service ordersagent? Message not received? How 1.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. STEP 1: CLARIFY PROBLEM - EXAMPLE

9 - 9 - Anal Prob ol v5.ppt Steps 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. STEP 1: CLARIFY PROBLEM

10 Anal Prob ol v5.ppt One 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. STEP 2: INVESTIGATE CAUSES - EXAMPLE

11 Anal Prob ol v5.ppt Strengths, Weaknesses, Opportunities, and Threats (S.W.O.T.) can clarify complex issues and define direction –S.W.O.T. analysis is a general tool that can be used across key areas: Product mix Profit/pricing Promotions Space management Supply chain –Definitions: 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. Strengths Opportunities Weaknesses Threats

12 Anal Prob ol v5.ppt Investigate causes ( or perform analysis) Implement Solution Follow-up and Measure Determine Decision Criteria Evaluate Solutions Identify Solutions Investigate Causes Clarify Problem 1. Identify possible causes 2. Design test 3. Perform test 4.Determine causes or retest 5. Determine to proceed Steps Hypothesis Surveys and interviews Fishbone (cause and effect) Pareto Root cause analysis tools DuPont tree Financial, statistical, database analyses Tools (examples) We use two general methods to approach problems - using analogies to previous experience and breaking the problem down into smaller pieces. STEP 2: INVESTIGATE CAUSES

13 Anal Prob ol v5.ppt Step 2 is to investigate causes of the problem 1.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. STEP 2: INVESTIGATE CAUSES

14 Anal Prob ol v5.ppt Now we are ready to test our possible causes 2.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. STEP 2: INVESTIGATE CAUSES

15 Anal Prob ol v5.ppt The Fishbone or Cause and Effect Diagram is simple tool for investigating causes Man No gas Lost keys Wrong fuel Machine Bad choke Worn out Lemon Vapor Lock No oil Dead battery Left lights on Bad Switch Electrical Material Out of tune No antifreeze Methods Don't know how to start Rental Repo'd Too cold Parts Stolen Gets wet in the rain Milieu (Environment) CAUSES FOR A CAR NOT TO START: Car will not start STEP 2: INVESTIGATE CAUSES - EXAMPLE “5“ M fishbone - Man, Machine, Materials, Methods and Milieu (Environment)

16 Anal Prob ol v5.ppt Supply Chain fishbone is an ‘mental model’ for looking at a business Order Fulfilment Performance Measures Distribution Logistics Supply Chain Effectiveness Raw material packaging Procurement Purchasing & Vendor Mtg. Partnership Supplier selection Performance measuresEDI Vendor alliancesSourcing terms CertificationAuditing Lead time Supplier base reduction New product development Contractor management MROQuality material JITTQM Forming consortiumsAll-in-one cost Transportation Cycle time Management reports Information Mgt. Common databasesNetworking AccessibilityTransparenting Real timeBar coding Aligned with operationsUser training Timing of processingCycle time MeasurementsReliability Data accuracyTrust in the system Data capture Production Control, Inventory CapacityReliability Safety stockMaintenance Lead timeReliability Change overCycle time BOMQuality Monitoring turnsLabour training ForecastingComplexity Stock accuracyScheduling Standardised codingLabour climate Real timeData accuracy Consumption rate OrderOrder size EDIFrequency Cost orderBar coding PricingSegmentation Know your customerVerification Perfect ordersLead time on orders Transportation costsOrder processing ECRPayment terms PromotionsDistribution/logistics Accounts receivablesOrder error rate InventoriesDiscounts Credit controlVendor mgt. Order status recordCustomer Modes & lead times Return logistics Driver tracking Labour climate Modes of freight & packing Driver training Warehousing Transportation Vehicle maintenance Network/routing DRP optimisation Cost of fuel LTL vs. FTLRegulations Intermodel networks Electronic tracking Inventory management Insurance Cross-docking Damaged goodsService point Outsourcing Scheduling Goods in transit Sourcing HVOV’s Connectivity to other core processes Break-even time Sales & op. planning Customer loyalty Corporate scorecard Planning & objective setting CSF’s OEE KPI’s SOP’s ABM End-to-end measuresCost of quality Quality & availability of measures Budget variancesTracking & reporting Compensatio n rewards Total consumption systems Continuous improvement Cycle time MTBF/MTTF STEP 2: INVESTIGATE CAUSES - EXAMPLE

17 Anal Prob ol v5.ppt A “DuPont” tree is a structured way to look at causes Cost of capital Earnings EVA Beta Risk premium Risk-free rate Ave cost of capital Revenue Costs Cost of equity Cost of debt Total debt Total equity Price Volume Materials Production Overheads Marketing Sales Capital employed STEP 2: INVESTIGATE CAUSES - EXAMPLE

18 Anal Prob ol v5.ppt We rely heavily on surveys and interviews to gain information quickly - Example Culture Survey Please 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 disagreeDisagreeAgree Strongly Agree Strongly disagreeDisagreeAgree Strongly Agree People here act when they see things that need to be done 2.People in this organisation try to resolve their differences constructively 3.People here readily accept responsibility for their actions and decisions 4.Cost is one of the most important factors taken into account before decisions are made here 5.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 things 7. People here listen to customers and respond to their needs 8.There is a concerted effort to perform better than the competition Please circle The way it is Please circle The way it should be

19 Anal Prob ol v5.ppt Focus Interview Guide General Information 1)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? Overall Your Group We use focus interviews on every Analysis and Design project

20 Anal Prob ol v5.ppt We can use this principle to determine where to focus our improvement efforts Pareto’s Law states that 20% of the sources cause 80% of the problem No one Answers Phone Routed to wrong person Don’t know the answer Don’t return calls UnhelpfulDiscourteousGum chewing Hard to underst and Customer Complaints about our Customer Service $35M 0 Number of Occurrences/month Customer Service Complaints Pareto Analysis

21 Anal Prob ol v5.ppt Determine Decision Criteria Implement Solution Follow-up and Measure Determine Decision Criteria Evaluate Solutions Identify Solutions Investigate Causes Clarify Problem 1.Determine criteria 2.Determine decision process Steps Decision modelling RACI charting Criteria weighing Quadrant analysis Tools (examples) STEP 3: DETERMINE DECISION CRITERIA

22 Anal Prob ol v5.ppt The third step is to determine our decision criteria Determine the decision criteria. Refer back to the constraints. Consider: –Needs vs. wants –Long-term vs. short-term –Interim steps –Risks –Costs –Timing –Desired benefits –Ranking 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. STEP 3: DETERMINE DECISION CRITERIA

23 Anal Prob ol v5.ppt Quadrant Analysis provides a framework for making decisions –Quadrant analysis is a general tool that can be used across different levels of analysis: Corporate portfolios Customers Products SleepersWinners QuestionablesOpportunity Gaps Market Share Market Growth – You can compare any two axes relevant to your problem: Quality vs. cost Market share vs. market potential Volume vs. margin

24 Anal Prob ol v5.ppt And then helps determine possible actions based on your findings - Example Quadrant Decision Matrix Quadrant Possible Category RolesPossible Actions Opportunity gaps (Higher growth/low share) Profit contributor Variety image Review 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 items Winners (High share/higher growth) Traffic draw Cash generator Price image Continue current programs Increase promotional support Review space management to ensure minimal out-of-stock potential Add good performing items not carried but available in market Be first with new items Review pricing and gross margins to see if selected price reductions can enhance image and increase growth and share Profit contributor Transaction builder Review product mix versusSleepers (Good share/lower growth) Questionables (Low share/lower growth) Profit contributor Variety image Review product mix versus market (variety index) Delete poorest performance items (brands, flavors, sizes) Raise prices if appropriate Promote category to meet market Minimize space allocated

25 Anal Prob ol v5.ppt Key steps in the problem solving process Implement Solution Follow-up and Measure Determine Decision Criteria Evaluate Solutions Identify Solutions Investigate Causes Clarify Problem 1.Determine solution approach 2.Determine solutions Steps Various Gemini methodologies Tools (examples)

26 Anal Prob ol v5.ppt Finally, we can develop solutions 1.Determine solution approach. This can be almost anything, like: –Brainstorming –Benchmarking –Best practices –Modelling techniques, e.g., decision modelling, business modelling, process modelling –Vision engineering –Organisation design –Any number of Gemini methodologies 2.Develop solutions. It is good practice to develop alternative scenarios, if applicable. STEP 4: IDENTIFY SOLUTIONS

27 Anal Prob ol v5.ppt Key Performance Indicator Average Benchmark Benchmark Range 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 value Average actual time to develop/negotiate a contract Percent of deliverables received on-time within the most recent 12 month period 0.3 % 1.2 % 1.1% 50 20% 9 wks 88% 0.06% -> 3.0% 0.7% -> 7.0% 0.3% -> 4.5% 6 -> 182 5% -> 75% 2 -> 26 wks 63% -> 98% 1:Median = 39 2:Median = Source: Center for Advanced Purchasing Status Benchmarking can provide a gauge of “what good looks like” - Purchasing KPI Benchmarks

28 Anal Prob ol v5.ppt We can also benchmark best practices - Purchasing Best Practices Partnering: establishes 3-5 year contracts with suppliers Partnering: 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 it Partnering: suppliers participate in developing design guidelines for new products Supplier management: communications sector trimmed its supplier base from 4,200 in 1985 to 1,155 in 1989 Technology: supports a common global database for critical material purchases Supplier 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 control Outboard Marine Corporation Ford Motor Company Motorola CompanyBest Practice/Strength Source:Purchasing

29 Anal Prob ol v5.ppt Key steps in the problem solving process Implement Solution Follow-up and Measure Determine Decision Criteria Evaluate Solutions Identify Solutions Investigate Causes Clarify Problem 1.Compare with decision criteria 2.Decide on solution(s) 3. Validate Steps Impact/Effort matrix Tools (examples) STEP 5: EVALUATE SOLUTIONS

30 Anal Prob ol v5.ppt Evaluating solutions becomes easy because we have already laid the groundwork 1.Follow the decision process and compare with decision criteria 2.Decide on solution(s) 3.Validate solutions with initial constraints and your sphere of influence STEP 5: EVALUATE SOLUTIONS

31 Anal Prob ol v5.ppt An Impact/Effort Matrix is a useful tool for prioritizing work and identifying “early wins” Level of effort required Level of impact (results) Low High Actio n 1 Actio n 2 Actio n 6 Actio n 3 Actio n 5 Actio n 4

32 Anal Prob ol v5.ppt Key steps in the problem solving process Implement Solution Follow-up and Measure Determine Decision Criteria Evaluate Solutions Identify Solutions Investigate Causes Clarify Problem 1.Prepare actionj plans 2.Prepare followup plan and measures) 3. Implement Steps Workplans RACI charting Tools (examples)

33 Anal Prob ol v5.ppt Step 6 is to implement the solution(s) 1.Prepare action/implementation plans. Include responsibilities and time frames 2.Prepare follow-up plan and measures 3.Do it! STEP 6: IMPLEMENT SOLUTIONS

34 Anal Prob ol v5.ppt Key steps in the problem solving process Implement Solution Follow-up and Measure Determine Decision Criteria Evaluate Solutions Identify Solutions Investigate Causes Clarify Problem 1.Measure expected benefits 2.Collect feedback 3. Incorporate feedback into ongoing work Steps Key performance indicators Balanced Scorecard Benefits dashboard Tools (examples)

35 Anal Prob ol v5.ppt Don’t forget to measure and follow-up! 1.Measure improvements and compare with expected benefits 2.Collect feedback 3.Incorporate feedback into on-going work STEP 7: MEASURE AND FOLLOW UP You will learn more about performance measurement in later sessions

36 Anal Prob ol v5.ppt In everything we do, Plan (think) - Do - Review THINK Implement Solution Follow-up and Measure Determine Decision Criteria Evaluate Solutions Identify Solutions Investigate Causes Clarify Problem THINKREVIEWDO THINKDO


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