BASIC QUALITY

Improve Service
And Administration
by Davis R. Bothe

D
espite the success of countless companies
in using statistical methods to signifi-
cantly improve their manufacturing
operations, many of these same companies don't
believe shop floor techniques are suitable for
improving the performance of their service and
In 50 Words
Or Less
• Basic statistical tools can be used to
reduce the variation in process outputs.
administrative operations.1 But statistical thinking
can be successfully applied to all types of business
activities.
Statistical thinking has been defined as a philos-
ophy of learning and action based on the following
three principles:2
• All work is performed in a system of intercon-
nected processes.
• Variation exists in all elements of every
process.
• Reducing variation leads to process improve-
ment.
Just as in manufacturing, service and adminis-
tration operations are made up of interrelated
processes. A process can broadly be defined as a
system in which suppliers provide various inputs
to some type of activity that transforms these

• There are seven steps in a generic

approach that embodies the three core
principles of statistical thinking.
FIGURE 1 The Elements of Every Process
• A case study demonstrates how these
seven steps can be used to improve a Transforming
Suppliers Inputs Outputs Customers
nonmanufacturing process. activity

QUALITY PROGRESS I SEPTEMBER 2003 I 53

BASIC QUALITY
inputs into useful outputs for customers,3 as illus-
trated in Figure 1 (p. 53).
Because variation occurs both in the inputs and
in how they are transformed, there will be varia-
tion in the process outputs. Small amounts of vari-
ation may be tolerated by customers, but excessive
amounts quickly lead to customer dissatisfaction
and even desertion. Although variety has often
been called the spice of life, variation in business
processes is definitely the kiss of death.
To increase customer satisfaction with a product
or service, an organization must first discover the
origins of variation by collecting and analyzing
process information. Then, based on the knowl-
edge gained from this study, the organization must
develop and implement appropriate actions to
eliminate, or at least significantly reduce, process
variation.
These tasks are best accomplished by a team of
subject matter experts that follows a step-by-step
strategy for process improvement. Many such
strategies exist: Six Sigma, 8D problem solving
and plan-do-check-act.
Here are the seven steps for a generic approach4
FIGURE 2 Flowchart for the Order
Fulfillment Process
Receive order.
Pick parts.
Move to inspection.
Check order.
Move to packing.
Pack parts.
Move to shipping.
Ship to customer.
54 I SEPTEMBER 2003 I www.asq.org
that embodies the three core principles of statistical
thinking:
1. Define the problem.
2. Learn about the process.
3. Think of potential causes of variation.
4. Select the most likely cause.
5. Test a possible improvement action.
6. Assess the effectiveness of the action.
7. Repeat the learn-act cycle.
Case Study
An example illustrates how these seven steps
can be applied to improve a nonmanufacturing
process. This case study involves a large automo-
tive parts distribution center in Europe. Car dealer-
ships and repair garages from several countries call
in orders for replacement parts needed to repair
various types of motor vehicles.
When an order is received, the distribution center
must quickly locate the requested parts and ship
them to the repair facility. Time is of the essence
because car owners typically become increasingly
upset the longer their vehicles are out of service.
Step one—define the problem. Because the
distribution center was having trouble shipping
orders on time, many of its customers were unhap-
py and threatening to switch to other part distribu-
tors. To appease these customers, the manager of
the center promised all orders would be delivered
within 24 hours or the customer would get the
parts at no charge. The manager then assembled a
team to discover ways to reduce order processing
time so at least 98% of orders would meet the 24-
hour deadline.
Step two—learn about the process. To better
understand the situation, the team decided to draw
a map showing how an order was received, filled,
checked, packed and finally shipped to the cus-
tomer. After discussing the required steps and
actually following an order from start to finish, the
team created a flowchart of the entire order fulfill-
ment process.
The diagram, which is shown in Figure 2, identi-
fies those activities the team had the power to
change and, it was hoped, improve. This type of
layout also encouraged every team member to
focus on the big picture rather than on only the
particular activity in which he or she worked.
To determine where the longest time delays
 FIGURE 3 Check Sheet for Recording FIGURE 4 Pareto Diagram for Average
Times Time of Each Activity

60

Order # XR-03018 Recorder Robert

Percentage of time
Date 16 Dec Comments 40
Times
Activity In Out Completion
Receive order 1:24 1:31 7 20
Pick parts 1:32 1:51 19
Move to inspection 1:52 2:03 11
Check order 2:04 2:10 6 0
g ing ing on rs
Move to packing 2:11 2:15 4 kin ck ck cti the
Pic Pa e sp
e o
Pack parts 2:16 2:34 18 Ch n All
oi
Move to shipping 2:35 2:38 3 v et
Mo

were occurring, the team randomly chose 50 orders
from those received during a one-week period. As
members tracked these selected orders through
the distribution center, they noted the time each
entered and left the various activity areas appear-
ing on the flowchart.
To ensure these times were accurately and consis-
tently recorded, the team designed the check sheet
shown in Figure 3. One sheet was used per order,
with the completion time for a given activity com-
puted by subtracting its in time from its out time.
For example, order XR-03018 began the “pack
parts” activity at 2:16 p.m. and finished at 2:34 p.m.
Therefore, the time to complete this particular
activity was 18 minutes (2:34 – 2:16).
At the end of the week, the average completion
time for each activity was calculated by adding its
50 completion times—one for each of the 50 orders
tracked—and dividing this total by 50. When these
average times were analyzed with the Pareto dia-
gram in Figure 4, picking time was identified as the
largest contributor to order processing delays, rep-
resenting about 52% of the total time needed to
process an order.
Based on this new information, the team refined
its original mission statement, “Reduce the time for
processing an order,” to the more specific, “Reduce
the time for picking parts.” With the scope of the
search narrowed to just the picking operation,
members invited some of the part pickers to join
the team because these personnel were the local
experts in picking parts and possessed the most
knowledge about the function.
To provide a more detailed analysis of the pick-
ing operation, the 50 individual times recorded for
picking orders (one from each of the 50 check
sheets collected during the team’s earlier study)
were plotted on the histogram in Figure 5 (p. 56).
The trimodal distribution—one having three
humps—on the histogram was an initial surprise
because it implied the existence of three distinct
clusters of picking times.
With this valuable clue in mind, the team now
concentrated on what could be responsible for
these three separate time groups.
Step three—think of potential causes of varia-
tion. During a brainstorming session, a part picker
suggested the three humps of the histogram
reflected the number of trips made to the parts
storage area of the distribution center to complete
an order. He explained that many orders were
filled with just one trip, but two were sometimes
required and, on occasion, even three.
Thus, the left hump could consist of times an
order was completed with only one trip, the mid-
dle could represent those requiring two, while the
third could be those in which three trips were
needed. By watching the part picking activity for
two days, the team members could verify the part
picker’s theory was indeed correct.

QUALITY PROGRESS I SEPTEMBER 2003 I 55

BASIC QUALITY

FIGURE 5 Histogram of Picking Times FIGURE 7 Histogram of Picking Times

With Longer Carts
10 10

Frequency of orders
X
Frequency of orders

X n = 50 8 n = 30
8 – X –
X X = 8.3
X X X = 13.9 X X
6 6
X XX X X
X XX X 4 X XX
4 X X XX
X X XX X X
X X XX X X X X X 2 X X XX
2 X X X XX X
X X XX X X X X X X
X X X XX X X X X X X X X X 0 X X X XX X X
0
0 4 8 12 16 20 24 28 32 0 4 8 12 16 20 24 28 32
Time to complete picking activity (minutes) Time to complete picking activity (minutes)

Step four—select the most likely cause. Armed
with this additional insight, the team brainstormed
reasons multiple trips were needed to complete an
order and then organized these ideas on the cause
and effect diagram in Figure 6.
After discussion, the team eventually decided
the push carts used by the part pickers to carry the
parts were too small (see the equipment branch of
Figure 6). When part pickers were gathering parts
to fill a large order, the cart became full long before
all the needed parts were gathered. The picker had
to travel to the inspection area to empty the cart
and make a return trip to the warehouse to retrieve
the remainder of the order.
FIGURE 6 Potential Causes of Multiple Trips
Cause and Effect Diagram
Material Method
Height of shelf Movement Stacking method
Picking style
es
Step five—test a possible improvement action.
Any proposed process change should be checked
to make sure it really does reduce process variation
and doesn’t cause any unexpected problems, de-
lays or costs. Teams must always be careful not to
solve one problem only to create two new ones.
As a pilot study, a few wider push carts were
ordered and put into service for a one-week trial
run. Although more parts could fit into these new
carts, the pickers complained they were so wide
two of them could not pass each other in the nar-
row aisles, causing traffic jams and thereby actual-
ly increasing picking times. The team then tried
using longer carts, which were found to take care
of both problems.
Step six—assess the effective-
ness of the action. By watching the
part picking activity over the next
several days, the team was able to
verify the switch to longer carts
greatly reduced the number of
multiple trips needed. In fact, with
the new push carts, a picker could

es

Location of parts often complete two small orders

Tim

nc
sta

Number of parts in order Items carried per trip during the same trip.
Di

To estimate the decrease in part

Multiple trips
picking time, the team constructed
required
Push cart a histogram of 30 picking times
Staffing Part Timers
associated with the longer carts
Fork lift
th

t
h
igh

idt

Experience (see Figure 7). This example has a

ng
ff
eo

He

W
Le

Table
Tim

Training unimodal distribution, with an

average picking time of only 8.3
Manpower Equipment minutes vs. the original average of
13.9 minutes.
Although a reduction of 5.6 min-

56 I SEPTEMBER 2003 I www.asq.org

utes (13.9 – 8.3) per trip doesn’t seem like much of
a time savings, consider that on an eight-hour shift,
a part picker spends about seven hours—420 min-
utes—actually gathering parts.
Using the old push carts, a picker would com-
plete an average of 30.2 orders (420/13.9) per shift.
With the longer carts, that same picker could now
complete 50.6 orders (420/8.3) per shift. This
increase of 20.4 orders (50.6 – 30.2) per worker
meant the four part pickers could fulfill an addi-
tional 81 orders (20.4 x 4) during their shift. Thus,
the seemingly small reduction in average trip time
translated into a fairly significant increase in the
throughput of this bottleneck operation.
Step seven—repeat the learn-act cycle. Suppose
the reduction in order processing time resulting
from the introduction of the longer carts was not
large enough to achieve the goal of having 98% of
the orders meet the 24-hour deadline. Or perhaps
the decrease was large enough, but the team want-
ed to exceed the goal, not just meet it.
In either case, additional reductions must be
made in the time needed to fulfill an order. The
team could initiate a second iteration of variation
reduction by creating a Pareto diagram of average
completion times for the revised process.
Suppose packing parts is now the activity respon-
sible for the greatest delays in processing an order.
Because the team’s attention would shift to this por-
tion of the process, packing personnel would be
added to the team, while those members who were
part pickers could be released. This updated team
would then start studying the part packing activity
to discover what actions could streamline it.
When these improvements were successfully
implemented, the team could continue repeating
the learn-act cycle until the desired level for order
fulfillment time was achieved.
Think Statistically
To improve any type of business process, organi-
zations must learn how variation affects the
process, uncover its major causes and then act to
eliminate the causes. By thinking statistically, orga-
nizations can enhance office, service and adminis-
trative operations by using many of the same
problem solving techniques that have helped
improve shop floor operations. As the perfor-
mances of these functions improve, they become
competitive advantages for companies battling to
gain market share.5
REFERENCES
1. Betsi Ehrlich, Transactional Six Sigma and Lean Servicing:
Leveraging Manufacturing Concepts To Achieve World Class
Service, St. Lucie Press, 2002.
2. American Society for Quality-Statistics Division,
Glossary and Tables for Statistical Quality Control, ASQ Quality
Press, 1996.
3. Galen Britz, Donald Emerling, Lynne Hare, Roger
Hoerl, Stuart Janis and Janice Shade, Improving Performance
Through Statistical Thinking, ASQ Quality Press, 2000.
4. Davis Bothe, Reducing Process Variation, Landmark
Publishing Co., 2002.
5. William Lareau, Transforming Office Operations Into a
Strategic Competitive Advantage, ASQ Quality Press, 2002.
BIBLIOGRAPHY
Anderson, Bjorn, Business Process Improvement Toolbox,
ASQ Quality Press, 1999.
Langley, Gerald, Kevin Nolan, Thomas Nolan, Clifford
Norman and Lloyd Provost, The Improvement Guide: A
Practical Approach to Enhancing Organizational Perfor-
mance, Jossey-Bass Publishers, 1996.
Milakovich, Mike, Improving Service Quality, St. Lucie
Press, 1995.
Tague, Nancy R., The Quality Toolbox, ASQ Quality Press,
1995.
Wheeler, Donald, and Sheila Poling, Building Continual
Improvement: SPC for the Service Sector, SPC Press, 1999.
DAVIS R. BOTHE is director of quality improvement for the
International Quality Institute, Cedarburg, WI. He earned
a master's degree in business administration from the
University of Wisconsin-Milwaukee. Bothe is a Fellow of
ASQ, a certified reliability engineer and quality engineer
and a Six Sigma Master Black Belt. He is author of
Reducing Process Variation, available through ASQ
Quality Press.
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QUALITY PROGRESS I SEPTEMBER 2003 I 57