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Analytical Problem Solving. Gemini Skills Workshop. August 1998. Learning objectives. Understand the key steps in the problem solving process. Learn tools and techniques that are available for each step of the process. Analytical Problem Solving.

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slide1

Analytical Problem Solving

Gemini Skills Workshop

August 1998

learning objectives
Learning objectives
  • Understand the key steps in the problem solving process.
  • Learn tools and techniques that are availablefor each step of the process.
analytical problem solving
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

as consultants we need to have a structured approach to problem solving
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.
key steps in the problem solving process
Key steps in the problem solving process

Determine DecisionCriteria

Follow-upandMeasure

ClarifyProblem

InvestigateCauses

Identify Solutions

Evaluate Solutions

Implement Solution

1. Determine what we know and what we don’t

2. Gather information

3. Identify constraints

4. Determine if you should proceed

1. Identify possible causes

2. Design tests

3. Perform tests

4. Determine causes or re-test

5. Determine to proceed

1. Determine criteria

2. Determine decision process

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

1. Measure expected benefits

2. Collect feedback

3. Incorporate feedback into ongoing work

There are many variations of this process, but these are the basic steps you should follow.

clarify the problem
Clarify the problem

Steps

Tools (examples)

1. Determine what we know and what we don’t

2. Gather information

3. Identify constraints

4. Determine if you should proceed

  • 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)

STEP 1: CLARIFY PROBLEM

Determine DecisionCriteria

Follow-upandMeasure

ClarifyProblem

InvestigateCauses

Identify Solutions

Evaluate Solutions

Implement Solution

clarifying the problem is the most important step in this process

STEP 1: CLARIFY PROBLEM

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 not 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.
these are the steps involved in clarifying the problem

STEP 1: CLARIFY PROBLEM - EXAMPLE

These are the steps involved in clarifying the problem

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.

What We KnowWhat We Don’t Know

WhatCustomers are complaining about Are requests being lost, forgotten, or not lack of responsiveness answered initially?

Who Only customers with urgent E-mail, voicemail,or telephone requests or rush orders communications?

Where Headquarters Customer place of origin

When Problem only in last two months

Why No documentation of requests or System error? Not recorded by service orders agent? Message not received?

How

steps to clarify problem continued

STEP 1: CLARIFY PROBLEM

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.

one very easy way to understand and define a problem is to ask why 5 times 5 whys

STEP 2: INVESTIGATE CAUSES - EXAMPLE

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.

slide11

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.

Strengths

Weaknesses

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.

Opportunities

Threats

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:
investigate causes or perform analysis
Investigate causes ( or perform analysis)

Steps

Tools (examples)

  • Hypothesis
  • Surveys and interviews
  • Fishbone (cause and effect)
  • Pareto
  • Root cause analysis tools
  • DuPont tree
  • Financial, statistical, database analyses

1. Identify possible causes

2. Design test

3. Perform test

4.Determine causes or retest

5. Determine to proceed

STEP 2: INVESTIGATE CAUSES

Determine DecisionCriteria

Follow-upandMeasure

ClarifyProblem

InvestigateCauses

Identify Solutions

Evaluate Solutions

Implement Solution

We use two general methods to approach problems - using analogies to previous experience and breaking the problem down into smaller pieces.

step 2 is to investigate causes of the problem

STEP 2: INVESTIGATE CAUSES

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.
now we are ready to test our possible causes

STEP 2: INVESTIGATE CAUSES

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.

the fishbone or cause and effect diagram is simple tool for investigating causes

STEP 2: INVESTIGATE CAUSES - EXAMPLE

The Fishbone or Cause and Effect Diagram is simple tool for investigating causes

CAUSES FOR A CAR NOT TO START:

Man

Machine

Dead battery

No gas

• Left lights on

• Bad Switch

• Electrical

Bad choke

Lost keys

Worn out

Wrong fuel

Lemon

No oil

Vapor Lock

Car will not start

Don't know

how to start

Out of tune

Too cold

• Rental

Parts Stolen

No antifreeze

Repo'd

Gets wet in the rain

Methods

Material

Milieu (Environment)

“5“ M fishbone - Man, Machine, Materials, Methods and Milieu (Environment)

supply chain fishbone is an mental model for looking at a business

Purchasing & Vendor Mtg.

Production Control, Inventory

Partnership

Supplier selection

Capacity

Reliability

EDI

Performance measures

Safety stock

Maintenance

Sourcing terms

Vendor alliances

Lead time

Reliability

Information Mgt.

Certification

Auditing

Common databases

Networking

Change over

Cycle time

Supplier base reduction

Lead time

Accessibility

Transparenting

BOM

Quality

Contractor management

New product development

Real time

Bar coding

Forecasting

Complexity

Quality material

MRO

Aligned with operations

User training

Monitoring turns

Labour training

TQM

JIT

Timing of processing

Cycle time

Scheduling

Stock accuracy

All-in-one cost

Forming consortiums

Data accuracy

Trust in the system

Real time

Data accuracy

Transportation

Procurement

Measurements

Reliability

Standardised coding

Labour climate

Cycle time

Data capture

Management reports

Consumption rate

Modes & lead times

Driver training

Cycle time

Corporate scorecard

Transportation

Return logistics

CSF’s

MTBF/MTTF

Vehicle maintenance

Warehousing

OEE

Planning & objective setting

Network/routing

Driver tracking

KPI’s

Break-even time

DRP optimisation

Labour climate

SOP’s

Sales & op. planning

Cost of fuel

Modes of freight & packing

ABM

Customer loyalty

Regulations

LTL vs. FTL

Cost of quality

End-to-end measures

Outsourcing

Intermodel networks

Compensation rewards

Quality & availability of measures

Scheduling

Electronic tracking

Budget variances

Tracking & reporting

Goods in transit

Insurance

Sourcing

Inventory management

Continuous improvement

Total consumption systems

HVOV’s

Cross-docking

Service point

Damaged goods

STEP 2: INVESTIGATE CAUSES - EXAMPLE

Supply Chain fishbone is an ‘mental model’ for looking at a business

Raw material packaging

Supply Chain

Effectiveness

Order size

Order

Frequency

EDI

Bar coding

Cost order

Segmentation

Pricing

Verification

Know your customer

Lead time on orders

Perfect orders

Order processing

Transportation costs

Payment terms

ECR

Distribution/logistics

Promotions

Order error rate

Accounts receivables

Discounts

Inventories

Vendor mgt.

Credit control

Customer

Order status record

Connectivity to other core processes

Performance Measures

Order Fulfilment

Distribution Logistics

a dupont tree is a structured way to look at causes

STEP 2: INVESTIGATE CAUSES - EXAMPLE

A “DuPont” tree is a structured way to look at causes

Price

Revenue

Volume

Sales

Earnings

Materials

Production

Costs

EVA

Overheads

Marketing

Risk-free rate

Capital employed

Beta

Cost of equity

Cost of capital

Risk premium

Total equity

Ave cost of capital

Cost of debt

Total debt

we rely heavily on surveys and interviews to gain information quickly example culture survey
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 disagree Disagree Agree Strongly Agree

1 2 3 4 5 6

Please circleThe way it is

1 2 3 4 5 6

1 2 3 4 5 6

1 2 3 4 5 6

1 2 3 4 5 6

1 2 3 4 5 6

1 2 3 4 5 6

Please circleThe way it should be

1 2 3 4 5 6

1 2 3 4 5 6

1 2 3 4 5 6

1 2 3 4 5 6

1 2 3 4 5 6

1 2 3 4 5 6

1. 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

slide19

We use focus interviews on every Analysis and Design project

  • 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?

Your Group

Overall

pareto s law states that 20 of the sources cause 80 of the problem
Pareto’s Law states that 20% of the sources cause 80% of the problem

Customer Service Complaints Pareto Analysis

$35M

30

25

20

Number of Occurrences/month

15

10

5

2

2

1

1

1

0

No one Answers Phone

Routed to wrong person

Don’t know the answer

Unhelpful

Don’t return calls

Hard to understand

Gum chewing

Discourteous

Customer Complaints about our Customer Service

We can use this principle to determine where to focus our improvement efforts

determine decision criteria
Determine Decision Criteria

Steps

Tools (examples)

1. Determine criteria

2. Determine decision process

  • Decision modelling
  • RACI charting
  • Criteria weighing
  • Quadrant analysis

STEP 3: DETERMINE DECISION CRITERIA

Determine DecisionCriteria

Follow-upandMeasure

ClarifyProblem

InvestigateCauses

Identify Solutions

Evaluate Solutions

Implement Solution

the third step is to determine our decision criteria

STEP 3: DETERMINE DECISION CRITERIA

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.

quadrant analysis provides a framework for making decisions

Sleepers

Winners

Questionables

Opportunity Gaps

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
  • You can compare any two axes relevant to your problem:
    • Quality vs. cost
    • Market share vs. market potential
    • Volume vs. margin

MarketShare

MarketGrowth

and then helps determine possible actions based on your findings example quadrant decision matrix
And then helps determine possible actions based on your findings - Example Quadrant Decision Matrix

Quadrant

PossibleCategory Roles

Possible 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

Sleepers

(Good share/lower growth)

Profit contributor

Transaction builder

  • Review product mix versus

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
key steps in the problem solving process1
Key steps in the problem solving process

Steps

Tools (examples)

1. Determine solution approach

2. Determine solutions

  • Various Gemini methodologies

Determine DecisionCriteria

Follow-upandMeasure

ClarifyProblem

InvestigateCauses

Identify Solutions

Evaluate Solutions

Implement Solution

finally we can develop solutions

STEP 4: IDENTIFY SOLUTIONS

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.

slide27

Benchmarking can provide a gauge of “what good looks like” - Purchasing KPI Benchmarks

Average Benchmark

Benchmark

Range

Key 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 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

2

1: Median = 392: Median = 91

Source: Center for Advanced Purchasing Status

we can also benchmark best practices purchasing best practices
We can also benchmark best practices - Purchasing Best Practices
  • Company

Best Practice/Strength

  • Outboard Marine Corporation
  • Ford Motor Company
  • Motorola
  • 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

Source: Purchasing

key steps in the problem solving process2
Key steps in the problem solving process

Steps

Tools (examples)

1. Compare with decision criteria

2.Decide on solution(s)

3. Validate

  • Impact/Effort matrix

STEP 5: EVALUATE SOLUTIONS

Determine DecisionCriteria

Follow-upandMeasure

ClarifyProblem

InvestigateCauses

Identify Solutions

Evaluate Solutions

Implement Solution

evaluating solutions becomes easy because we have already laid the groundwork

STEP 5: EVALUATE SOLUTIONS

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

an impact effort matrix is a useful tool for prioritizing work and identifying early wins

Action 4

Action 3

Action 1

Action 5

Action 6

Action 2

An Impact/Effort Matrix is a useful tool for prioritizing work and identifying “early wins”

High

Level of impact (results)

High

Low

  • Level of effort required
key steps in the problem solving process3
Key steps in the problem solving process

Steps

Tools (examples)

1. Prepare actionj plans

2.Prepare followup plan and measures)

3. Implement

  • Workplans
  • RACI charting

Determine DecisionCriteria

Follow-upandMeasure

ClarifyProblem

InvestigateCauses

Identify Solutions

Evaluate Solutions

Implement Solution

step 6 is to implement the solution s

STEP 6: IMPLEMENT SOLUTIONS

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!

key steps in the problem solving process4
Key steps in the problem solving process

Steps

Tools (examples)

1. Measure expected benefits

2.Collect feedback

3. Incorporate feedback into ongoing work

  • Key performance indicators
  • Balanced Scorecard
  • Benefits dashboard

Determine DecisionCriteria

Follow-upandMeasure

ClarifyProblem

InvestigateCauses

Identify Solutions

Evaluate Solutions

Implement Solution

don t forget to measure and follow up

STEP 7: MEASURE AND FOLLOW UP

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

You will learn more about performance measurement in later sessions

in everything we do plan think do review
In everything we do, Plan (think) - Do - Review

Determine DecisionCriteria

Follow-upandMeasure

ClarifyProblem

InvestigateCauses

Identify Solutions

Evaluate Solutions

Implement Solution

THINK

DO

THINK

DO

THINK

DO

REVIEW