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Handbook of Corporate Performance Management by Mike Bourne, Pippa Bourne

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Chapter 8

Managing with Measures – Statistical Process Control

8.1 INTRODUCTION

One of the trickier aspects of using measures to manage performance is deciding what type of action to take and when. In this chapter we will discuss how you can approach these decisions and, in particular, when and how to intervene. The underlying approach we will be taking is based on the principles of Statistical Process Control (SPC). Walter Shewhart invented SPC in the Bell Telephone Laboratories in the 1920s, so it is not a new concept. The approach has been refined in high volume manufacturing processes, but SPC is applicable to most repetitive operations and situations, in fact to any situation where there is a process. It is important to understand the concepts behind SPC. If you do not understand them you may take action when it is not needed and that will undermine performance.

Problems tend to arise when people either ignore or misunderstand variations in performance so we will start this chapter by talking about variation. Performance is never completely consistent; there is always a slight variation. You need to understand this and be able to differentiate between what is known as ‘common cause variation’ and ‘special cause variation’, as these two different types of variation need to be managed differently.

We will then present an overview of SPC, which is a simple visual approach for identifying the difference between common cause and special cause variation. With SPC you can use time ...

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