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.
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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
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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.
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Key steps in the problem solving process
Clarify
Problem
1. Determine
what we know
and what we
don’t
Investigate
Causes
1. Identify
possible
causes
2. Design tests
2. Gather
information
3. Perform tests
3. Identify
constraints
4. Determine
causes or retest
4. Determine if
you should
proceed
5. Determine to
proceed
Determine
Decision
Criteria
1. Determine
criteria
2. Determine
decision
process
Identify
Solutions
Evaluate
Solutions
Implement
Solution
1. Determine
solution
approach
1. Compare with
decision
criteria
1. Prepare action
plans
2. Develop
solutions
2. Decide on
solution(s)
2. Prepare
follow-up plan
and measures
3. Validate
3. Implement
Follow-up
and
Measure
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.
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STEP 1: CLARIFY PROBLEM
Clarify the problem
Clarify
Problem
Investigate
Causes
Determine
Decision
Criteria
Steps
1.Determine what we
know and what we
don’t
2.Gather information
3.Identify constraints
4.Determine if you
should proceed
Identify
Solutions
Evaluate
Solutions
Implement
Solution
Follow-up
and
Measure
Tools (examples)
• 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)
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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 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.
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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 Know
What We Don’t Know
What
or not
Customers are complaining about
lack of responsiveness
Are requests being lost, forgotten,
answered initially?
Who
Only customers with urgent
requests or rush orders
E-mail, voicemail,or telephone
communications?
Where
Headquarters
Customer place of origin
When
Problem only in last two months
Why
service
No documentation of requests or
orders
System error? Not recorded by
agent? Message not received?
How
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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.
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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.
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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:
Strengths
Weaknesses
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.
Opportunities
Unexploited strategic capabilities and/or market
positioning which could provide a competitive
advantage in the market place.
Threats
Unexploited strategic capabilities and/or market
positioning which could provide a competitor a
competitive advantage in the market place.
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STEP 2: INVESTIGATE CAUSES
Investigate causes ( or perform analysis)
Clarify
Problem
Investigate
Causes
Determine
Decision
Criteria
Steps
1. Identify possible
causes
Identify
Solutions
Evaluate
Solutions
Implement
Solution
Follow-up
and
Measure
Tools (examples)
• Hypothesis
• Surveys and interviews
2. Design test
• Fishbone (cause and effect)
3. Perform test
• Pareto
4.Determine causes or
retest
• Root cause analysis tools
5. Determine to proceed
• Financial, statistical, database
analyses
• DuPont tree
We use two general methods to approach problems - using analogies
to previous experience and breaking the problem down into smaller
pieces.
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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.
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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.
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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:
People
No gas
Lost keys
Wrong fuel
No oil
Machine
Dead battery
Bad choke
Worn out
Lemon
Vapor Lock
• Left lights on
• Bad Switch
• Electrical
Car will
not start
Don't know
how to start
Out of tune
Too cold
• Rental
No antifreeze
Parts Stolen
Repo'd
Gets wet in the rain
Material
Methods
Milieu (Environment)
“5“ M fishbone - Man, Machine, Materials, Methods and Milieu
(Environment)
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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
No gas
Lost keys
Wrong fuel
No oil
Dead battery
Bad choke
Worn out
Lemon
Vapor Lock
• Left lights on
• Bad Switch
• Electrical
Car will
not start
Don't know
how to start
Out of tune
Too cold
• Rental
No antifreeze
Parts Stolen
Repo'd
Gets wet in the rain
Material
Methods
Milieu (Environment)
“5“ M fishbone - Man, Machine, Materials, Methods and Milieu
(Environment)
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STEP 2: INVESTIGATE CAUSES - EXAMPLE
Supply Chain fishbone is an ‘mental model’ for looking
at a business
Purchasing & Vendor
Mtg.
Supplier
Partnership
selection
Performance
EDI
Production Control,
Inventory
Capacity
measures
Sourcing terms
Information Mgt.
Vendor alliances
development
Quality material
MRO
TQM
Forming consortiums
Transportation
Procurement
Cycle time
Order size
Frequency
Bar coding
Verification
Lead time on orders
Order processing
Raw material packaging
Order
Vehicle maintenance
Pricing
Network/routing
Scheduling
Stock accuracy
Real time
Driver training
Data accuracy
KPI’s
Driver tracking
LTL vs. FTL
Labour climate
Corporate scorecard
Supply Chain
Effectiveness
CSF’s Planning
MTBF/MTTF
& objective
OEE
setting
Warehousing
Know your customer DRP optimisation Modes
Labour
climate&
of freight
Cost of fuel
packing
Regulations
Cycle time
Return logistics
Perfect orders
Transportation costs
Labour training
Standardised coding
Data capture Management reports
Consumption rate
Transportation
Cost order
Complexity
Reliability
Modes & lead times
EDI
Forecasting
Trust in the system
Measurements
Quality
Monitoring turns
Cycle time
Data accuracy
Cycle time
BOM
User training
Timing of processing
Reliability
Change over
Bar coding
Aligned with operations
JIT
All-in-one cost
Segmentation
Real time
Maintenance
Lead time
Certification
Common databases
Networking
Supplier base Auditing
reduction
Lead
time
Accessibility
Transparenting
Contractor
New product
management
Reliability
Safety stock
SOP’s
ABM
Cost of quality
Break-even time
Sales & op. planning
Customer loyalty
End-to-end measures
Quality & availability of
Intermodel networks Compensatio
n rewards
measures
Distribution/logistics
Promotions
Scheduling
Electronic tracking
Budget variances
Tracking & reporting
Order error rate
Accounts receivables Goods in transit
Insurance
Continuous
Total consumption
Discounts
Inventories
Sourcing
Inventory management
improvement
systems
Vendor mgt.
Credit control
HVOV’s
Cross-docking
Connectivity to other
Payment terms
Customer
Order
Fulfilment
ECR
Order status record
Outsourcing
Service point
Damaged goods
Distribution
Logistics
core processes
Performance
Measures
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STEP 2: INVESTIGATE CAUSES - EXAMPLE
A “DuPont” tree is a structured way to look at causes
Price
Revenue
Volume
Sales
Earnings
Materials
Production
Costs
Overheads
EVA
Marketing
Risk-free rate
Capital employed
Beta
Cost of equity
Risk premium
Total equity
Cost of capital
Ave cost of
capital
Cost of debt
Total debt
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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
1
2
3
Please circle
The way it is
4
1.
1
2
3
4
5
6
1
2
3
4
5
6
2.
1
2
3
4
5
6
1
2
3
4
5
6
Agree
Strongly Agree
5
6
Please circle
The way it should be
People here act when they see things that need to
be done
1
2
3
4
5
6
People in this organisation try to resolve their
differences constructively
1
2
3
4
5
6
1
2
3
4
5
6
1
2
3
4
5
6
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
1
2
3
4
5
6
7.
People here listen to customers and respond to
their needs
1
2
3
4
5
6
1
2
3
4
5
6
8.
There is a concerted effort to perform better than
the competition
1
2
3
4
5
6
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We use focus interviews on every Analysis and
Design project
Focus Interview Guide
General Information
1)
2)
Years with Company::
_______________________________
Years in current position:
_______________________________
Number of reports:
_______________________________
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?
Overall
Your Group
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?
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Pareto’s Law states that 20% of the sources cause 80%
of the problem
Customer Service Complaints Pareto Analysis
$35M
Number of
Occurrences/month
30
25
20
15
10
5
2
2
1
1
1
0
No one
Answers
Phone
Routed to Don’t
Unhelpful Don’t Hard to
wrong
know the
return underst
person
answer
calls and
Gum
chewing
Discourteous
Customer Complaints about our Customer Service
We can use this principle to determine where to focus our
improvement efforts
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STEP 3: DETERMINE DECISION CRITERIA
Determine Decision Criteria
Clarify
Problem
Investigate
Causes
Determine
Decision
Criteria
Steps
Identify
Solutions
Evaluate
Solutions
Implement
Solution
Follow-up
and
Measure
Tools (examples)
1.Determine criteria
• Decision modelling
2.Determine decision
process
• RACI charting
• Criteria weighing
• Quadrant analysis
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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.
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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
Market
Share
Sleepers
Winners
Questionables
Opportunity Gaps
Market
Growth
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And then helps determine possible actions based on
your findings - Example Quadrant Decision Matrix
Quadrant
Possible
Category Roles
Opportunity gaps
(Higher growth/low share)
Profit contributor
Variety image
•
•
•
•
Winners
(High share/higher growth)
Traffic draw
Cash generator
Price image
•
•
•
•
•
•
Sleepers
(Good share/lower growth)
Profit contributor
Transaction builder
• Review product mix versus
Questionables
(Low share/lower growth)
Profit contributor
Variety image
•
•
•
•
•
Possible Actions
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, fastermoving items not being carried?
• Tie-in promotions with higher margin consumption items
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
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
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Key steps in the problem solving process
Clarify
Problem
Investigate
Causes
Determine
Decision
Criteria
Identify
Solutions
Steps
Evaluate
Solutions
Implement
Solution
Follow-up
and
Measure
Tools (examples)
1.Determine solution
approach
• Various Gemini
methodologies
2.Determine solutions
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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.
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Benchmarking can provide a gauge of “what good
looks like” - Purchasing KPI Benchmarks
Key Performance Indicator
Average
Benchmark
Benchmark
Range
•
Purchasing function expense as a
percentage of sales
0.3 %
0.06% -> 3.0%
•
Purchasing function expense as a
percentage of purchase value
1.2 %
0.7% -> 7.0%
•
Purchasing headcount as a percentage
of total company headcount
1.1%
0.3% -> 4.5%
•
Active suppliers per purchasing
employee
50
6 -> 182
•
Percentage of all active suppliers that
account for 90% of total purchase value
20%
5% -> 75% 2
•
Average actual time to develop/negotiate
a contract
9 wks
2 -> 26 wks
•
Percent of deliverables received on-time
within the most recent 12 month period
88%
63% -> 98%
1
1: Median = 39
2: Median = 91
Source: Center for Advanced Purchasing Status
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We can also benchmark best practices - Purchasing
Best Practices
Company
Best Practice/Strength
• Outboard Marine
Corporation
• Partnering: establishes 3-5 year contracts with suppliers
• Ford Motor
Company
• 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
• Motorola
• 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
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STEP 5: EVALUATE SOLUTIONS
Key steps in the problem solving process
Clarify
Problem
Investigate
Causes
Determine
Decision
Criteria
Identify
Solutions
Steps
Evaluate
Solutions
Implement
Solution
Follow-up
and
Measure
Tools (examples)
1.Compare with
decision criteria
• Impact/Effort matrix
2.Decide on solution(s)
3. Validate
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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
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An Impact/Effort Matrix is a useful tool for prioritizing
work and identifying “early wins”
High
Level of impact (results)
Actio
n4
Actio
n3
Actio
n1
Actio
n5
Actio
n6
Actio
n2
Low
Level of effort required
High
- 32 Anal Prob ol v5.ppt
Key steps in the problem solving process
Clarify
Problem
Investigate
Causes
Determine
Decision
Criteria
Identify
Solutions
Steps
Evaluate
Solutions
Implement
Solution
Follow-up
and
Measure
Tools (examples)
1.Prepare actionj plans
• Workplans
2.Prepare followup plan
and measures)
• RACI charting
3. Implement
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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!
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Key steps in the problem solving process
Clarify
Problem
Investigate
Causes
Determine
Decision
Criteria
Identify
Solutions
Steps
Evaluate
Solutions
Implement
Solution
Follow-up
and
Measure
Tools (examples)
1.Measure expected
benefits
• Key performance
indicators
2.Collect feedback
• Balanced Scorecard
3. Incorporate feedback
into ongoing work
• Benefits dashboard
- 35 Anal Prob ol v5.ppt
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
- 36 Anal Prob ol v5.ppt
In everything we do, Plan (think) - Do - Review
Clarify
Problem
THINK
Investigate
Causes
DO
Determine
Decision
Criteria
THINK
Identify
Solutions
DO
Evaluate
Solutions
THINK
Implement
Solution
DO
Follow-up
and
Measure
REVIEW
- 37 Anal Prob ol v5.ppt