Chapter 6

Tools
Introduction:

In this section, we examine 16 tools ranging from highly quantitative to qualitative ones.
They provide diverse means of gathering information, analyzing it, presenting it, and
serving as tools to persuade clients that either condition are satisfactory or that they
need corrective actions. These tools were developed by experts in the fields such as
statistics, economics, mathematics, quality control, and management, including Vilfredo
pareto, Joseph M. Juran, W. Edwards Deming, Walter Shewhart, Genichi Taguchi, Karl
Pearson, Kaoru Ishikawa, and many others.

Histograms

Histograms are charts that show the frequency distribution of numerical data using
rectangles, each of which represents intervals. They display the probability distribution
of a continuous variable. In a histogram, the X-axis represents a dimension arranged
over equal intervals and can represent hours of operation for a service center, prices,
odometer readings, or similar variables. The Y-axis represents the quantity, frequency,
or other metric being plotted against the interval, this could be the number of properties,
visitors, vehicles, calls, etc.

To prepare a histogram, the following steps are used;

1. Calculate the range of values
2. Divide the range into evenly spaced intervals.
3. Count the number of observation in each interval.
4. Create the bars where the height represents the count in each interval
5. The Y-axis represents the number of items fitting into each category.

Histograms are used to assess the distribution of data and help to identify how the data
points are distributed. In so doing, the information is more than a picture of the data
points, but instead shows a flow of the data. This can be very useful for the auditor and
very helpful to understand the dynamics affecting the process under review. Rather than
simply focusing on the total transactions during a period of time, histograms provide
what I refer to as a fluid view of the transactions. By observing the pattern of a
histogram, internal auditors can get an enhanced understanding of the data plotted

Fig 1.0
Control Chart

A control chart is a graph used to plot and study how a process changes over time.
Data are plotted in time order, in a similar fashion as run charts. A control chart has a
central line for the average or target value for the process being plotted, an upper line
for the upper control limit (i.e., maximum allowable value given the established
performance specifications) and a lower line for the lower control limit.

Control charts can help auditors determine if the process is stable and under control.
Furthermore, these charts can be used to predict the future performance of the process
and if the process is not in control, an analysis of the chart can help to identify the
source of the problem. They are modified run charts and show the placement of data
points so that patterns and deviations can be promptly identified.

Fig. 1.1

Pareto Chart

The Pareto Principle, also known as the 80/20 rule, posits that for many events
approximately 80% of the effects are caused by 20% of the causes. This principle
essentially means that there is a concentration of sources that internal auditors should
identify for best results.

Pareto diagrams are designed to organize data and can be used to prioritize
improvement effort by focusing on major root causes of the problems under review. The
focus is to focus on the root causes, and look for cause and effect relationship.

Fig. 1.2
Cause and Effect (Fishbone, Ishikawa) Diagram

Identifying the root cause of problem is a constant challenge for internal auditors. One
of the best tools to help identify contributing causes of an issue, and hone into the root
cause most accurately is the fishbone diagram. This tool is also called cause and effect
diagram or Ishikawa diagram for the name of the person who invented it, Kaoru
Ishikawa.

When searching for the root cause of issues, auditors are effectively searching for the
source of variation, which are often grouped into categories. The following six
categories are often used:
 People
 Methods
 Machines
 Materials
 Measurements
 Environments

Fishbone diagrams are ideal for participative exercises, where instead of an auditor
working in isolation, she can engage the team during the construction of the diagram or
with the audit client. By combining the ideas of multiple people, internal auditors can
obtain better information and get those affected by the corrective action to be involved
in shaping their own destiny. It also helps to support the maxim; people support what
they helped to create.

Fig. 1.3

Force Field Analysis

This is a great decision making tool to identify the forces for and against a course of
action. It is a technique to list, discuss, and evaluate the forces that support or hinder a
decision. It can also help to strategize the best way to present the information by
understanding the big picture and the pros and cons of the recommendation. Lastly, it
forces the proposal advocate to ‗walk a mile in the auditees‘ shoes.‖ By understanding
the auditees‘ perspective, the auditor is more aware of the challenges that the client
faces, and shows empathy during the process.

Some helpful questions to consider while preparing a force field analysis and related
analyses are;
 What business benefit will the change deliver?
 Who supports the change? Who is against it? Why?
  How easy will it be to make the change? Do you have enough time andresources
to make it work?
 What costs are involved?
 What other business processes will be affected by the change?
 What are the risks to successful implementation?

Fig. 1.4

Flowchart/Process Flow Map/Value Stream Map

Flowcharts are very helpful and versatile tool to help auditors answer these questions;
 The objectives of the program or process
 How performance is measured
 How the activities are performed
 How perform these activities
 Where the risks and controls are
 Where anomalies take place

A flowchart is a diagram that represents a workflow or process. It shows the steps in the
form of boxes of different shapes and the order or sequence of events by connecting
the items with arrows. Flowcharts are used to design, document, manage, and analyze
a program or process in virtually any field by presenting the process flow in visual form.
Its visual nature makes it easier to spot deficiencies and note them prominently for
others to see. While flowchart is arguably the most common name given to this tool, it is
sometimes also called Process Flow diagram, Process Map, Process Model, and Work
Flow Diagram.

Most common features of Process Flow Diagram;

 Rectangular boxes: they show a processing step or activity
 Diamonds: Represent a decision
 Arrows: Show direction of the flow of each activity
 Ellipses: Indicate the start and stop of the diagram

Value Stream Mapping (VSM) is a Lean management method for analyzing the current
state and designing a future state. It shows the flow of information and material as they
occur. VSM is an effective tool for mapping out the processes involved, displaying the
relationship between production processes in a visual manner, and for separating value-
added and non-value-added activities.
 Fig. 1.5

Common Process Improvement Areas

A broken business process can cost your business time and money. But pinpointing
exactly where a process breaks down — and where it can be improved — isn‘t an exact
science. Process improvement can have several different names such as business
process management (BPM), business process improvement (BPI), business process
re-engineering, continual improvement process (CIP), to name a few. Regardless of the
nomenclature, they all pursue the same goal: to minimize errors, reduce waste, improve
productivity and streamline efficiency.

There are several different methodologies designed to help your organization tackle
process improvement. Each aims to help your business identify process issues, fix them
and analyze the success or failure of those changes.

Takt time

Takt time relates to the amount of time to perform each activity. It has a deeper
connotation than the word ―rate‖ may suggest. It is the rhythm or heartbeat of the
operation and it is the pace at which everyone in the process works to keep capacity
aligned. Without takt time, there would be inventory between workstations and possibly
shortages of material between others.

This metric can be used to determine the pace to keep a process flowing, so there are
no bottlenecks in a process. In fact, a bottleneck results from the demand in a process,
or number of transactions entering a process, exceeding the ability of the operators to
do the work and make the transactions exit the process.

Fig. 1.6
Eight Areas of Waste

In recent years, an eighth waste has been added to the list to ensure that organizations
recognize the importance of not wasting the contribution humans can make to
operations. Lean thinking aims to remove wastes from work processes. The 8 wastes
are commonly referred to as ‗TIMWOODS’. In the following section we will examine
each of these wastes in detail.

1. Transport
Waste in transportation includes movement of people, tools, inventory, equipment, or
products further than necessary. Excessive movement of materials can lead to product
damage and defects. Additionally, excessive movement of people and equipment can
lead to unnecessary work, greater wear and tear, and exhaustion.

2. Inventory
Often times it is difficult to think about excess inventory as waste. In accounting,
inventory is seen as an asset and oftentimes suppliers give discount for bulk purchases.
But having more inventory than necessary to sustain a steady flow of work can lead to
problems including: product defects or damage materials, greater lead time in the
production process, an inefficient allocation of capital, and problems being hidden away
in the inventory.

3. Motion
The waste in motion includes any unnecessary movement of people, equipment, or
machinery. This includes walking, lifting, reaching, bending, stretching, and moving.
Tasks that require excessive motion should be redesigned to enhance the work of
personnel and increase the health and safety level.

4. Waiting
The waste of waiting includes: 1) people waiting on material or equipment and 2) idle
equipment. Waiting time is often caused by unevenness in the production stations and
can result in excess inventory and overproduction.

5. Overproduction
Overproduction occurs when manufacturing a product or an element of the product
before it is being asked for or required. It may be tempting to produce as many products
as possible when there is idle worker or equipment time. However, rather than
producing products just when they are needed under the ‗Just In Time‘ philosophy, the
‗Just In Case‘ way of working leads a host of problems including preventing smooth flow
of work, higher storage costs, hiding defects inside the WIP, requiring more capital
expenditure to fund the production process, and excessive lead-time.

6. Over-processing
Over-processing refers to doing more work, adding more components, or having more
steps in a product or service than what is required by the customer.

7. Defects
Defects occur when the product is not fit for use. This typically results in either
reworking or scrapping the product. Both results are wasteful as they add additional
costs to the operations without delivering any value to the customer.

8. Skills - The 8th Waste

Even though it was not part of the Toyota Production System (TPS), many people are
well aware of the 8th waste - the waste of human potential. The 8th waste is also
described as the waste of unused human talent and ingenuity. This waste occurs when
organizations separate the role of management from employees. In some organizations,
management‘s responsibility is planning, organizing, controlling, and innovating the
production process. The employee‘s role is to simply follow orders and execute the work
as planned.

Affinity Diagram/KJ Analysis

Affinity Diagram to reduce larger processes to a few key steps. Possibly invented by
Jiro Kawakita and thus sometimes referred to as the K-J method, an affinity diagram is
a good technique for identifying & displaying potential root causes for unfamiliar
problems. Very similar to a cause-and-effect diagram in that brainstormed ideas are
segregated into categories. Used to organize facts and data on an unfamiliar subject.
Affinity diagrams help you organize ideas into meaningful categories by recognizing
common groupings. This method helps you reduce large amounts of data into a smaller
set.

When to use an affinity diagram:

 When you are confronted with many facts or ideas in apparent chaos
 When issues seem too large and complex to grasp
 When group consensus is necessary

How to Create an Affinity Diagram?

Step 1: Gather Ideas
Step 2: Organize
Step 3: Label groupings
Step 4: Create an action plan

Fig. 1.7

Check Sheet

The Check Sheet is a simple document that is used for collecting data in real time and
at the location where the data is generated. The document is typically a blank form that
is designed for the quick, easy, and efficient recording of the desired information, which
can be either quantitative or qualitative. When the information is quantitative, the check
sheet is sometimes called a tally sheet. The check sheet is one of the seven basic tools
of quality control made popular by Dr. Kaoru Ishikawa.

A defining characteristic of a check sheet is that data is recorded by making marks

(―checks‖) on it. A typical check sheet is divided into regions, and marks made in
different regions have different significance. Data is read by observing the location and
number of marks on the sheet. Five basic types of check sheets include:
  Classification check sheet - A trait such as a defect must be classified into a
category.
 Defect location check sheet - The physical location of a trait is indicated on a
picture, or illustration of a part or item being evaluated.
 Frequency check sheet - The presence or absence of a trait or combination of
traits is indicated.
 Measurement scale check sheet - A measurement scale is divided into
intervals and measurements are indicated by checking an appropriate interval.
 Check List - The items to be performed for a task are listed so that as each is
accomplished it can be marked as having been completed.

Fig. 1.8

Scatter Diagram

A Scatter Diagram is a way of showing whether two variables are correlated or related
to each other. It shows patterns in the relationship that cannot be seen by just looking at
the data. It is often used as a first step when analyzing and communicating the
correlation between pairs of variables, and before conducting advanced statistical
techniques (such as regression) to support or reject hypotheses about the data.

A scatter diagram is primarily used to visually investigate the relationship between two
variables (often an input and an output variable). This is useful to verify that any change
in the input variable will have an effect on the output variable. This information enables
you to identify the most significant factors affecting the process and eliminate non-
critical factors from consideration. A scatter diagram uses a two-axis chart to represent
the data. The input variable is plotted along the horizontal axis (x-axis) while the output
variable is plotted along the vertical axis (y-axis).

Fig. 1.9
5S

5S is a Japanese management approach that was originally developed by Toyota as a

part of their lean manufacturing system. It represents an important component of the
lean production system and a prerequisite for driving other lean techniques such as
TPM and Kaizen. Many companies start their lean transformation journey with 5S
because it is one of the easiest lean techniques and exposes some of the most visible
examples of waste. Many lean experts believe that you need to be successful with 5S
so you don‘t struggle with the other lean techniques during lean implementation.

The term 5S is an abbreviation for five Japanese words: seiri, seiton, seisou, seiketsu,
and shitsuke. These five words are often translated into English as: sorting, setting in
order, shining, standardizing, and sustaining.

 Seiton - Setting in order refers to the practice of arranging the required items so
that anyone can locate and access them easily. It defines where and how the
items to perform the work should be arranged. Once you have eliminated all the
unneeded items, get back to the left items and organize them in a way that
makes it easy to find what is needed. This will result in an improved workflow and
reduced wasted time and motion.

 Seiri - The main idea behind sorting is to clear the area from distractions to
concentrate on what will remain in the workplace. This will lead to less clutter and
wasted time, free up space, and create a more streamlined workplace. A very
common tool used in the sorting phase is the Red Tag technique. It is a labeling
tool used to highlight what is necessary in a given area.

 Seiso - Shining aims of creating a clean workplace without rubbish, dirt or dust.
This will enable easy identification of abnormalities such as repeat contamination
and oil spills before the problem gets worse. Shining also helps in creating
ownership of the work area making it safer and more pleasant to work in.

 Seiketsu - Standardizing means doing the right things right all the time. It is the
communication and maintaining of standards and expectations throughout the
workplace.
 Shitsuke - Sustaining is the disciplined application the first four ‗S‘ practices in
order for the 5S program to be successful. Proper planning, training, monitoring
and a formal system of accountability must exist in order for the program to
ensure its successful continuation.

5S is a structured way to create and maintain an organized, clean, safe, and high-
performing work environment. It is not just about the appearance and keeping the place
tidy, nor it is a housekeeping technique. It is more a way of eliminating waste, identifying
opportunities for improvement, and making a more efficient and productive workplace.
5S helps making waste visible to everyone so it can be eliminated right away. With 5S,
you can eliminate or reduce excess inventory, wasted motion, waiting while searching to
find the required items, and having more parts than required.

RACI Diagram

A RACI chart is a simple matrix used to assign roles and responsibilities for each task,
milestone, or decision on a project. By clearly mapping out which roles are involved in
each project task and at which level, you can eliminate confusion. And answer the age-
old project question, who‘s doing what?
  Responsible: This team member does the work to complete the task. Every task
needs at least one Responsible party, but it‘s okay to assign more.
 Accountable: This person delegates work and is the last one to review the task or
deliverable before it‘s deemed complete. On some tasks, the Responsible party
may also serve as the Accountable one. Just be sure you only have one
Accountable person assigned to each task or deliverable. (Note: It might not be
your PM!)
 Consulted: Every deliverable is strengthened by review and consultation from
more than one team member. Consulted parties are typically the people who
provide input based on either how it will impact their future project work or their
domain of expertise on the deliverable itself.
 Informed: These team members simply need to be kept in the loop on project
progress, rather than roped into the details of every deliverable.

How to create a RACI matrix: Example & Template

Step 1: Enter all project roles or team member names across the top row.
Step 2: List all tasks, milestones, and decisions down the left column.
Step 3: For each task, assign a responsibility value to each role or person on the
team.

Fig. 1.10

Communication Plan

In project management, a communication plan is an outline of how you‘re going to

communicate important, ongoing project information to key stakeholders.
Your communication plan will help your team understand who should be getting which
notifications and when to loop in project stakeholders.

As part of your communication plan, you‘ll clarify which channel stakeholders should
use and when, how frequently different details should be communicated, and who is
responsible for each of the different channels.
 Fig. 1.11

Communication Matrix

A communication matrix is just an easy way to keep key players in the loop. It details
things like project owners, deadlines, project status, objectives, and so on.
Why do you need a communication matrix?
 Improved communication across departments.
 More efficient use of resources.
 Faster decision-making.

Fig. 1.12

Categorize Information in Communication Matrix

 Communication: This would be things like meetings, status reports, project

newsletters, etc.
 Purpose: What‘s the purpose of the meeting or the report? Be as succinct as
possible. Now‘s not the time to prove you‘re the next Shakespeare.
 Medium: Is the communication going out via email, conference call, or an in-
person meeting?
 Frequency: Is this happening daily, weekly, or monthly? Or is it just a one-off?
 Audience: Who is this going to, or who needs to be present?
 Owner: Who is in charge of moving this part of the project along? Is it the
project manager, project sponsor, or a stakeholder?
  Deliverable: What tangible item will be the end result of that particular part of
your project? Possibilities include an agenda, a slide deck, a project
schedule, and a status report.

SIPOC Diagram

A SIPOC diagram is a tool used by a process improvement team to identify all relevant
elements of a process improvement project before work begins, and helps to define a
complex project that may not be well scoped.

SIPOC stands for supplier, input, process, output, and customer. It‘s a high-level map
showing a process‘s supplier, the inputs received from them, and the process that adds
value to those inputs. That process produces an output that meets or exceeds customer
requirements.

Fig. 1.13

Poka Yoke/Mistake Proofing

The term Poka-Yoke (poh-kah yoh-keh) was coined in Japan during the 1960s by
Shigeo Shingo, an industrial engineer at Toyota. Poka-Yoke ensures that the right
conditions exist before a process step is executed, and thus preventing defects from
occurring in the first place. Where this is not possible, Poka-Yoke performs a detective
function, eliminating defects in the process as early as possible.

Example of Poka-Yoke Application:

One of the most common is when a car driver with a manual gearbox must press
on the clutch pedal (a process step – Poka-Yoke) before starting the engine. The
interlock prevents an unintended movement of the car.

Why is Poka-Yoke Important?

The value of using Poka-Yoke is that they help people and processes work right
the first time, which makes mistakes impossible to happen.
These techniques can significantly improve the quality and reliability of products and
processes by eliminating defects. This approach to production fits perfectly the culture
of continuous improvement, which is also part of the Lean management arsenal.
It can also be used to fine-tune improvements, and process designs from six-sigma
Define – Measure – Analyze – Improve – Control (DMAIC) projects. Applying simple
Poka-Yoke ideas and methods in product and process design can eliminate human and
mechanical errors.

When to Use it?

 Poka-Yoke technique could be used whenever a mistake could occur, or

something could be done wrong – meaning everywhere. It can be
successfully applied to any type of process in the manufacturing or services
industry, preventing all kinds of errors:
 Processing error: Process operation missed or not performed per the
standard operating procedure.
 Setup error: Using the wrong tooling or setting machine adjustments
incorrectly.
 Missing part: Not all parts are included in the assembly, welding, or other
processes.
 Improper part/item: Wrong part used in the process.
 Operations error: Carrying out an operation incorrectly; having the incorrect
version of the specification.
 Measurement error: Errors in machine adjustment, test measurement, or
dimensions of a part coming in from a supplier.

How to Use it?

1. Identify the operation or process.

2. Analyze the 5-whys and the ways a process can fail.
3. Choose the right Poka-Yoke approach, such as using a shutout type (preventing
an error being made) or an attention type (highlighting that an error has been
made).
4. Take a comprehensive approach instead of thinking of Poka Yokes just as limit
switches or automatic shutoff.
5. Determine whether a contact (use of shape, size, or other physical attributes for
detection), constant number (error triggered if a certain number of actions are not
made), or a sequencing method (use of a checklist to ensure completing all
process steps) is most appropriate.
6. Test the method and see if it works.
7. Train the operator, review performance, and measure success.

Benchmarking

Benchmarking is defined as the process of measuring products, services, and

processes against those of organizations known to be leaders in one or more aspects of
their operations.
Benchmarking provides necessary insights to help you understand how your
organization compares with similar organizations, even if they are in a different business
or have a different group of customers.
Categories of Benchmarking

1. Technical benchmarking- is performed by design staff to determine the

capabilities of products or services, especially in comparison to the products or
services of leading competitors.
2. Competitive benchmarking- compares how well (or poorly) an organization is
doing with respect to the leading competition, especially with respect to critically
important attributes, functions, or values associated with the organization‘s
products or services.

Benchmarking Procedure:

1. Plan
 Define a tightly focused subject of the benchmarking study. Choose an issue
critical to the organization‘s success.
 Management‘s goals and support for the study must be firmly established.
 Study your own process. Know how the work is done and measurements of the
output.
 Identify partner organizations that may have best practices.
2. Collect
 Collect information directly from partner organizations.
 Collect both process descriptions and numeric data, using questionnaires,
telephone interviews, and/or site visits.
3. Analyze
 Compare the collected data, both numeric and descriptive.
 Determine gaps between your performance measurements and those of your
partners.
 Determine the differences in practices that cause the gaps.
4. Adapt
 Develop goals for your organization‘s process.
 Develop action plans to achieve those goals.
 Implement and monitor plans.

Five Whys

Five whys (or 5 whys) is an iterative interrogative technique used to explore the cause-
and-effect relationships underlying a particular problem. The primary goal of the
technique is to determine the root cause of a defect or problem by repeating the
question "Why?". Each answer forms the basis of the next question.

Benefits of the 5 Whys:

 Help identify the root cause of a problem.
 Determine the relationship between different root causes of a problem.
 One of the simplest tools; easy to complete without statistical analysis.

When Is 5 Whys Most Useful?

 When problems involve human factors or interactions.
 In day-to-day business life; can be used within or without a Six Sigma project.

Example of Five Whys

Problem Statement: You are on your way home from work and your car stops in the
middle of the road.
1. Why did your car stop?
– Because it ran out of gas.
2. Why did it run out of gas?
– Because I didn‘t buy any gas on my way to work.
3. Why didn‘t you buy any gas this morning?
– Because I didn‘t have any money.
4. Why didn‘t you have any money?
– Because I lost it all last night in a poker game.
5. Why did you lose your money in last night‘s poker game?
– Because I‘m not very good at ―bluffing‖ when I don‘t have a good hand.

Work Breakdown Structure

Work breakdown structure (WBS) in project management is a method for completing a

complex, multi-step project. It's a way to divide and conquer large projects to get things
done faster and more efficiently.

The goal of a WBS is to make a large project more manageable. Breaking it down into
smaller chunks means work can be done simultaneously by different team members,
leading to better team productivity and easier project management. Here‘s another
example of a bicycle construction broken down into three levels:

Fig. 1.16