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What are some business decisions would a manager make using statistical process controls?

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Question added by dana tutunji , Architect , Helou Trading Co
Date Posted: 2013/06/18
Ahamed Shareef
by Ahamed Shareef , Divisional Head - Quality Assurance , Apollo Tyres Ltd

Statistical process control throws immense opportunity to understand extent of variation and type of variation. A decision can be of two types depending on the cause being addressed -

1. Special cause: Decisions are local and no major business decisions are really needed! It can really alter cost structure positively in terms of reduced setup time, reduced monitoring frequency, reduced inspection cost and increased efficiency.

2. Common cause: When a process variation is due to common cause and extent of variation (capability of the process) is not acceptable by the customers or the market, key business decisions are necessary. It can be enhancing machine capabilities and investment related it. Some time decision of discontinueing a product may happend if new cost structure does not fit the need of the customer.

SHIBU ALEX
by SHIBU ALEX , Director and Senior Business Consultant , Fortune Consultancy

Decision making is an important role of any manager in his/her day to day activities.
Hence the manager’s decision making quality and capacity has a major impact in the success / failure of the business.
Statistics is an important tool that helps the management to come up with better quality decisions, which can eliminate many losses or damages that could have arisen in the organization.
Some of the major decision makings that are carried out based on statistical information are : a)       Decision on business enhancements and accordingly further decisions on infrastructure investment b)       Decision on product’s marketing strategies (based on the sales trend statistics) c)        Based on the statistics of the past performance, future forecast can be predicted d)       Decision making on change in processes e)       Decision on Customer Retention strategies f)        Decision on Product enhancements g)       Decision on brand enrichments (addition / omission of brands) h)       Understanding the Life cycle of the product and take decision on the product’s future business strategies accordingly.
i)         Decision on recruitment of new staff can be done effectively based on statistics The list can be extended a lot as the area of today’s management locus is wide and is becoming more and more complex.
But since statistics is coming from concrete results of the past (not based on assumptions), it helps the management to take decisions on the ground of better certainty.

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