Root Cause Analysis Institute of Internal Audits (IIA) March 20, 2013

Root Cause AnalysisInstitute of Internal

Audits (IIA)

March 20, 2013

Introduction Terry Upshur- Director of Support Services with

the Inspector General of the U.S. House of Representatives

Lean Six Sigma - Master Black Belt

Certified Government Auditing Professional (CGAP)

Over 25 Years of Experience in Quality Assurance

Root Cause Analysis 2

Super-Bowl Champions Teams with better organizations

Teams with better players

Teams with better statistics

Teams with better records

Super-Bowl Championships are based on:

Teams with the best execution in the playoffs

Baltimore Ravens

Root Cause Analysis

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Overview

Performance Improvement Principles

Root Cause Analysis

Tools and Techniques

Closing Remarks


Exercise Introduction

Scenario # 1 (Answer at the end of the training session)

The Plant Manager walked into the plant and found oil on the floor. He called the Foreman over and told him to have maintenance clean up the oil. The next day while the Plant Manager was in the same area of the plant he found oil on the floor again and he subsequentially raked the Foreman over the coals for not following his directions from the day before. His parting words were to either get the oil cleaned up or he’d find someone who would.

Copyright © 2004 Gene Bellinger5

Process Improvement

Process Improvement Using the Principles of Lean Six Sigma

Root Cause Analysis

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Lean Six Sigma Is the Integration of Two Powerful Business Improvement Approaches...


Goal – Reduce waste and increase process speed

Focus – Implementing Waste reduction tools

Method – Improvement events Value Stream Mapping

Goal – Improve performance on items Critical to Customer Quality (CTQs)

Focus – Use DMAIC with (TQM) tools to eliminate variation

Method – Management engagement, dedicated team effort

Six SigmaQuality, Cost

LeanSpeed + Waste Elimination

Lean Speed Enables Lean Speed Enables Six Sigma Quality Six Sigma Quality (Faster Cycles of (Faster Cycles of

Experimentation/learning)Experimentation/learning)

Six Sigma Quality Enables Six Sigma Quality Enables Lean SpeedLean Speed

(Fewer Defects Means(Fewer Defects Means Less Time Spent on Rework)Less Time Spent on Rework)

Efficiency Effectiveness

What is Six Sigma?

Six Sigma is defined as a method to discover customer requirements and meet them with minimal variation.

Supported by a suite of quality/statistical analysis tools

Concept of Y = f(x1,x2,…) introduced to drive focus on improving critical process inputs rather than just outputs (reports, services, deliveries, sales etc.)


Determine Critical X’s Y=f(x)


Process:Process:

InfoInfoSystemsSystemsReleaseRelease

Operating Budget

Training Budget

System Requirements

Delivery Time

Inputs(Factors)

Outputs (Responses)

Number of People

Operating Hours

Functional Requirements

Customer Interface

Skills Selection

Y

(x)

What is Lean? Lean is defined as a process strategy that uses

less of everything compared with the traditional process:

Less: human effort, space, investment in tools or information.

Reduces the number of steps (.90*.90*.90=.72)

Removes waste and non-value added processes and complexity

Drives speed and increases capacity


Lean Focuses on Eliminating Waste

Root Cause Analysis

Over Production

Over Processing

Motion

Waiting

Inventory

Transportation

Defects

ControlProcessWaste

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TIMWOOD: An Acronym for WASTE

Transportation: Transporting something farther than necessary

Inventory: Excess stock of anything

Motion: Motion unnecessary to successfully completion the task

Waiting: Waiting for anything

Over-processing: Processing what the customer doesn’t want.

Over-production: Making to much

Defects: Work that needs to be redone


DMAIC Problem Solving Methodology

Root Cause Analysis

DefineDefine

MeasureMeasure

AnalyzeAnalyze

ImproveImprove

ControlControl

Define the opportunity from both business and customer

perspectives

Search for the key factors (critical X’s) that have the biggest impact on process performance and determine

the root causes

Understand the process and its performance

Develop improvement

solutions for the critical X’s

Implement the solution and control plan

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Value Add – From the Customer Perspective

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Customer Value Add(CVA) Questions

Does the task add form, feature, or function to the process or service?

Does the task enable a competitive advantage (reduced price, faster delivery, fewer defects)?

Would the customer be willing to pay extra or prefer us over the competition if he or she knew we were doing this task?

Example CVA Activities: Improved Safety Shorter Deliver Times Fewer Errors Accurate Reporting

Non-Value Add (NVA)

Questions If the customer knew we were

doing this, would they request that we eliminate the activity so we could lower our prices?

Does the task fit into either of the other two categories?

Can I eliminate or reduce this activity?

Typical NVA Activities: Over Inspecting Transporting/Moving Stocking/Storing Rework Loops Multiple Signoffs Document Handling

Business Value Add (BVA) Questions

Does this task reduce owner financial risk?

Does this task support financial reporting

requirements? Would the process of

producing/selling the service break down if this task were

removed? Is this task required by law or

regulation? Typical BVA Activities:

Reconciliations Internal Audits

Invoice Processing IRS/OSHA/EPA Reporting

Internal Financial Reporting

Question

How does all of this relate to audit?

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Function of a Finding

A finding allows us to understand what occurred, how significant the occurrence was, and how we may be able to reasonably protect against its reoccurrence.

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Root Cause Analysis and FindingsRoot cause analysis the elements of a audit findings

Criteria – What should be

Condition - What does exist

Effect – The impact of the difference

Cause – Why the difference exist

Recommendation – What is a possible remedy?

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Definition of Root Cause AnalysisA process of determining the causes that led to a nonconformance, event or undesirable condition and identifying corrective actions to prevent recurrence which (when solved) restores the status quo or establishes a desired effect.


Purpose Root Cause Analysis helps to identify what, how, and

why something happened, thus preventing recurrence.

Root causes are underlying, are reasonably identifiable, can be controlled by management and allow for the generation of recommendations.

The process involves data collection, cause charting, root cause identification, recommendation generation and implementation.

Only when you are able to determine why an event or failure occurred will you be able to specify workable corrective measures.


Understanding Root Causes To fix a problem it must be clearly defined. In a

lot of cases the symptom is identified and not the underlying problem.

For example, buying expired milk is not an inspection failure its a recall system failure.

Questions to ask are: What is the scope of the problem? What else is affected by the problem? How often does it occur? What impact will this have on the larger

population?Root Cause Analysis 20

Determining Root Causes

Four steps you can use to identify the Root Cause

Data Collection & Prioritization Pareto Analysis

Cause Charting Cause and Effect Diagram (Fishbone)

Root Cause Identification

Recommendation Generation and Implementation


Exercise All who are active IIA members (Stand)

All that are members of the IIA DC chapter

All who have at least two IIA certifications

All who have volunteered with the chapter in the last two years

All who would like to volunteer with the chapter

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Data Collection Data collection provides information and an

understanding of causal factors.

Good data collection techniques involve: Data Types – Attribute or Discrete

Good/Bad, Counts or Percentages Planning – When, Who, How, Stratification Check Sheets - Consistency of Data

Collection Measurement System Analysis

Ensure the data collection process is “Repeatable and Reproduceable”



Pareto Chart A Pareto chart is a graphical tool to prioritize multiple

problems in a process so you can focus on areas where the largest opportunities exist.

Pareto charts are a type of bar chart in which the horizontal axis represents categories of interest.

By ordering the bars from largest to smallest, a Pareto chart can help you determine which of the defects comprise the “vital few”, and which are the “trivial many.”

The Pareto principle states that 80% of the effect is generated by 20% of the causes. We want to focus on the 20%.

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Sample Pareto Chart: Processing Errors

Count 73 18 13 8 7 5Percent 58.9 14.5 10.5 6.5 5.6 4.0Cum % 58.9 73.4 83.9 90.3 96.0 100.0

Count

Perc

ent

Exception OtherNew ResATGHSTQ/TAHHG

140

120

100

80

60

40

20

0

100

80

60

40

20

0

Pareto Chart of Processing Errors

Cause Charting Provides a structure for analyzing the

information and identifying gaps and deficiencies in knowledge.

Cause Charting can also take the form of process mapping. The process map is simply an illustration that depicts the steps or events leading up to an occurrence.


What A tool to represent the relationship between an

effect (problem) and its potential causes by category type.

When Carried out when a root cause needs to be

determined.

Why To help ensure that a balanced list of ideas have

been generated during brainstorming. To determine the real cause of

the problem versus a symptom. To refine brainstormed ideas into

more detailed causes.Root Cause Analysis

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Cause and Effect Diagram(Also Called Fishbone)

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Effect: Too many price adjustments at

check-out

Machine Methods

Measurements Manpower

Updates

Not enough staffing during peak times

Discovery of different discount rates occurs too late in process

Computer screens

Billing process not accurate

Too many “jumps”

Master customer discount table not up-to-date

Incomplete Training on common complaints

Unfamiliarity with proceduresMarketing metrics counterproductive

Notification of absence

For vacation notification

Management Policies

Material

Mother Nature

Power Failures

Product Shortages

Example: Fishbone Diagram

Root Cause Identification Use the Cause Charts and subject matter

experts (SMEs) to gain a proper understanding of the event.

Asking the right questions will help address the actual problem and not the symptoms.

Types of questions to ask: What is the scope of the problem? How many problems are there? What is affected by the problem? How often does the problem occur?


Root Cause Identification

Tools used to assist with Root Cause Identification:

Data Analysis Pareto Charts Fishbone Diagrams 5 Why Technique Brainstorming Affinity Diagrams


Root Cause Identification Reduce the list of potential root causes

Rank root causes using Pareto Analysis (Statistical)

Rank the items in order of significance (Organizational)

Identify the items with the most significant impactTimeCostManpower


Root Cause Identification Confirm potential root causes relate to the

overall problem Validate/Verify that root causes identified have

a causal relationship with the desired output Ensure the legitimacy of the measurement

system Ensure results are repeatable and

reproducible

Note: If you cannot state the problem simply, you do not fully understand the problem.


Addressing the Root Cause(s)


Conduct Value Add Analysis Ensure that items identified will add

value to the organization or customer Ensure that the items are required by

regulation or policy Confirm that the item does not add value

and is not needed or required

Recommendation Implementation

Things to consider prior to implementation: Determine the impact the root causes will

have on critical inputs (X) Estimate impact of the root cause on

over-all output (Y)


Recommendation Implementation (Management)

Implement recommendations based on: Significance to organizational goals and

objectives Availability of personnel, finances or

other essential resources Complexity of the implementation

Evaluate controls required to maintain corrective actions after implementation.


Jefferson Memorial


See Jefferson Memorial Handout

Jefferson Memorial

Businessweek March 14, 2006 , Keith McFarland 37

A few years ago National Parks managers noticed the Jefferson Memorial was crumbling at an alarming rate. When they asked why, they found out it was being washed far more often than other memorials. For most organizations, the analysis would stop here. The solution is clear, right? Adjust the cleaning schedule to match those of the other memorials.

Unfortunately, that solution would have only led to a very dirty Jefferson Memorial. Because when Parks managers asked about the reason for the frequent washings, they found it had an exceptionally large amount of bird droppings deposited on it every day (no, this isn't a metaphor -- it really happened). What's the solution now? Erect scarecrows? Declare open season on pigeons?

Luckily, National Parks managers kept inquiring. And when they asked why the birds seemed to soil Jefferson at rates higher than they did so to Kennedy or Lincoln, they discovered the Virginian's memorial harbored an incredibly large population of spiders upon which the birds were feeding. And the population of spiders had exploded because of an abundance of midges (tiny aquatic insects) in and around the Memorial.

By now, you have the routine down. When Parks managers asked why so many midges congregated on the Jefferson memorial, they learned what any fly-fisherman finds out his first day on the river: Midges are stimulated to emerge and mate by a unique quality of light (for the rivers of my home state of Utah, it usually falls between 11 a.m. and 1 p.m. on a cloudy day).

It just so happens park managers were inadvertently creating this unique quality of brightness by turning the lights on the memorial just before dusk. This one variable caused the whole chain of events -- lots of midges, lots of spiders, lots of bird droppings, lots of effort on the part of the cleaning crews, and finally, the crumbling of the statue.

The solution ended up being pretty simple, and actually saved the Parks Department money: Just wait until dark to turn on the lights.

Definition of the 5 Whys


The 5 Whys is an iterative question-asking 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. (The "5" in the name derives from an empirical observation on the number of iterations typically required to resolve the problem.)

Benefits of the 5 Whys


Help identify the root cause of a problem.

Determine if there is a relationship between different root causes of a problem.

Simplicity; easy to complete without statistical analysis.

Effective when problems involve human factors or interactions.


______________1. Why?

2. Why?3. Why?

4. Why?5. Why?

______________1. Why?

2. Why?3. Why?

4. Why?5. Why?

Computer Storage Costs Too High1. Why? Users keep too many large files as email attachments

2. Why? Users don’t know that this results in an extra charge to the company

3. Why? Email policy not communicated

4. Why? Official email policy not defined

5. Etc….

Computer Storage Costs Too High1. Why? Users keep too many large files as email attachments

2. Why? Users don’t know that this results in an extra charge to the company

3. Why? Email policy not communicated

4. Why? Official email policy not defined

5. Etc….

EffectEffect

Ask "Why?" 5 TimesAsk "Why?" 5 Times

Root Cause Analysis

5 Why Example

Refer Back to Scenario #1

How would you suggest the Plant Manager address the oil on to the floor?

Do you see an opportunity to use any of the tools we discussed?

See Scenario #2

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5 Why Example (Scenario #2)The Plant Manager walked into the plant and found oil on the floor. He called the Foreman over and asked him why there was oil on the floor. The Foreman indicated that it was due to a leaky gasket in the pipe joint above. The Plant Manager then asked when the gasket had been replaced and the Foreman responded that Maintenance had installed 4 gaskets over the past few weeks and that each one seemed to leak. The Foreman also indicated that Maintenance had been talking to Purchasing about the gaskets because it seemed they were all bad. The Plant Manager then went to talk with Purchasing about the situation with the gaskets. The Purchasing Manager indicated that they had in fact received a bad batch of gaskets from the supplier. The Purchasing Manager also indicated that they had been trying for the past 2 months to try to get the supplier to make good on the last order of 5,000 gaskets that all seemed to be bad. The Plant Manager then asked the Purchasing Manager why they had purchased from this supplier if they were so disreputable and the Purchasing Manager said because they were the lowest bidder when quotes were received from various suppliers. The Plant Manager then asked the Purchasing Manager why they went with the lowest bidder and he indicated that was the direction he had received from the VP of Finance. The Plant Manager then went to talk to the VP of Finance about the situation. When the Plant Manager asked the VP of Finance why Purchasing had been directed to always take the lowest bidder the VP of Finance said, "Because you indicated that we had to be as cost conscious as possible!" and purchasing from the lowest bidder saves us lots of money. The Plant Manger was horrified when he realized that he was the reason there was oil on the plant floor. Bingo!

Copyright © 2004 Gene Bellinger42

Table Top Exercise

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Problem Statement 1: You have to spend more and more money on your utility bills.

Problem Statement 2: Your boss is unhappy because he has received work-papers that don’t meet this expectations.

Problem Statement 3: You frequently arrive to work late in the mornings and you are faced with disciplinary action if you don’t correct it immediately.

Problem Statement 4: You do not have enough money to retire comfortably.

Table Top Reporting Each group take 5 minutes to report on 5

Why Exercise

What were your questions

What were some potential root causes?

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Closing Remarks Appreciate that Process Improvement is a

proven and established methodology that has been successfully implemented by corporate, academic, and government agencies.

You have gained an appreciation for the value of Root Cause Analysis and the part it plays in responding to recommendations

You have become familiar with the 5 why process and find it useful.

Closing Remarks 45

Questions?

Terry Upshur

[email protected]

Closing Remarks 46

Documents

Root Cause Analysis Institute of Internal Audits (IIA) March 20, 2013