5 Things You Should Know About Statistical Process Control Charts

Once again I outdo myself with the clickbait-ish titles, huh? Sorry about that, I promise this is actually a REALLY interesting topic.

I was preparing a talk for a conference this week (today actually, provided I get this post up when I plan to), and I realized that statistical process control charts (or SPC charts for short) are one of the tools I use quite often at work but don’t really talk about here on the blog. Between those and my gif usage, I think you can safely guess why my reputation at work is a bit, uh, idiosyncratic. For those of you who have never heard of an SPC chart, here’s a quick orientation. First, they look like this:

(Image from qimacros.com, and excellent software for generating these)

The chart is used for plotting something over time….hours, days, weeks, quarters, years, or “order in line”…take your pick.  Then you map some ongoing process or variable you are interested in…..say employee sick calls. You measure employee sick calls in some way (# of calls or % of employees calling in) in each time period. This sets up a baseline average, along with “control limits”, which are basically 1, 2 and 3 standard deviation ranges. If at some point your rate/number/etc starts to go up or down, the SPC chart can tell you if the change is significant or not based on where it falls on the plot.  For example, if you have one point that falls outside the 3 standard deviation line, that’s significant. If two in a row fall outside the 2 standard deviation line, that’s significant as well. The rules for this vary by industry, and Wiki gives a pretty good overview here. At the end of this exercise you have a really nice graph of how you’re doing with a good visual of any unusual happenings, all with some statistical rigor behind it. What’s not to love?

Anyway, I think because they take a little bit of getting used to,  SPC charts do not always get the love they deserve. I would like to rectify this travesty, so here’s 5 things you should know about them to tempt you to go learn more about them:

  1. SPC charts are probably more useful for most business than hypothesis testing While most high school level statistics classes at least take a stab at explaining p-values and hypothesis testing to kids, almost none of them even show an example of a control chart. And why not? I think it’s a good case of academia favoring itself. If you want to test a new idea against an old idea or to compare two things at a fixed point in time p-values and hypothesis testing are pretty good. That’s why they’re used in most academic research. However, if you want see how things are going over time, you need statistical process control. Since this is more relevant for most businesses, people who are trying to keep track of any key metric should DEFINITELY know about these.   Six Sigma and many process improvement class teach statistical process control, but they still don’t seem widely used outside of those settings. Too bad. These graphs are  practical, they can be updated easily, and it gives you a way of monitoring what’s going on and lot of good information about how your process are going. Like what? Well, like #2 on this list:
  2. SPC charts track two types of variation Let’s get back to my sick call example. Let’s say that in any given month, 10% of your employees call in sick. Now most people realize that not every month will be exactly 10%. Some months it’s 8%, some months it’s 12%. What statistical process control charts help calculate is when those fluctuations are most likely just random (known as common cause variation) and the point at which they are probably not so random (special cause variation). It sets parameters that tell you when you should pay attention. They are better than p-values for this because you’re not really running an experiment every month….you just want to make sure everything’s progressing as it usually does. The other nice part is this translates easily in to a nice visual for people, so you can say with confidence “this is how it’s always been” or “something unusual is happening here” and have more than your gut to rely on.
  3. SPC charts help you test new things, or spot concerning trends quickly SPC charts were really invented for manufacturing plants, and were perfected and popularized in post-WWII Japan. One of the reasons for this is that they really loved having an early warning about when a machine might be breaking down or an employee might not be following the process. If the process goes above or below a certain red line (aka the “upper/lower control limit”) you have a lot of confidence something has gone wrong and can start investigating right away. In addition to this, you can see if a change you made helps anything. For example, if you do a handwashing education initiative, you can see what percentage of your employees call in sick the next month. If it’s below the lower control limit, you can say it was a success, just like with traditional p-values/hypothesis testing. HOWEVER, unlike p-values/hypothesis testing, SPC charts make allowances for time. Let’s say you drop the sick calls to 9% per month, but then they stay down for 7 months. Your SPC chart rules now tell you you’ve made a difference. SPC charts don’t just take in to account the magnitude of the change, but also the duration. Very useful for any metric you need to track on an ongoing basis.
  4. They encourage you not to fix what isn’t broken One of the interesting reasons SPC charts caught on so well in the manufacturing world is that the idea of “opportunity cost” was well established. If your assembly line puts out a faulty widget or two, it’s going to cost you a lot of money to shut the whole thing down. You don’t want to do that unless it’s REALLY broken. For our sick call example, it’s possible that what looks like an increase (say to 15% of your workforce) isn’t a big deal and that trying to interfere will cause more harm than good. Always good to remember that there are really two ways of being wrong: missing a problem that does exist, and trying to fix one that doesn’t.
  5. There are quite a few different types One of the extra nice things about SPC charts is that there are actually 6 types to chose from, depending on what kind of data you are working with. There’s a helpful flowchart to pick your type here, but a good computer program (I use QI macros) can actually pick for you. One of the best parts of this is that some of them can deal with small and varying sample sizes, so you can finally show that going from 20% to 25% isn’t really impressive if you just lowered your volume from 5 to 4.

So those are some of my reasons you should know about these magical little charts. I do wish they’d get used more often because they are a great way of visualizing how you’re doing on an ongoing basis.

If you want to know more about the math behind them and more uses (especially in healthcare), try this presentation. And wish me luck on my talk! Pitching this stuff right before lunch is going to be a challenge.

4 thoughts on “5 Things You Should Know About Statistical Process Control Charts

  1. Here’s an unusual application for you. A friend of mine used a control chart to track stocks. He identified a few stocks that were very cyclical, and charted them, along with a running SD. When the price got above plus two SDs, he sold, and when it got below minus two SDs, he bought again. This differs a little bit because the UCL and LCL are not fixed, but the principle is similar. This has some obvious risks, but he said he did quite well.

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    • I think I had a coworker at one point who did a similar thing, though I remember his system sounding much more complicated. There are some versions of these graphs that do recalculate the UCL and LCL every time period, so I suspect he was using one of those. The idea is intriguing, but I feel somehow it would go terribly wrong if I tried it.

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