Relationship of Statistics and Effective Management

Relationship of Statistics and Effective Management

I thank you for allowing me the opportunity to explain how statistics is beneficial to me in my position as a manager. As you are well aware, decision making is a key aspect in your role as a manager.
No person can be expected to always do things perfectly, as we are all human. Knowing this, when I make a decision that affects myself and the company as a whole I want to be certain that I am seeing a good view of things.
Basing decisions solely on feelings or pressure from various departments of the company are not always the best thing for the company. So to help with the assurance to make sure I am making logical beneficial decisions for the company I employ statistics.
Before our budgets are created for the next fiscal year, I log into the computer and run several reports. The reports that I run are based on statistics. The end result or numbers that are printed out are pulled from information on several other databases. Things such as expenses, sales, material costs all are plugged into formulas. I then run other formulas to evaluate the data based on several variables or what if scenarios. I then present the final information to our Controller showing potential profits or losses for our company based on activity.
When the time comes to undertake a new project, research must first be performed. When information is gathered or researched it is done using a type of methodology.
One such methodology is qualitative; this is where data is collected by means of first hand interviews or meetings. (Creswell, 2008)

Once the information is gathered the manager in charge of the project then analyzes this information to answer certain questions to see whether or not the original idea still proves to be a good idea.
If the project is more involved than a quantitative approach could be used. In a quantitative study numbers are used to provide the answers to your questions. Questions of how many, or how much are answered. When the data or numbers are crunched they must be arranged in a way to provide these answers.
Variables are then considered. For our business I look at variables such as labor costs, material costs, times, locations, delivery times. Anything that could drastically change our completion of a task or project is a variable that should be considered.
Regardless of the methods used, when you have an idea, or theory of how something should work and you look into making this idea a reality you perform the same processes that are in statistics. The use of statistics for business managers became rather popular in 1980 for big business such as Motorola and General Electric. It has been noted that companies who use these methods save close to $230,000 per project and end up completing up to 6 projects per year. Six Sigma became the go to statistical method to focus on defects or reasons why an anticipated outcome doesn’t happen. Six Sigma is a quality initiative which focuses on defects per million--at the Six Sigma level the expectation is a mere 3.4 defects per million. (Plotkin, 1999) Six Sigma is a measure based statistical method that focuses on how to improve a process. It is more typically oriented toward solution of problems at root cause and prevention of their recurrence. By using DMAIC (design, measure, analyze, improve, control) or DMADV (Define, measure, analyze, design, and verify) The reasoning behind lean thinking or six sigma have been very helpful in my current position in analyzing our manufacturing process, and even in making employee evaluations. I hope that you have been able to see how the use of statistics is key in making well considered decisions for any company.
The use of a statistical approach allows you to collect, and evaluate a great number of details in a timely manner. All of these things are a contributing factor, in my opinion to being an effective manager.

References:

Creswell, John W. (07/2008). Research Design: Qualitative, Quantitative, and Mixed
Methods Approaches

Plotkin, Hal. (June, 1999). Six Sigma: What It Is and How to Use It. Harvard Business Publishing Newsletters. Page 2. Prod. #U9906C-PDF-ENG