Hey everyone, welcome to this lecture. Why is variation an enemy to business processes in any process regardless of how well designed or carefully maintained it is, a certain amount of inherent or natural variation or variability will always exist. This natural variation, often called as background noise, or common cause is the effect of many small, essentially unavoidable causes. For example, if you have 300 people employed, which are rostered for work, at least five to 10% of the workforce will be absent due to either planned or unplanned reasons. In the framework of statistical quality control. This natural variability is often called a stable system of chance causes a process that is operating with only Chance causes of variation present is said to be in statistical control.

In other words, the chance causes are an inherent part of the process. Chance causes are also called as common causes of variation. Other kinds of variation may occasionally be present in the output of a process. This variation in key quality characteristics usually arises from multiple sources, including, but not limited to improperly adjusted or controlled systems, operator errors, defective inputs or raw material, environmental factors. Such variation is generally large when compared to the background noise and it usually represents an unacceptable level of Process Performance. For example, certain shutdown of systems, local rights etc.

We refer to these sources of variation that are not part of the chance cause pattern as assignable causes or special causes. A process that is operating in the presence of special causes, is said to be out of control. So if the systems are suddenly shut, your team will not be able to process transactions, thus, piling up inventory and leading to missing of timelines. In another instance, local writes can lead to radio stuffing. Now the production schedule will need to be met with these radio stuffing conditions. That will be terrible, isn't it?

Often production processes will operate in the in control state, releasing acceptable product for relatively long periods of time. Eventually, however, assignable causes or special causes will occur seemingly at random, resulting in In a shift to an out of control state, where a larger proportion of the process output does not confirm to the given requirements. This would lead to manufacturing of defective products, processing of non confirming or defective transactions further leading to rework over time, inventory and a bunch of other problems. If these non conforming or defective products reach customer, the organization can further face problems of customer complaints, dissatisfaction, penalties, loss of reputation, and even loss of business. In a nutshell, common cause or chance cause variation is inherent in the process and will keep the process in a state of statistical control. However, special causes are an enemy to the business process.

They will eventually lead the process to Out of statistical control. With this, it's time to close this lecture. Thank you for attending. See you in the next one.