270 CHAPTER ◆ 2 9 Determine Causes of Variation
29.11. Summary
A firm ’ s goal should be to continuously improve their profit-to-risk ratio. This should be
done by both launching new products and improving the performance of existing ones.
Both in trading and manufacturing, once a product matures, the focus needs to switch to
continuous improvement to boost profit margin and extend its life. The goal should be to
be the firm with the highest profit margin, so when the group consolidates due to pricing
pressure, the firm wins.29.11.1. Best Practices
● To find sources of special variation, start with brainstorming techniques.
● Use DoE and ANOVA processes to uncover root causes.
● For identified root causes, follow through with kaizen which will require a reversion
to a previous stage in our methodology.
● Use a cross-functional kaizen team with both a team leader and a quality facilitator
to research and find root causes of variation.
● Errors must be reproducible to be considered fully understood.