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Statistics your secret weapon.

You may have heard of, the use of statistical process control and statistical quality control to reduce defects in manufacturing from a few percentage points to ppm (parts per million) levels. At the heart of this is good application of statistics.

The stereotype of a statistician is a serious chap, quite boring and often speaks in a language that appears alien to most people.

Every organisation should avail the services of a good statistician even if on a part time basis.

Most statisticians are also well versed in a complimentary subject called Operations Research (OR), which is an interdisciplinary branch of applied mathematics that uses methods such as mathematical modelling, statistics, and algorithms to arrive at optimal solutions even to complex problems.

The raw material for a statistician is data. Most organisations do not collect any data leave alone collate it and hence for them meaningful analysis is not possible.

We were fortunate to be introduced to Mr.SB Deo. He was head of statistics at Kirloskar Oil Engines and for quite a time worked directly under the legendary Mr. SL Kirloskar of the Kirloskar group.

Mr. Deo accepted our invitation to guide us as a consultant and to use statistical analysis as a force multiplier both for technical and management purposes.
Mr. Deo for a statistician was quite a lively individual with an inquisitive mind. He brought with him a lot of the collective wisdom of Kirloskar group and helped us to structure our data collection, collation, analysis, and action.

We spent the first year and a half merely gathering data, then, we started preparing reports looking at quality and productivity data in different ways. It is amazing what you can do when information is collated and analysed correctly.

Here are three examples on how statistics made a difference other than in the area of quality.

When we joined the manufacturing business of our father and uncle in 1981 we had a workmen absenteeism rate varying daily between 5% to 17% of the workforce. In a continuous manufacturing business this was a very serious problem. We tightened up disciplinary action, and the figure dropped to between 4% to 12%. This too was simply unacceptable. we discussed the situation with Mr. Deo and decided to accept his suggestion to conduct a survey, which Mr. Deo designed.

The survey investigated age, religion, health , family size, diet, mode of transport to and from work, education qualifications etc. When the results were collated we were able to identify four main factors which caused 80% of the problem.

We modified our HR policies for recruitment and appraisals and offered new benefits and facilities and within 18 months we were operating at a 1% to 3% absenteeism level.

The second example concerns that place and time in our growth when demand far outstripped supply capacity in India. Supply shortage to the market were rampant due to constraints in infrastructure, raw materials energy etc, not to mention that up to 65% of the capacity was lost due to poor management skills. Incidentally this was and remains an industry standard in many areas.

We never turned down any business and were flooded with work. We had numerous products and were unable to execute most orders on time.

A series of discussions and analysis helped us to identify areas where we would increase our effective plant utilisation. Implementing wide ranging changes covering recruitment, training, tooling, maintenance, purchasing , engineering , marketing etc we were able to raise effective plant utilisation from 27% to 67% within a decade and twice as high as our next best competitor.

The competition was unable to fathom what we were doing different, simply because we were way ahead of the times in our business and almost impossible for them to implement unless they analysed work like we did.

A talk delivered by Colonel Dr. BSKS Chopra a brilliant teacher on contribution evaluation in business opened our eyes to revaluation of our business and production planning processes.
Mr. Deo again developed a business model using optimisation techniques based on a very interesting science called operations research and we were able to double our profits using the same capacity and tonnage than earlier, by simply chasing the right product mix.

Innovation need not be only in product design etc, it can also mean the re-alignment of resources to design manufacturing or business processes in new ways to give significant improvements over earlier methods.

In many a situation people like Mr. Deo and statisticians like him, provide information to help managements formulate strategies which can provide a quantum leap to performance. Your statistician may not laugh at your jokes but he or she will be the one to have the last laugh.

8 Recommended steps:
1. Collect right data
2. Analyse right data
3. Make correct diagnosis
4. Formulate right strategy and policies
5. Deploy correct strategy and policies
6. Review
7. Make corrections
8. Verify achieved results


  1. Anupam Karnik said;

    Very interesting & enlightening.
    One small factual correction needs to be made, though statistically insignificant, founder of the Kirloskar group was Laxmanrao Kirloskar and not SLK.

    Best Regards
    Capt. A.M. Karnik

  2. Abhishek Lakhatia said;

    Thank you for sharing these knowledgable write -ups regarding best managerial practices

    Warm regards



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