Tuesday, July 29, 2014

$400K Saved by Company Using SPC!!


Company Insurance Premium Reduced 400K by using SPC!

Control plus $ led me to write this post!

We recently worked with a company to help take control of some of their processes. It turned out that the company was already using some of the Statistical Process Control, SPC, techniques we teach in our classes to monitor selected processes. These processes provided some excellent data that allowed the company to initiate “SPC Control Charts.”

Why would the companies Insurance carrier reduce premiums? When you apply Statistical Control Limits to process outputs, you now have a systems that reacts to variation in the process rather than failure or hazards. This application of SPC now  gives that process a predictive indicator which , of course, will reduce the probability of accidents based on “Out of Control” events.

Since the Insurance companies have used Statistics to establish their “Risk” in insuring companies, they understand the “Power” of Statistical Control and therefore encourage, monetarily, the use of these predictive methods.

I am identifying an “Out of Control” section in a process

All processes can be “quantified” either using “Attribute” or “Variable” data. Once you apply control limits to this data, you have now a “PREDICTIVE” system of monitoring processes. Remember, control charts do not tell you if a process is producing a “Good” or “Bad” output. I simply tells you that something in that process is “NOT NORMAL.” Your system is now performing Corrective Action on “Variation” rather than a Hazard or incident.

Using and understanding the Statistical “Control”  system of monitoring processes WILL MAKE YOUR COMPANY SAFER! And now the Insurance industry has recognized this and will LOWER YOUR INSURANCE COSTS!.


“Your system is now performing Corrective Action on ‘Variation’ rather than a Hazard or incident.”


I should also note that the use of SPC for Control of processes, is the basis for the extremely popular “Lean” enterprise system that is widely used in all industries. So, in addition to the Insurance premium benefit, your company will automatically run in a leaner financial state as efficiency is increased due to the added “Control.”

Lean Enterprise is based on SPC. 
I recently Spoke on "Predictive SMS" at the International Society of Safety Professional, ISSP, annual SMS and Human Factors Symposium in Dallas Texas. I will have a Youtube presentation on the concepts of using Statistical Control to predict hazards and incidents. 

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