Variables control charts have found frequent application in both manufacturing and nonmanufacturing settings. A fairly widespread but erroneous notion about these charts is that they do not apply to...

Variables control charts have found frequent application in both manufacturing and nonmanufacturing settings. A fairly widespread but erroneous notion about these charts is that they do not apply to the nonmanufacturing environment because the “product is different.” Actually, if we can make measurements on the product that are reflective of quality, function, or performance, then the nature of the product has no bearing on the general applicability of control charts. There are, however, two commonly encountered differences between manufacturing and transactional/service business situations: (1) In the nonmanufacturing environment, specification limits rarely apply to the product, so the notion of process capability is often undefined; and (2) more imagination may be required to select the proper variable or variables for measurement. One application of and R control charts in a transactional business environment involved the efforts of a finance group to reduce the time required to process its accounts payable. The division of the company in which the problem occurred had recently experienced a considerable increase in business volume, and along with this expansion came a gradual lengthening of the time the finance department needed to process check requests. As a result, many suppliers were being paid beyond the normal 30-day period, and the company was failing to capture the discounts available from its suppliers for prompt payment. The quality-improvement team assigned to this project used the flow time through the finance department as the variable for control chart analysis. Five completed check requests were selected each day, and the average and range of flow time were plotted onand R charts. Although management and operating personnel had addressed this problem before, the use ofand R charts was responsible for substantial improvements. Within nine months, the finance department had reduced the percentage of invoices paid late from over 90% to under 3%, resulting in an annual savings of several hundred thousand dollars in realized discounts to the company.