Question

What about the variances?

How can organizations adjust variances depending on the regions?

Also, what are your thoughts on what the variances are measured against?

Answer 1

Variance, in general means the degree of difference between two or more variables. In Statistics, Variance is significant in the application of measures of Dispersion.

In Business Organizations, Variance analysis provide a great deal of information in the assessment of the differences between two given figures, thereby aiding in financial and operation data for identification of such differences and determining the causes of the same. For adjustment of variances depending on the regions, it is hence important for the Organization to conduct an in-depth study about the pattern of variances and the degree to which it has an impact upon the operations. Once such a variance is well identified, measures need to be taken to cater to the mitigation of such variances.

For example, in certain Production Process, the Organization is particular about its quality control. Here, it can use the Quality Control approach of ‘Six Sigma’ which is a statistical program undertaken by the Organization for the process improvement. It has six standards that is set to reduce defects to 3.4 per million, thereby helping in identifying and mitigating any variances in the system. It is a customer-centric approach to cater the requirements of the end-users. The process starts with defining a problem pertaining to the ongoing process, measuring the same against the current performances, analyze such measurements to undertake the root-cause analysis, improving the variances with various innovative approaches and control the same by monitoring the performances. Thus, in this way, Organizations can use various tools to adjust the variances depending upon the regions where the variance is examined the most.

As for my thoughts on what the variances are measured against, I think there needs to be presence of at least two types of variables: one, which forms a standard benchmark variable for any given Operation while the other could be the Actual variable i.e. the performance of the variable. The difference between the Standard and Actual could help determine the variable. Tools that could be used for the same may be ANNOVA, Six Sigma, etc.