Presented By: ALVIN PEREZ ABALOS, CE Master in Management Engineering Pangasinan State University Urdaneta Campus
What is the Deming Cycle
The Deming Cycle or PDSA Cycle or Shewhart Cycle (named after Walter Shewhart) is a four stage change management model used by companies for continuous improvement and incremental problem solving.
This change management model benefits companies by providing a systematic approach to achieving continuous improvement. The objective is to continually progress through each stage while aiming to achieve a better quality output of products or services or information as defined by our customers.
Because of its repeated cyclical nature of continuous improvement, the Deming cycle is often phrased in the change management process and in business improvement fields as the PDSA cycle. It is often graphically presented as a circle or wheel because it requires repeating the same stages over and over in the continuous effort to improve processes and outputs. The circle is represented in four quadrants of PLAN, DO, STUDY and ACT
How To Use The Deming Cycle
Below is the outlined details of each of the 5 stages of the Deming Cycle. By following these I hope it will benefit those who wish to implement this change management model. This process can be particularly useful for continuous improvement initiates.
PLAN an improvement
The goal at this stage is decide what needs to be done and how it best can be done. Achieve this goal by reviewing and studying the current work process and available data. This stage really involves examining the current method or the problem area.
DO the planned activity
Implement the improvement or problem-solving plan by actually doing it. This is the implementation stage during which the plan is actually tried out in the operation. The people responsible need to be trained and equipped with the resources necessary to complete the task. This stage itself may involve a mini PDCA cycle as the problems of implementation are discovered and resolved and we begin to see if the implementation of the plan is providing results.
CHECK the results
The new implemented solution is evaluated to see whether it has resulted in the expected performance improvement. Analyze the new data available and measure the results to see if the implementation of the plan is giving the results that it should.
ACT on the results
If the implementation was successful standardize and documented the work and new processes. If the change were not successful, learn what we can from the trial, adjust where necessary to overcome problems, and formalize the new knowledge before starting the PDSA cycle over again. In starting over again we take any corrective action that is required; we lock in the positive and good outcomes and then we return to the planning stage and repeat again as necessary.
Repeat the Deming Cycle
Continue the cycle again. Plan and implement further improvements. Even better though, as we continue with the Deming Cycle we have the benefit of having new data and learned experiences from the previous cycles.
It was devised by Dr. W Edwards Deming.
An effective Theory of Management. It is a framework of thought and guide for action that any leader wishing to transform their organization into one that will thrive and survive through the current century.
Appreciation for a System
Deming wrote that “A System is a network of interdependent components that work together to try to accomplish the aim of the system.” An essential part of improvement is that the aim must be clear to everyone in the system, and the secret is to develop cooperation between components towards achieving that aim.
2. Knowledge of variation
Effective managerial action also demands a knowledge of variation. Deming said: “Variation there will always be, between people, in output, in service, in product .
3. Theory of knowledge
Deming said that management’s job is prediction. Rational prediction requires theory, and builds knowledge through systematic revision of theory based on comparison of prediction with observation.
4. Knowledge of psychology
The fourth element of the System of Profound Knowledge is those aspects of Psychology relating to what motivates people. In particular understanding the respective roles of intrinsic and extrinsic motivation, and respecting the rights of people to obtain joy in work and joy in learning.
Focuses on finding and developing unique opportunities to create value by enabling a provocative and creative dialogue among people who can affect a company’s direction. It is the input to strategic planning — good strategic thinking uncovers potential opportunities for creating value and challenges assumptions about a company’s value proposition.
Competencies and Skills
What are the company’s strengths?
How can these be used to create a unique competitive advantage?
What are the company’s weaknesses that might leave it vulnerable?
Products and Offerings
What is the portfolio of offerings(product, service, price and image bundles) that the company provides to the market?
What are the overlaps or white spaces among the offerings?
What is the rationale or logic for these offerings?
What makes them unique?
What are the brands associated with these offerings?
How do these brands fit with the company’s image ?
3. Environment and Industry
What is the overall economic context in which the company competes?
What is the regulatory or governmental environment, and how does this impact the company?
Where is this industry headed, and where do we want it to be?
What is our position in the industry, and what do we want it to be?
How does this industry connect with others, and what are the implications of that for our positioning?
Markets and Customers
Who are the target customers for the offerings?
What are their needs?
How is the company uniquely suited to meet these particular needs?
Competitors and Substitutes
What is the nature of competition in our industry?
What other companies have offerings that could meet the same needs?
What are their unique strengths and strategies?
How might they respond to our strategies?
Are there companies not yet in the market who might choose to enter it?
What are their strengths and strategies?
What market conditions might lead to action on their part?
6. Suppliers and Buyers
What other companies do we need to work with in order to make and sell our offerings?
What is their relative power compared with us?
What are their strategies and strengths, and are these aligned with ours?
What’s in it for them?
Aligned: A company’s strategies must fit with its mission, vision, competitive situation and operating strengths.
Goal-oriented: Strategies are the means by which a company sets out to achieve its goals. Effective strategies, then, set clear expected outcomes and make explicit links between these outcomes and the company’s goals.
Fact-based : The best strategies are based on and supported by real data. While strategic thinking by its very nature requires assumptions about the future, these assumptions must be educated guesses, based on facts—for example, actual performance data or results of some kind of pilot test or experiment. The logic behind the strategy must be clear. Effective strategies tell believable stories.
Based on Broad Thinking: Companies that are strategically nimble are able to consider multiple alternatives at once and to consider a range of scenarios in making strategic choices.
Focused: No company can do everything or be all things to all people. Strategy setting involves making choices about what a company will do and—as important—what it will not do. Strategies provide clear guidance about how a company’s activities will be prioritized, and how its limited resources will be deployed.
Agreed upon: Especially in large, complex organizations, successful strategies must gain the support of multiple stakeholders. This often requires a process of developing strategies that is interactive in gathering multiple points of view and in sharing the thinking behind the strategy as it evolves.
Engaging: Strategies that will need to mobilize broad resources must be easily articulated so that they can capture the attention of the people who will be asked to carry them out.
Adaptable: Strategies need to be able to be adjusted to build on learning from experimentation, errors and new information. At the same time, there needs to be some thoughtfulness in these adjustments so that they are responsive without being overly reactive or “knee jerk.”
Implementable: Because effective strategies draw on the particular strengths and skills of an organization, they include explicit considerations of how they will be implemented. Implementable strategies provide clear guidance for decision making in order to shape behavior throughout the company.
Strategic Analysis is:
“… the process of conducting research on the business environment within which an organization operates and on the organization itself, in order to formulate strategy”.
BNET Business Dictionary
Definitions of strategic analysis often differ, but the
following attributes are commonly associated with it:
Identification and evaluation of data relevant to
Definition of the external and internal environment to be analyzed.
A range of analytical methods that can be employed in the analysis.
PEST analysis (Political Environmental Social Technological)
Porter’s five forces analysis
Four corner’s analysis
Value chain analysis
Early warning system
A SWOT analysis is a simple but widely used tool that helps in understanding the strengths, weaknesses, opportunities and threats involved in a project or business activity. The origins of the SWOT analysis technique is credited by Albert Humphrey, who led a research project at Stanford University in the 1960s and 1970s using data from many top companies.
SWOT ANALYSIS DIAGRAM
PEST analysis is a scan of the external macro-environment in which an organization exists. It is a useful tool for understanding the political, economic, socio-cultural and technological environment that an organization operates in.
Political factors - These include government regulations
Economic factors - These affect the cost of capital and purchasing power of an organization.
Social factors - Impact on the consumer’s need and the potential market
Technological factors - Barriers to entry, make or buy decisions
Porter's five forces of competitive position analysis was developed in 1979 by Michael E. Porter of Harvard Business School as a simple framework for assessing and evaluating the competitive strength and position of a business organization
Threat of substitution
Threat of new entry
Value chain analysis is based on the principle that organizations exist to create value for their customers. In the analysis, the organization's activities are divided into separate sets of activities that add value.
The three steps for conducting a value chain analysis are:
Separate the organization's operations into primary and support activities.
Allocate cost to each activity
Identify the activities that are critical to customer’s satisfaction and market success.
The purpose of strategic early warning systems is to detect or predict strategically important events as early as possible.
A cyclical process
CFAR Center for Applied Research copyright 2001 RES7: 010116
Barclay M. Hudson. 1979. Comparison of Current Planning Theories: Counterparts and Contradictions