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  1. 1. Quality IT229E – Kvalitetssikring Handelshøgskolen i Bodø12.10.12 IT229E – Kvalitetssikring 1
  2. 2. Chapter 6W. Edwards Deming Key learning points; Deming’s definition of quality: a function of continuous improvement based on reduction in variation around the desired output Seven deadly Sins and Diseases:  Lack of constancy  Short term profit focus  Performance appraisal  Job-hopping  Use of visible figures only  Excessive medical costs  Excessive liability costs Three key beliefs: quantification, recognition of failure causes, systematic approach, continuous improvement, constancy Principal methods: fourteen-principles for transformation, the seven-point plan12.10.12 IT229E – Kvalitetssikring 2
  3. 3. Introduction Williams Edward s Deming, 1900 in US - 1993 Considered to be the founding father of the quality movement Doctorate in physics from Yale  Teached mathematics and statistics from 1930-1946 Statistician, worked for the US government for many years Was closely involved in post-war development of quality in Japan  Deming has been given a lot of the credit for transforming Japan into a modern industrial state  Rose to prominence in Japan12.10.12 IT229E – Kvalitetssikring 3
  4. 4. Introduction Heller (1989):  Deming has a “passionate belief in man’s ability to improve on the poor and the mediocre, and even on the good” Logothetis (1992):  Sees Deming as advocating “widespread use of statistical ideas, with management taking strong initiative in” Bank (1992)  Deming helped Japanese quality movement “to cut through the academic theory, to present the ideas in a simple way which could be meaningful right down to production worker levels”12.10.12 IT229E – Kvalitetssikring 4
  5. 5. Philosophy 1. Initial approach: based on statistical methods  Use of quantitative method  Management focus on causes of variability in manufacturing processes  Identify special and common causes of quality problems  Special causes: relating to operators or machines  Common causes: Arise from the operation of the system itself; responsibility of the management.  Belief: there are common and special causes of quality problems12.10.12 IT229E – Kvalitetssikring 5
  6. 6. Philosophy 2. Use of Statistical Process Control (SPC) to identify special and common causes  Brings the production process under control  Aim: remove quality problems relating to special causes of failure  Remaining quality problems are common causes: inherent in the design of the production process  Eradication of special causes enables a shift in focus to common causes to improve quality further  Belief: a quantitative approach to identifying and solving problems12.10.12 IT229E – Kvalitetssikring 6
  7. 7. Philosophy Comments on use of SPC  The statistically approach brings its own problems Bendell (1989):  Lack of technical standards, limitations of data  Human difficulties by employee resistance and management lack of understanding as to their roles in quality improvement  Deming’s approach reflects the machine view  For most people the subject is tenuous and we often find it hard to understand what the results achieved really mean  The value of Deming’s work could be obscured by our ability to interpret it12.10.12 IT229E – Kvalitetssikring 7
  8. 8. Philosophy 3. Systematic approach to problem solving: the Deming, Shewart cycle – Plan, Do, Check, Action Identify improvements and identify Plan ways to achieve the improvements What we do as a response to the observed effect Action Implement necessary actions to Do achieve improvement Verify if the implemented changes Check results in improvements12.10.12 IT229E – Kvalitetssikring 8
  9. 9. Philosophy 3. Systematic approach to problem solving: the Deming, Shewart cycle – Plan, Do, Check, Action  Frequently used in other methodologies (e.g. ISO 9000:2001, Oakland)  Continuous cycle – Do it all over again  Belief 1: systematic, methodical approach  Belief 2: continuous quality improvement action12.10.12 IT229E – Kvalitetssikring 9
  10. 10. PhilosophyThe seven deadly sins  Fundamental beliefs about bad management  Are the cause to the poor condition of many organizations today  Must be eliminated 1. Sin 1: “Lack of constancy”  Lack of constant commitment from senior management  Management “run on the quarterly dividend”  Deming urges an absolute and constant commitment on senior management to quality, productivity and innovation; i.e.:  Drive towards better quality of product in order to drive down costs, protect investment and employment, enlarge markets and generate more jobs12.10.12 IT229E – Kvalitetssikring 10
  11. 11. PhilosophyThe seven deadly sins 2. Sin 2: “Short-term profit focus”  Prevents continuous improvement and constancy  Need to satisfy owners, Reduction of costs  Deming points out that the expectations of the owners must go beyond the immediate return on capital to consider the long-term future  A sin that is difficult to eliminate 3. Sin 3: “Performance appraisal” (Prising av prestasjoner)  Ranking of employees  Subjective, may leave people bitter, desolated, feeling inferior  May lead to rivalry and isolation, undermines team affiliation  Demolish teamwork and leads back to focus on short term performance  Deming warns against badly designed appraisal systems12.10.12 IT229E – Kvalitetssikring 11
  12. 12. PhilosophyThe seven deadly sins 4. Sin 4: “Job-hopping – regular movement of management between jobs”  Leads to instability  Destroys team work and commitment  Decisions are taken in ignorance of the circumstances around them  Reinforce the short term orientation  Deming points out the need for commitment of management to the long-term future12.10.12 IT229E – Kvalitetssikring 12
  13. 13. PhilosophyThe seven deadly sins 5. Sin 5: “The use of visible figures only”  Organizations don’t recognize and evaluate intangible aspect of the organization.  Additional sales generated through satisfied customers  Negative impacts of performance appraisal  Barriers achieving quality….  Deming considers that managers that believes that everything can be measured are deluding themselves  Managers should know that they will be able to quantify only “a trivial part of the gain”  Managers that base their leadership on figures only will eventually owe neither figures nor company…. How does this conflict with his espousal of statistical methods12.10.12 IT229E – Kvalitetssikring 13
  14. 14. PhilosophyThe seven deadly sins 6. Sin 6: Excessive medical cost  The cost of insurance is driven by claims experience and actuarial expectation 6. Sin 7: Excessive costs of liability (Erstatningskrav)  There is an increasingly litigious public  The costs must be borne by the organization  May relate to the organization:  What types of liability costs? How are the agreements? Delayed deliveries?...  May relate to broader societary changes  Towards individual rather than collective values  “Whenever things go wrong, there must be some to blame”  This may not be within the control of the management and manufacturers12.10.12 IT229E – Kvalitetssikring 14
  15. 15. Philosophy  Summary of Deming’s philosophy:  Quantitative, statistically valid, control systems  Clear definitions of those aspects under the direct control of staff – that is the “special causes” – and those which are the responsibility of management – “the common causes” (as high as 94%)  A systematic, methodical approach  Continuous improvement  Constancy and determination  Quality should be designed into both product and process. (Deming and Crosby)12.10.12 IT229E – Kvalitetssikring 15
  16. 16. Assumptions1. Management processes and attitudes must be “transformed” in order for sustained improvement to be achieved  The management is seen to be responsible and capable of undertaking the proposed transformation  Deming does not suggest , in organization design terms, how this should be achieved1. Statistical methods will provide quantitative evidence to support changes  At the same time he recognizes that some aspects cannot be easily measured12.10.12 IT229E – Kvalitetssikring 16
  17. 17. Assumptions3. Continuous improvement is possible and desirable  If the needs of the customer is fully met and understood, where is the benefit in further improvement?  Handy (1990) characterizes the contemporary world by “discontinuous change”  Long-term view and continuous improvement may not be enough  Maybe organizations must be built for sudden, catastrophic, change  E.g.: the dotcom business; the inevitable collapse of the weak brought down many of the strong 12.10.12 IT229E – Kvalitetssikring 17
  18. 18. Assumptions3. The service sector’s prime job is enabling the manufacturing to do its job “A better plan for freight carriers would be to improve service and thus decrease costs. These cost savings, passed on to manufacturers and to other service industries, would help American industry to improve market for American products and would in time bring new business to carriers of freight”  Deming sees an altruistic effort which contrasts sharply with his accusations of short-termism12.10.12 IT229E – Kvalitetssikring 18
  19. 19. Assumptions3. The service sector’s prime job cont…  The implications of his assumptions about the role of services must be considered  Few local communities thrive when their manufacturing base is lost  E.g. shipbuilding and coal-mining communities in UK suffer from major economic difficulties, social fragmentation and unemployment  it’s discovered that many service sectors have been dependent upon local manufacturers  Is there any future for nations if their manufacturing base is lost?12.10.12 IT229E – Kvalitetssikring 19
  20. 20. Methods Deming has four principal methods: 1. The PDCA cycle 2. Statistical process control 3. The fourteen principles for transformation 4. The seven point action plan 12.10.12 IT229E – Kvalitetssikring 20
  21. 21. Methods Statistical Process Control (SPC) SPC is a quantitative approach based on measurement of process performance A process is under control – stable - when its random variations fall within upper and lower limits A control chart is used to record the values Statistical analysis reveal the mean value Normal variation from mean value for a process is any value within ± 3 standard deviations of the mean 12.10.12 IT229E – Kvalitetssikring 21
  22. 22. Methods Statistical Process Control (SPC) Events falling outside normal variation are considered “special” and should lead to diagnosis and treatment Events falling within the norms are considered to have “common” causes  They are a product of the organization of the system and require treatment at the system level  responsibility of management Deming:  94% belong to the system, 6% special 12.10.12 IT229E – Kvalitetssikring 22
  23. 23. Example of a Control diagram  Undersøkelse av brukbarheten  Diagnose: nødvendig med endringer  Årsak til problemene finnes kun ved å se nærmere på prosessen 14 Øvre kontrollgrenseAntall riktige 12 10 8 Sentrallinjen Common 6 4 Nedre kontrollgrense 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Special Oppgavenummer 12.10.12 IT229E – Kvalitetssikring 23
  24. 24. MethodsDeming’s fourteen Principles for transformation1. Create constancy of purpose to improve product and service  Create a “team” type of environment, all are working to a common goal  Requires management to commit themselves to achieving ever- improving quality as a primary objective of the organization  Long-term commitment  Stable jobs and no focus on profit on short-term2. Adopt a new philosophy for the new economic age, with management learning what their responsibilities are and assuming leadership for change  Acceptance by management that the responsibility for developing and achieving the changes is theirs  Recognition that the workers are not to blame12.10.12 IT229E – Kvalitetssikring 24
  25. 25. MethodsDeming’s fourteen Principles for transformation3. Cease dependence on mass inspection to achieve quality, by building quality into the product  Prevent defects: do things right the first time  Implies a dramatic change in management, organization structure and information management  Abandonment of mass inspection not supported by changes may be disastrous  E.g.: the introduction of multidisciplinary product development teams, John Deere Tractors12.10.12 IT229E – Kvalitetssikring 25
  26. 26. MethodsDeming’s fourteen Principles for transformation4. End the awarding of business in price; award business on total cost and move towards single suppliers  The invoice unit price of a part is only a fraction of its total potential cost  Total cost may include:  Unit cost, quality (failure, reject), inspection costs, ease of use in manufacturing environment  Ongoing running costs may be far greater than the initial cost  Benefits can be obtained by bearing a higher initial cost in order to generate long-term savings  Advantages of a single supplier  Negotiating improvements, long-term relationships, secure financial platform for supplier  Disadvantages of a single supplier  Vulnerable to failure on the part of the supplier, financially or in quality12.10.12 IT229E – Kvalitetssikring 26
  27. 27. MethodsDeming’s fourteen Principles for transformation5. Aim for continuous improvement of the system of production and service to improve productivity and quality and to decrease cost  Aim for continuous improvement  Focus on productivity, quality and decreasing costs  Objectives can be made more quantifiable5. Institute training on the job  Improve competencies  Not ineffective12.10.12 IT229E – Kvalitetssikring 27
  28. 28. MethodsDeming’s fourteen Principles for transformation7. Institute leadership with the aim of supervising people to help them to do a better job  Move towards a collaborative management style  Give advice, not blame  Motivate and support employees8. Drive out fear so that everyone can work effectively together for the organization  Fear is the greatest obstacle to achieve the principles  Ineffective  Provide communication12.10.12 IT229E – Kvalitetssikring 28
  29. 29. MethodsDeming’s fourteen Principles for transformation9. Break down barriers between departments. Encourage research, design, sales and production to work together to foresee difficulties in production and use  Multidisciplinary teams for product and service development  Co-operation between departments  Common objectives10. Eliminate slogans, exhortations and numerical targets for the workforce  Irritates staff more than encourages  Argument of Deming:  If “special causes” of failure related to machines and workers have been removed through use of SPC, then all other causes of failure relate to the system itself. These are the responsibility of management12.10.12 IT229E – Kvalitetssikring 29
  30. 30. MethodsDeming’s fourteen Principles for transformation11. Eliminate quotas or work standards and management by objectives or numerical goals;  Leadership should be substituted instead  Seems to be a contradiction: improvement targets are an inherent part of measuring achievement and SPC provides one form of measuring achievement  Deming’s point: if the system is stable, then performance cannot be improved by the setting of targets, only by changes to the system  Quotas and targets are meaningless unless accompanied by an action plan to improve the process12.10.12 IT229E – Kvalitetssikring 30
  31. 31. MethodsDeming’s fourteen Principles for transformation12. Remove barriers that rob people of their right to pride in their work  Annual appraisal focuses the attention of management on matters covered in the appraisal system  Management will strive to achieve these regardless of the impact on quality or productivity  Workers are constrained by  Uncertainty of employment, lack of definition of acceptable workmanship, poor quality materials, tool and machines and ineffective management  If workers constraints are removed, quality products will follow  Deming:  “Give the workforce a chance to work with pride, and the 3 % that apparently don’t care will erode itself by peer pressure”12.10.12 IT229E – Kvalitetssikring 31
  32. 32. MethodsDeming’s fourteen Principles for transformation13. Institute a vigorous education and self-improvement program  People must continuously improve, if the organization is to improve  Staff is the organizations most important resource  Knowledge is the competitive advantage14. Put everyone in the company to work to accomplish the transformation  A total approach must be taken  Requires a strong and cohesive culture  Commitment from top to bottom  Management must be consistent with their words: “walk the talk”12.10.12 IT229E – Kvalitetssikring 32
  33. 33. MethodsDeming’s seven-point action plan An action plan to implement the principles  What to do, not how to do it1. Management must agree on the meaning of the quality program, its implications and the direction to take2. Top management must accept and adopt the new philosophy3. Top management must communicate the plan and the necessity for it to the people in the organization12.10.12 IT229E – Kvalitetssikring 33
  34. 34. MethodsDeming’s seven-point action plan4. Every activity must be recognized as a step in a process and the customers of that process identified; the customers are responsible for the next stage of the process  Process based work flow, the processes are divided into stages  At every stage there are customers that must be identified and satisfied4. Each stage must adopt the Deming-Shewart cycle – PDCA – as the basis of quality improvement  Continuous improvement of every stage through the PDCA cycle  Acceptance of responsibility of the process and authority to develop and implement changes12.10.12 IT229E – Kvalitetssikring 34
  35. 35. MethodsDeming’s seven-point action plan6. Team working must be created and encouraged to improve inputs and outputs; everyone must be enabled to contribute to this process  Participation in team work can be seen in several levels: 1. A team culture within each process 2. Changes in one area may have implications in another: Team culture must be engendered between process owners 3. Sharing and developing improvements across processes6. An organization for quality must be constructed with the support of knowledgeable statisticians  Build an organization which reflects and nurtures the achievement of quality  Deming suggests the use of statisticians  Multidiscipline team shows the collaborate nature of achieving quality12.10.12 IT229E – Kvalitetssikring 35
  36. 36. Successes and failures Overall Deming can be said to have been successful Substantial success in Japanese industry After Japanese success he was able to turn his attention to America  Here he met “strong workforce resistance”: Deming had to revise his methods  Emphasis from quantitative to qualitative approach  Coded the “Seven Deadly Sins”12.10.12 IT229E – Kvalitetssikring 36
  37. 37. Successes and failures Flood (1993) acknowledges the principal strengths of Deming: 1. The systemic logic, particularly the idea of internal customer-supplier relationships 2. Management before technology 3. Emphasis on management leadership 4. The sound statistical approach 5. Awareness of different socio-cultural approach12.10.12 IT229E – Kvalitetssikring 37
  38. 38. Successes and failures Comments on Flood’s principal strengths: 1. The systemic and logical approach is seen through the “PDCA” cycle  Both personal and organizational improvement 2. Prioritization of management before technology represents a reversal of attitudes of many managers  Many look for external rather than internal factors as responsible for failures (94% belongs to managers) 2. Recognition of the importance of good leadership and motivation can be seen to reflect human relations theory12.10.12 IT229E – Kvalitetssikring 38
  39. 39. Successes and failures Comments on Flood’s principal strengths: 4. A strong quantitative base is fundamental to achievement of quality  “Do better”  “How much?”/”When”  We must know when success is achieved  Target orientation is motivational 4. Recognition of different cultural contexts is a vital strength  Essential in achieving success12.10.12 IT229E – Kvalitetssikring 39
  40. 40. Successes and failures Flood (1993) weaknesses: 1. Lack of well-defined methodology 2. The work is not adequately grounded in human relations theory 3. The approach will not help in an organization with a biased power structure12.10.12 IT229E – Kvalitetssikring 40
  41. 41. Successes and failures Comments on Flood’s weaknesses: 1. Deming suggests what to do without indicating how  May be empowering  Encourages experimentation and debate within each context 3. Deming is criticized for saying nothing about intervention in political and coercive situations  The second principle and the first three point in the action plan call on management to accept their responsibility for quality and productivity and to embrace the new philosophy  Deming’s approach rests on the attitude of the management12.10.12 IT229E – Kvalitetssikring 41
  42. 42. Critical review The foundation of Deming’s approach is seen in his statistical background and his training in the science of physics  Hard sciences, but make a major contribution to the field of quality The principles and practice of SPC have demonstrated considerable value to organizations  Have also given value to workers: rapid and personal feedback Deming’s work in relation to softer issues is considered narrow and underdeveloped The PDCA cycle is a directive to management and workers that continuous improvement is the purpose of the quality activity 12.10.12 IT229E – Kvalitetssikring 42
  43. 43. Critical review Deming references the service sector in his work  But places much emphasis on quantitative aspects Managers measure things that are easy to measure  Things that are difficult to measure, but of greater importance, are not measured  In a world of telecommunication devices, these aspects will have increasingly importance 12.10.12 IT229E – Kvalitetssikring 43
  44. 44. Critical review Deming has made a substantial contribution to quality management, but he should have  Provided a clearer method  More explicit and developed recognition of human aspects  A precise focus on what constitutes quality of service 12.10.12 IT229E – Kvalitetssikring 44
  45. 45. Oppgaver1. Hvilke 4 prinsipielle metoder har Deming?2. Forklar prinsippene og målet ved Deming-Shewart hjulet (PDCA cycle).3. Hva er formålet med Demings sju punkts aksjons plan.4. Deming mener at 94% av kvalitetsproblemene er ansvar som ligger hos ledelse. Diskuter denne påstanden.5. Diskuter prinsipp 3, ”Cease the dependence on mass inspection to achieve quality, by building quality into the product”. Hva menes?6. En av de syv dødelige synder (sykdommer) er ”Kortsiktig fokus på profitt”. Hva mener Deming med dette? Ser vi det i bedrifter i Norge i dag? Har du eksempler?7. På hvilken måte er Demings metode både kvantitativ og kvalitativ?12.10.12 IT229E – Kvalitetssikring 45