Deming

1. Dr. W. Edwards Deming and Quality Management

2. Dr. Deming BiographyAmerican Statistician, Professor, Author, Lecturer, and Consultant • Born October 14, 1900 in Sioux City Iowa • Died December 20, 1993 • BS in electrical engineering from the University of Wyoming 1921 • MS in Mathematics & Mathematical Physics from the University of Colorado 1925 • PHD in in Mathematics & Mathematical Physics from Yale 1928 • Mathematical physicist at the United States Department of Agriculture (1927–39) • Statistical Advisor US Census Bureau 1935-1945 • Professor of Statistics at NY University 1946-1993 • As a census consultant under general Douglas MacArthur taught statistical control methods to Japanese business leaders • 1947 – taught Japanese engineers and managers statistical process controls – the message: improving quality will reduce expenses while increasing productivity and market share. • Credited with enabling Japan to become a world business power by the 1980’s due to image of quality • 1979-1982 – worked for Ford Motor Co. credited for making Ford the most profitable US Auto manufacturer by 1986

3. Deming Philosophy Synopsis The philosophy of W. Edwards Deming has been summarized as follows: • "Dr. W. Edwards Deming taught that by adopting appropriate principles of management, organizations can increase quality and simultaneously reduce costs (by reducing waste, rework, staff attrition and litigation while increasing customer loyalty). The key is to practice continual improvement and think of manufacturing as a system, not as bits and pieces."

4. Deming Philosophy Synopsis – con’t. • In the 1970s, Dr. Deming's philosophy was summarized by some of his Japanese proponents with the following 'a'-versus-'b' comparison: • (a) When people and organizations focus primarily on quality, defined by the following ratio: QUALITY = • quality tends to increase and costs fall over time. • (b) However, when people and organizations focus primarily on costs, costs tend to rise and quality declines over time. Results of Work Efforts Total Costs

5. The Deming System of Profound Knowledge • "The prevailing style of management must undergo transformation. A system cannot understand itself. The transformation requires a view from outside”. • "The first step is transformation of the individual. This transformation is discontinuous. It comes from understanding of the system of profound knowledge. The individual, transformed, will perceive new meaning to his life, to events, to numbers, to interactions between people”. • "Once the individual understands the system of profound knowledge, he will apply its principles in every kind of relationship with other people. He will have a basis for judgment of his own decisions and for transformation of the organizations that he belongs to”.

6. The Deming System of Profound Knowledge • The individual, once transformed, will: • Set an example; • Be a good listener, but will not compromise; • Continually teach other people; and • Help people to pull away from their current practices and beliefs and move into the new philosophy without a feeling of guilt about the past."

7. The Deming System of Profound Knowledge • Deming advocated that all managers need to have what he called a System of Profound Knowledge, consisting of four parts: • Appreciation of a system: understanding the overall processes involving suppliers, producers, and customers (or recipients) of goods and services (explained below); • Knowledge of variation: the range and causes of variation in quality, and use of statistical sampling in measurements; • Theory of knowledge: the concepts explaining knowledge and the limits of what can be known; • Knowledge of psychology: concepts of human nature.

8. The Deming System of Profound Knowledge Deming explained: • "One need not be eminent in any part nor in all four parts in order to understand it and to apply it. “ • "The various segments of the system of profound knowledge proposed here cannot be separated. They interact with each other. Thus, knowledge of psychology is incomplete without knowledge of variation.” • "A manager of people needs to understand that all people are different. This is not ranking people. He needs to understand that the performance of anyone is governed largely by the system that he works in, the responsibility of management."

9. The Deming System of Profound Knowledge The Appreciation of a system: Involves understanding how interactions (i.e., feedback) between the elements of a system can result in internal restrictions that force the system to behave as a single organism that automatically seeks a steady state. It is this steady state that determines the output of the system rather than the individual elements. Thus it is the structure of the organization rather than the employees, alone, which holds the key to improving the quality of output.

10. The Deming System of Profound Knowledge The Knowledge of variation: • Involves understanding that everything measured consists of both "normal" variation due to the flexibility of the system and of "special causes" that create defects. • Quality involves recognizing the difference to eliminate "special causes" while controlling normal variation. • Deming taught that making changes in response to "normal" variation would only make the system perform worse. Understanding variation includes the mathematical certainty that variation will normally occur within six standard deviations of the mean.

11. Deming’s 14 Key principles • The System of Profound Knowledge is the basis for application of Deming's famous 14 Points for Management. • Deming offered fourteen key principles for management for transforming business effectiveness. • The points were first presented in his book Out of the Crisis. • Although Deming does not use the term in his book, it is credited with launching the Total Quality Management movement.

12. Deming’s 14 Key principles – 1Constancy of Purpose Create constancy of purpose for continual improvement of products and service to society, allocating resources to provide for long range needs rather than only short Term profitability, with a plan to become competitive, to stay in business, and to provide jobs. Developing the organizations goals and philosophy • Long term view • Stating the Organization’s goals and philosophy • Self examination – where are we • Developing a Mission Statement • Making the Mission Statement a “Living” document

13. Deming’s 14 Key principles – 2Adopt the new philosophy We are in a new economic age, created in Japan. We can no longer live with commonly accepted levels of delays, mistakes, defective materials, and defective workmanship. Transformation of Western management style is necessary to halt the continued decline of business and industry. Understanding the Philosophy of never-Ending Improvement • Customer satisfaction • Managing for success instead of failure • Identify and remove barriers to achieving quality • Get everyone involved in the quality journey

14. Deming’s 14 Key principles – 3Cease the need for mass inspection Eliminate the need for mass inspection as the way of life to achieve quality by building quality into the product in the first place. Require statistical evidence of built in quality in both manufacturing and purchasing functions. Replacing mass inspection with Never-Ending improvement • Develop a plan that minimizes the total cost of incoming materials and final product • Inspect all or none rule • Commit to examining the process over time

15. Deming’s 14 Key principles – 4End lowest tender contracts End the practice of awarding business solely on the basis of price tag. Instead require meaningful measures of quality along with price. Reduce the number of suppliers for the same item by eliminating those that do not qualify with statistical and other evidence of quality. The aim is to minimize total cost, not merely initial cost, by minimizing variation. This may be achieved by moving toward a single supplier for any one item, on a long term relationship of loyalty and trust. Changing the philosophy of purchasing • Price has no meaning without a measure of quality being purchased – do not make cost the sole decision factor • Move from multiple to single source relationships • Long term relationship between the vendor and buyer • The lowest price or bidder means poorer quality

16. Deming’s 14 Key principles – 5Improve every process Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs. Improving the system • Management has responsibility for the “system” • Continual reduction of waste • Continual improvement in quality in every activity • Management to define operational definitions/communication • Use of Control Charts, flow Charts, Check Sheets, Pareto Diagrams, Brainstorming, Fishbone (cause and Effect), Histograms, Scatter Diagrams for managing quality • Shewhart Cycle – “Plan/Do/Check/Act”

17. Deming’s 14 Key principles – 6Institute training on the job Institute modern methods of training on the job for all, including management, to make better use of every employee. New skills are required to keep up with changes in materials, methods, product and service design, machinery, techniques, and service. Instituting Modern Training Methods • Training in the organizational philosophy • On-going integrated approach to an employees growth • Learn how to perform the job • All employees should learn Dr. Deming’s 14 points • Realize that training is part of everyone’s job • Use statistical methods to determine workers capability • Training that offers employees a share in the overall philosophy and goals for the organization

18. Deming’s 14 Key principles – 7Institute leadership Institute leadership - the aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers. Supervising Never-Ending improvement • People are penalized for things beyond their control • Management should remove causes for system variation • Create a positive supportive atmosphere • Eliminate fear and mistrust • Encourage coaching • Extract feedback • Workers have to give new systems a chance

19. Deming’s 14 Key principles – 8Drive out fear Encourage effective two way communication and other means to drive out fear throughout the organization so that everybody may work effectively and more productively for the company. Driving out fear: • Fear causes stress, emotional problems, and absenteeism • Caused by feeling powerless and having no control • Do not use as a motivator get people to work in teams • Elimination of fear starts at the top • Open channels of communication • Interaction with the organization - Training in company goals • Organize and structure teams • What is the job, is acceptable, what is not acceptable • Reward teamwork, quality, and creativity

20. Deming’s 14 Key principles – 9Break down barriers Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service. Breaking down organizational barriers: • Employees roles become functional • Problems in competition, communication and fear arise • Staff areas have to work as an integrated whole • Customer and employee surveys should be done • Improve communication upwards and downwards • Eliminate performance appraisals • Training to reduce barriers

21. Deming’s 14 Key principles – 10Eliminate exhortations Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force. Replacing numerical goals, posters and slogans with Never- Ending improvement • Change to system to help employees achieve goals • Identify problems/barriers that are causing goals not to be met and eliminate them – get rid of management by objectives • Goals must be focused on the company’s mission in the future • Goals must have an organizational purpose and aligned with the job

22. Deming’s 14 Key principles – 11Eliminate arbitrary numerical targets Eliminate work standards (quotas) on the factory floor. Substitute leadership. Eliminate management by objective. Eliminate management by numbers, Numerical goals. Substitute aids and helpful leadership in order to achieve continual improvement of quality and productivity. Replace management by numbers with Never-Ending Improvement • Quotas and standards focus on quantity not quality • Replace with statistical methods, leadership and training • Identify process improvements • By focusing on quality through the use of statistical methods, management provides a roadmap for never-ending improvement

23. Deming’s 14 Key principles – 12Permit pride in workmanship Remove barriers that rob the hourly worker of his right to pride of workmanship. Promoting pride of workmanship: • The responsibility of supervisors must be changed from sheer numbers to quality. • This means, inter alia," abolishment of the annual or merit rating and of management by objectives • Involve employees at all levels of process improvement • Operationally define job descriptions • Meet basic work-related needs of employees • Supply employees with the proper tools, materials, & methods

24. Deming’s 14 Key principles -13Encourage education Institute a vigorous program of education and self- improvement,. What an organization needs is not just good people; it needs people that are improving with education. Educating and retraining everyone: • Should develop employees for changes in their current jobs • In the organization’s mission and goals • Statistical training • View training as long term for the individual • In fields related to the employees current job • The employees personal improvement • Failure to do this creates loss of resources in the future

25. Deming’s 14 Key principles – 14Top management commitment to action Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job. Clearly define top management's permanent commitment to ever improving quality and productivity, and their obligation to implement all of these principles. Indeed, it is not enough that top management commit themselves for life to quality and productivity. They must know what it is that they are committed to—that is, what they must do. Create a structure in top management that will push every day on the preceding 13 Points, and take action in order to accomplish the transformation. Support is not enough: action is required!

26. The Seven Deadly Diseases The "Seven Deadly Diseases" include: • Lack of constancy of purpose • Emphasis on short-term profits • Evaluation by performance, merit rating, or annual review of performance • Mobility of management • Running a company on visible figures alone • Excessive medical costs • Excessive costs of warranty, fueled by lawyers who work for contingency fees

27. Dr. Deming Quotations • “There is no substitute for knowledge." • “In God we trust; all others must bring data.” • “The most important things cannot be measured." • "The most important things are unknown or unknowable." • "Experience by itself teaches nothing.” • "You can expect what you inspect." • The problem is at the top; management is the problem." • "A system must be managed. It will not manage itself. Left to themselves in the Western world, components become selfish, competitive. We can not afford the destructive effect of competition."