Deming is famous for his 14 points, which he referred to as ‘the basis for the transformation of
American industry’ (Dahlgard et a1.1995). These points are:
- Constantly improve the quality of products and services
- Adopt the new philosophy
- Eliminate he need for mass inspection
- End the practice of choosing suppliers on the basis of price alone 5. Constantly improve the system
- Institute training on the job
- Institute leadership
- Drive out fear
- Break down barriers between departments
- Eliminate slogans, exhortations and arbitrary targets for the workforce
- Eliminate numerical quotas for the workforce and the management
- Create pride
- Institute a vigorous programme of education and self-improvement for everyone
- Make everyone in the firm take action to accomplish the transformation
It is not necessary to implement the points in the above order. Also, the points are quite interdependent-for example, nine points are dependent on point 8 (‘drive out fear’), which
Deming himself considered a key point. Deming did not give managers the liberty to selectively apply these points. ‘Don’t say you’re going to obey some of them but not the others.’
Deming himself described these 14 points as the outcome of his system of profound knowledge.
He described profound knowledge as ‘knowledge or leadership of transformation’ and stressed upon the need to apply profound knowledge instead of perpetuating the practices conventionally advocated by business schools. ‘The purpose of a school of business should not be to perpetuate the present style of management, but to transform it’ (Deming 1993)
Deming started that profound knowledge was composed of four interrelated pats:
- Appreciation for a system
- Knowledge of variation
- Theory of knowledge
Deming’s discussion of these components provides a fascinating insight into his basic tenets.
Appreciation for a System: Deming defined a system as ‘a network of interdependent components that work together to try to accomplish the aim of the system. He emphasised the following attributes of a system:
- Without an aim, there is no system. This aim must be clear to everyone in the system and must include plans for the future. The aim is a value judgment.
- The components need not be clearly defined and documented.
- A system must be managed to ensure that work is done toward the aim of the system.
Left to themselves, the components tend to become ‘selfish, competitive, independent profit centres’.
- The recommended aim for any organisation is ‘for everybody to gain- . Stockholders, employees, suppliers, customers, community, the environment–over the long term’.
- A system includes competitors. Deming has noted that adversarial competition between companies often leads to lose-lose situations.
Though these concepts seem to be highly abstruse, they led Deming to come out with the diagram shown in Figure 3.6. This diagram seems deceptively simple. As Deming described it:
The flow diagram was the spark that in 1950 and onward turned Japan around. It displayed to top management and to engineers a system of production. The Japanese had knowledge, great knowledge, but it was in bits and pieces, uncoordinated. This flow diagram directed their knowledge and efforts into a system of production geared to the market. The whole world knows about the results. This simple flow diagram was on the blackboard at every conference with top management in 1950 and onward. It was on the blackboard in the teaching of engineers. This diagram, as an organisation chart, is far more meaningful than the usual pyramid. It shows the chain of command and accountability. If a pyramid conveys any message at all, it is that anybody should first and foremost try to satisfy his boss (get a good rating). The customer is not in the pyramid.
Figure 3.6: Deming’s View of Production as a System (circa 1950). Improvement in quality envelopes the entire production line, from incoming materials to the customer, and redesign of the product and service for the future.
Knowledge of Variation: The crux of Deming’s philosophy lies in his emphasis on the understanding of variations. Understanding the variability inherent to a process helps us to avoid two kinds of mistakes:
- To react to an outcome as if it came from a special cause, when it actually came from common causes of variation.
- To treat an outcome as if it came from common causes of variation, when it actually came from a special cause.
Statisticians are familiar with these two types of errors-they call them Type 1 and Type 2 errors.
In his training seminars, Deming used to teach the principles of the knowledge of variations through his famous red beads experiment, briefly described here:
- Material used: 4,000 wooden beads about 3 mm in diameter. Of these 800 are red and 3,200 white. A paddle with 50 depressions that will scoop up 50 beads.
- Procedure: The foreman (Deming) invites 10 volunteers (6 willing workers, 2 inspectors, 1 inspector general and 1 recorder) from the audience. The workers are to scoop up 50 beads (symbolising one production lot) at a time from the mixed beads. The customer wants only white beads, not red ones. Red beads are thus treated as defects. Management has declared a numerical goal: not more than three defects in a production lot.
- Results: The percentage of defects (red beads) in each production lot is found to vary within an upper and lower control limit. Because of the foreman’s exhortations, threats and cajoling, the workers put in their best efforts, but they are unable to meet the target of 3 defects per production lot, and the company winds up. Workers who produce less red beads are rewarded, but they do not maintain their superior performance. The plant winds up.
- Lessons: The workers were working in the same environment, the same beads (raw material), the same paddle (equipment) and the same procedures (operations) and the same foreman (leadership). The variation in the output was built into the operation itself. There was nothing the workers could have done about it.
The control chart is a tool which helps people in the organisation to distinguish between variations that are due to common causes (that is, they are within the limits prescribed by the variability inherent to a process) and those due to special causes. A process is said to be in a stable state the so-called state of statistical control-if the outputs produced by it are within the upper and lower control limits. There are well-known procedures for calculating these limits, which we will not go into here.
Control charts have been designed for the mean and range of a continuous variable (e.g. the diameter of a shaft), the number of defects per sample, the number of defective items in a sample and so in. Cumulative Sum (CUSUM) charts are used because of their power to detect trends in variation.
Figure 3.7 shows what a control chart may look like. Our objective here is to explain the use of a control chart, and not its mechanics. Shewhart, the inventor of control charts, referred to chance and assignable causes of variation. Deming later used the terms common and special causes. The essence of applying control charts in simple (Deming 1993) words is: ‘Plot points. A point outside the control limits is a signal (an operational definition for action) of a special cause (called by Dr Shewhart an assignable cause), which indicates the need for action-try to identify the special cause, and if it can recur, eliminate it.’
Figure 3.7: Example of a Control Chart. The chart plots the arrival time of a school bus at a time and lower control limits have been calculated according to standard rules based on ability distribution. The chart shows that there is no point in blaming the driver for not at 8.30 a.m. The variability in arrival time is due to common causes; probably traffic arrival time with the new driver exceeds the UCL. This is assignable to a special cause.
Controls charts are a cornerstone of the implementation of Deming’s Philosophy. The steps prescribed by him for the effective use of control charts are (Deming 1993):
- Decide what quality characteristic to plot, what kind of chart may be Plan for data collection. Decide scales for format of the chart eve statistical control of the system of measurement
- Start the chart; consider revision of the plan in the light of observations.
- Work on special causes (indicated by a point outside the control limits).
- Reach a state of statistical control.
- Work on some change in the process for improvement resulting in (a) less variation (b) a different mean level. If no change is made, drop the chart. Restore it periodically to learn whether statistical control continues.
Thus, Deming intended control charts to be used as only tools for tangible governments in processes. Attaining statistical control was only as end. Deming viewed the first three steps as the responsibility and people working close to the process, and the last step as responsibility of management
Theory of Knowledge: According to Deming, ‘the theory of knowledge teaches us that a statement, if it conveys knowledge, predicts future outcome, with risk of being wrong and that it fits without failure observations of the past’. Deming cites the parable of a rooster who had a theory that the sun rose every morning because of his crowing. One morning, he forgot to crow and the sun still rose. The shattered rooster realised that his theory needed revision. Others may infer from this example that the theory is useless. Deming uses the example to illustrate that if the rooster did not have a theory, there would be nothing to revise. Deming believed that ‘information, no matter how complete and speedy, is not knowledge. Knowledge has temporal spread.
Knowledge comes from theory.’
The quest for knowledge, leading to continuous improvement, is sym1bolised in the famous
PDSA (Plan-Do-Study-Act) cycle. Deming introduced this cycle to the Japanese in 1950, calling it ‘The Shewhart Cycle for Learning and Improvement’, after its originator W. A. Shewhart. The
Japanese were so enamored of Deming’s teachings that they quickly took to this cycle and called it the Deming cycle instead. Some authors refer to the cycle as the PDCA (Plan-Do-Check-Act) cycle. Like Deming’s view of production as a system (Figure 3.6), the PDSA cycle is deceptively simple. The change in mentality that it wrought was far-reaching. Kaizen and the continuous improvement philosophy were outcomes of the line of thinking embodied in this cycle.
Psychology: Deming has strongly criticized systems of forced ranking, rating and rewards. As he puts it (Deming 1993), ‘People are born with a need for relationships with other people and need love and esteem by others. One is born with a natural inclination to learn. Learning is a source of innovation. One inherits a right to enjoy his work. Good management helps us to nurture and preserve these positive innate attributes of people. ‘Deming distinguishes between extrinsic motivation (such as that provided by financial incentives) and intrinsic motivation (which results from the workers’ sense of pride and ownership in work). This is the reasoning behind his points 10, 11 and 12. The ‘forces of destruction’, which destroy the human self-esteem, dignity and joy in learning, include:
- Forced distribution of grades in schools
- Merit systems which put people into slots and cause resentment
- Incentive pay
- Numerical goals without a method
Figure 3.8: The PDSA Cycle
Deming’s teaching revoutionalised industry across the world. In the 1980s he was rediscovered by American managers as rediscovered by American managers as ‘The Man Who Disqualify’.
Beginning with the Ford Motor Company, a number of American companies turned to him for advice. His teachings remain greatly relevant to Indian industry today. However, his lofty philosophy was most visible translated into tangible manufacturing practices in the form of the statistical approach to quality control. This approach was rejected outright by pioneers of World.