Quality and Awarding Business – A New Philosophy

Deming recognizes that once errors occur, efficiency and effectiveness have already been lost. Mass inspections to catch errors after they have occurred therefore need to be replaced by building in quality from the start. Continuous process improvement reduce costs incurred when errors are made and then corrected. The completion of high quality products also enhances employee satisfaction, because it enables employees to feel a sense of accomplishment and enables them to take pride in their work – no one enjoys producing junk.

The emphasis therefore moves to catching and correcting errors at “The source” – “where the work is performed. LL Bean the Northeast catalog retailer instituted a program to ensure that clothing fits the customer right the first time. In the past, the company would tell customers to order two different sizes, assuming one would fit. The new program emphasizing quality reduced costly product returns by tracking customer sizing problems. By doing it right the first time, LL Bean employees are able to please their customers and reduce costs.

End the practice of Awarding Business on Price Tag Alone:

Deming encourages companies to end adversarial relationships with their suppliers, and instead develop long term relationships with them. He argues that price is not relevant until it is linked to a measure of the quality being purchased. Statistical tools are very important in enabling companies to evaluate the quality of vendors and purchased parts.

General Motors (GM) uses information technology to maintain close relations with its suppliers. GM and many of its suppliers operate as nearly a single business. GM brings its suppliers into its internal organization through computer data linkups that blur the boundaries between GM and its suppliers. GM requires that its suppliers interact through a computer network. While remaining separate legal entities, GM and its suppliers have become virtually a single corporation through the computer link up. In addition, the link up improves productivity by saving time, reducing errors, and eliminating paper transactions such as purchase orders and invoices. The system therefore reduces the need for administrative personnel.

One of the ways Deming urges companies to improve relationship with suppliers is by developing partnerships based on trust with single sources. Procter and Gamble (P&G) used the single source method to improve quality. Batches of the company’s experimental drugs must be determined to be free of microbiological contamination before they can be released for use in clinical studies. The clearance service is performed by independent contractors. Before instituting total quality management, P&G contracted with five or six suppliers; the company now negotiates with a single “preferred” contractor and saves shipping and administrative expenses, in addition to other costs.

Constantly and forever improve the system of production and service:

According to Deming, management’s obligation to seek out methods for quality improvement is never ending. He believes that improvement follows from studying the process itself, not the defects, and that process improvement is the responsibility of management. In this regard, the recent focus on corporate reengineering is consistent with Deming’s teachings.

Institute modern methods of training on the job:

In Deming’s eyes, training encompasses more than merely teaching employees how to use tools, such as statistical quality control, from improving quality. Training also translates into making sure that workers get adequate knowledge and skills for the jobs for which they are responsible. Motorola University is built on this idea.

ASt the Will Burt Company, a small manufacturing firm in Orrville, Ohio, CEO Harry Featherstone instituted a comprehensive employee training program to combat a high parts rejection rate (in the neighborhood of 35 percent) Featherstone discovered that many employees struggled with skills essential to the performance of their jobs, such as reading blueprints. Initially, a voluntary basic math and blueprint reading class was offered, and eventually Featherstone implemented an extensive mandatory training program. Productivity improved remarkably: the cost of remaking pieces dropped more than $500,000 a year, with the time spent remaking parts dropping from 2,000 hours a month in the mid 1980s to 400 hours 1988.