Introduction to Industrial Engineering

By Jane M. Fraser

Chapter 5

The IE Approach

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5.4 Deming’s 14 points,

W. Edwards Deming (1900-1993) applied statistical process control during World War II to help the US mobilize its war time production. After the war, Deming tried to get US companies to continue to use these ideas, but he found little response. US Manufacturers were facing soaring demand from consumers after the war, and felt little need to think about efficiency and quality. In 1950 JUSE (the Union of Japanese Scientists and Engineers), on the other hand, invited Deming to Japan to help apply the Japanese apply these ideas in the rebuilding of Japanese production.

Japan credits Deming for planing a major role in the success of Japanese manufacturing products, especially in Japanese improvements in quality and efficency. The most prestigious award for quality improvement awarded in Japan (by JUSE) is called the Deming Prize.

Several anecdotes illustrate what Deming was like.

In 1980, NBC aired a documentary titled “If Japan Can ... Why Can’t We?” that described Japanese progress in efficiency and quality in the automobile and electronics industries, and that also explained why the Japanese credited Deming with much of their success. As Deming said, his phone rang off the hook. I'll talk more about the history of Japan, Deming, and US companies in Chapter 12.

What did Deming teach the Japanese? In his book Out of the Crisis, published in 1986: Deming summarized his teaching in the following 14 points,

  1. Create constancy of purpose towards improvement of product and service, with the aim to become competitive, stay in business, and to provide jobs.
  2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for a change.
  3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.
  4. End the practice of awarding business on the basis of price tag. Instead minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.
  5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.
  6. Institute training on the job.
  7. 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.
  8. Drive out fear, so that everyone may work effectively for the company.
  9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in that may be encountered with the product or service.
  10. 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.
  11. a. Eliminate works standards (quotas) on the factory floor. Substitute leadership.
    b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.
  12. a. Remove barriers that rob the hourly worker of his right to pride of workmanship the responsibility of supervisors must be changed from sheer numbers to quality.
    b. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating and of management by objective.
  13. Institute a vigorous program of education and self-improvement.
  14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody’s job.

Deming often lamented that some managers liked some of his points, but rejected others. Deming said his 14 points were not a menu from which a manager could choose.

More than the other frameworks in this chapter, Deming’s principles are about people. Regarding “drive out fear,” Deming elaborated:

“No one can put his best performance unless he feels secure. Se comes from the Latin, meaning without, cure means fear or care. Secure means without fear, not afraid to express ideas, not afraid to ask questions. Fear takes on many faces. A common denominator of fear in any form, anywhere, is loss from impaired performance and padded figures.” (Out of the Crisis, page 59)

In point 10, Deming says that the primary cause of poor work is not lack of effort by workers.

“Eliminate targets, slogans, exhortations, posters, for the work force that urge them to increase productivity. 'Your work is your self-portrait. Would you sign it?' No – not when you give me defective canvas to work with, paint not suited to the job, brushes worn out, so that I can not call it my work. Posters and slogans like these never helped anyone to do a better job.” (Out of the Crisis, page 65)

Deming was famous for insisting on measurements, but he also thought numbers should not be used to judge workers.

“Goals are necessary for you and for me, but numerical goals set for other people, without a road map to reach the goal, have effects opposite to the effects sought.” (Out of the Crisis, page 69)

Deming emphasized repeatedly the need to remove barriers that prevent good work.

“Give the work force a chance to work with pride, and the 3 per cent that apparently don't care will erode itself by peer pressure.” (Out of the Crisis, page 85)

He said that the annual rating of individuals should be eliminated.

“The day is here when anyone deprived of a raise or of any privilege through misuse of figures for performance (as by ranking the people in a group) may with justice file a grievance.” (Out of the Crisis, page 118)

Deming is often quoted as saying "Measure, measure, measure," but he stressed using that feedback to improve the process, not to judge the performance of employees. Denove and Power describe the work of J.D. Power and Associates in performing customer satisfaction surveys for many companies. Denove and Power stress that companies that listen to the voice of the customer from these surveys (and other input) are more profitable, but they lament that some companies use the surveys to judge particular stores, particularly to incentivize the managers of stores by making their salaries dependent on the customer satisfaction score. They point out the natural effect of such a strategy: employees in the stores will seek to manipulate the customer satisfaction ratings, even to the extent of begging customers to give good reviews.

By focusing corporate attention on customer satifaction scores, did we somehow let a very powerful genie out of the bottle? As we've said many times throughout this book, our goals is to emphasize some crucial truths: listening to the needs of your customers and creating advocates by striving to deliver upong those needs are paramount to long-term profitability. We never meant for companies to take their eyes off these basic truths by focusing their attention exclusively on the scorecard. (page 228)

The lesson here is that no single quantitative measure, or even a group of such measures, can replace good judgment.

Fundamentally, Deming believed in people.

“People require in their careers, more than money, ever-broadening opportunities to add something to society, materially and otherwise.” (Out of the Crisis, page 85)

“People stay home or look around for another job when they can not take pride in their work. Absenteeism and mobility are largely creations of poor supervision and poor management.” (page 121)

While I have focused on Deming’s 14 points, other quality gurus have made similar points. For example, in Quality without Tears, Philip B. Crosby lists 21 points under five headings that make up the Crosby Quality Vaccine: Integrity, Systems, Communications, Operations, and Policies. These features must be present to have a quality organization. Point C under Communications is:

“Each person in the company can, with very little effort, identify error, waste, opportunity, or any other concern to top management quickly -- and receive an immediate answer” (pages 7-8).

Like Deming, Crosby blames management for a lack of quality; he cites as the most important symptom of a troubled organization:

“Management denies that it is the cause of the problem” (page 5).

Feigenbaum points out the high costs of poor quality, which he breaks into costs of prevention (management, training, etc.), costs of appraisal (incoming inspection, calibration, maintenance, testing), costs of internal failure (scrap and rework), and costs of external failure (warranty expenses and customer services) (page 115). He also says (page 77)

“Quality must be designed and built into a product; it can not be exhorted or inspected into it.”

According to Feigenbaum, a Total Quality System is achieved by considering

“both how well each person, each machine, and each organization component works individually and how they all work together.” (page 85)

Feigenbaum lists 12 points that describe an effective quality system (pages 107-108). Point 7 says that the system

“makes quality motivation a continuous process of quality goals, quality measurements, and an attitude of quality-mindedness beginning with general management.”