Summary by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida
Quality Related
Main Page | Deming's
Management Theory Main Page
Part I. The Global Marketplace
"Welcome to the new economic order - the global marketplace - where every business is one flight away from every consumer, where companies worldwide now vie for consumer product loyalty, from automobiles to roses, and where the customer is king. Advances in transportation and communication have revolutionized the way we do business. For business purposes, reporter Lloyd Dobyns tells us in the first program, national boundaries don't mean much. It is no longer a question of where something was made or grown. The question is how well it was done. Consumers want quality - or else."
As indicated in the paragraph above, the first part introduces the concept of global or world wide economics and competition. What does this mean?
1. 70% of the goods produced in the U.S. must compete with goods produced outside the U.S.
2. The old rules of quantity give way to the new rules of quality. The old competitive strategy of cost minimization using economies of scale is no longer good enough to maintain global competitiveness.
3. The only factors of production that are immobile are people and infrastructure, i.e., roads, transportation systems, communication systems, education systems etc.
4. Companies and countries can compete with no natural resources using technology and a knowledgeable workforce.
5. This makes strong education and training programs important for both the college and non-college bound students.
6. Quality expectations are not as high in the U.S. as in Japan and other parts of the world.
7. Their are two kinds of quality. Design quality and conformance quality. Design quality refers to the difference between a Chevrolet and a Cadillac (See Morse summary). Conformance quality refers to whether the product meets engineering and customer expectations. This was not mentioned during the program.
8. Quality should be designed in, not inspected in. (Siemens)
9. Money (and jobs) go to where the returns are the highest.
10. U.S. states are competing against each other to obtain foreign investment and new plants.
Part II. Change to Survive: A Brand New Ball Game
"Change, especially in the corporate world, is a disruptive, risky, often wrenching process. But change-- immediate change-- is exactly what's demanded if American companies are to stay competitive in the new global marketplace. The change to quality management is not cosmetic, Loyde Dobyns says in Program Two. A new coat of paint won't do. This is a basic change in how we work and live, and companies that won't work, won't live."
Part two focuses on the U.S. and Japan because they best illustrate how the world has changed. America's dominance of the world economy no longer exist, mainly but not entirely because of Japan. (Note: This is no longer true, but it was in 1992. See the world competitiveness reports for recent rankings). Many companies have not recognized the change and may end up like the boiled frog . If you drop a frog into boiling water, it will jump out instantly. Place a frog in a pot of cool water and turn up the heat slowly. It will boil. (Friend consoling bereaved widow ). Since no American president or congressional leader has admitted that we have a problem, many American companies may boil before they recognize the threat.
Nationalism becomes less important as people live better. Past $5,000 per capita income and people forget nationalism.
Many companies have changed to a Deming quality management system. Louisville Sluggers, Florida Power, General Motors, Harley Davidson, AT&T. Converted to pull systems from push systems, bottom-up employee empowerment systems from top-down command and control systems, management by facts with data rather than cowboy management, recognizing that replacing people with machines does not solve the quality problem. NUMI GM-Toyota joint venture example. Workers brought into the process. Changed the relationship between management and labor union. Developed a new culture.
It takes groups to solve problems. The town is the hero, not an individual who rides in to clean up the town like the Lone Ranger, or Rambo. Teamwork is in, Cowboy management is out.
Companies cannot create wealth with financial fiddling. The most important elements of a nation or business are the skills and talents of its people and how they are managed.
Two ways to achieve quality:
1. The new quality system with 100% quality designed in.
2. The old inspection approach.
For Americans, perfection is death. What do you do next? We need a new frontier. Continuous improvement is boring. If there is no Pearl Harbor, we don't care. We need a crisis.
The relationship between government and business is very important. Herbert Striner's (American University professor) study indicated that countries that view government as part of the solution (France, Italy, Germany, Japan, Sweden, Spain, Belgium and Canada) had a 45% greater productivity growth between 1970-1988 than countries where government is viewed as part of the problem (U.S., U.K. and Australia). The point: Public and private cooperation is needed to support growth. They mention various industries such as telegraph, aviation, agriculture and also the infrastructure to make the point. American infrastructure is in desperate need of repair. (See the ASCE report card summary for support for this statement).
A company in the global economy is like Alice in wonderland. Everything is changing. The mallet is a flamingo, the wickets are moving cards, the ball is a hedgehog who moves unexpectedly. The tools of management, employees and customers are constantly changing. Even the structure of industry is changing.
Part III. How to Hit the Moving Target
"Quality works not only in manufacturing," Lloyd Dobyns tells us at the start of Program Three, "but also in services, hospitals, government, and even schools. It is a revolution in everything we do." This hour is about the basics of a successful quality program: common vision, statistical thinking, a knowledge of systems, and continual improvement. It is about changing relationships among people who work together - manager, blue collar worker, engineer, dock worker, salesman, union leader, nurse, doctor, supplier, teacher, student, and customer.
Survival means Quality in everything and every part of the organization.
Story boards - Example showing how story boards map the work process.
The work process is the problem - too many steps and too many layers.
The following "three rings" illustration is attributed to Myron Tribus who was a colleague of W. E. Deming.
The Education system relates to the interaction among the parts.
The Management system relates to how the system is organized.
The Social system is the culture of the organization, the relationships between people. (What is culture? See the Hofstede Summary ).
The Technical system refers to statistical and other tools.
The program continues with:
Quality is a mental process.
A Waitresses charting customer preferences.
Features some of the recipients of the Malcome Baldridge Award.
People = The only asset that a business has that another business cannot duplicate.
Quality programs focus on the process - Producing quality, not controlling quality.
An example of how the quality concepts are being used in a school in Alaska.
A presentation by some high school students went something like the following:
Snow White analogy: Four animals.
| Will | Belief | Wherewithal | Doing |
| Must want to change | Must believe that the system can be changed |
Must understand how to use statistical analysis and other tools |
Must do it |
The keys to total quality:
1. Management commitment.
2. Training and education.
3. Statistical analysis.
4. Cooperation across the board.
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Related summaries:
Albright, T. L. and H. Roth. 1992. The measurement of quality costs: An alternative paradigm. Accounting Horizons (June): 15-27. (Summary).
Albright, T. L. and H. P. Roth. 1994. Managing quality through the quality loss function. Journal of Cost Management (Winter): 20-37. (Summary).
Deming, W. E. 1993. The New Economics for Industry For Industry, Government & Education. Cambridge: Massachusetts Institute of Technology Center for Advanced Engineering Study. Chapter 10. (Summary).
Kim, M. W. and W. M. Liao. 1994. Estimating hidden quality costs with quality loss functions. Accounting Horizons (March): 8-18. (Summary).
Martin, J. R. Not dated. Constrained optimization techniques. Management And Accounting Web. ConstrainoptTechs
Martin, J. R. Not dated. What is Six Sigma? Management And Accounting Web. SixSigmaSummary
Morse, W. J. 1983. Measuring quality costs. Cost and Management (July-August): 16-20. (Summary).
Pasewark, W.R. 1991. The evolution of quality control costs in U.S. manufacturing. Journal of Cost Management (Spring): 46-52. (Summary).
Roehm, H. A., D. Klein and J. F. Castellano. 1995. Blending quality theories for continuous improvement. Management Accounting (February): 26-32. (Summary).
