Deming's 14 points

William Edwards Deming (October 14, 1900 – December 20, 1993) was an American statistician, professor, author,lecturer and consultant. He is best known for his work in Japan. From 1950 onward, he taught top management how to improve design (and thus service), product quality, testing, and sales through various methods, including the application of statistical methods.                                                          Deming made a significant contribution to Japan's later reputation for innovative high-quality products and its economic power. He is regarded as having had more impact upon Japanesemanufacturing and business than any other individual not of Japanese heritage. Despite being considered something of a hero in Japan, he was only just beginning to win widespread recognition in the U.S. at the time of his death. 
Dr. Deming's teachings and philosophy are best illustrated by examining the results they produced after they were adopted by Japanese industry.    Deming developed the sampling techniques that were used for the first time during the 1940 U.S. Census, formulating the Deming-Stephan algorithm for iterative proportional fitting in the process. During World War II, Deming was a member of the five-man Emergency Technical Committee. He worked with H.F. Dodge, A.G. Ashcroft, Leslie E. Simon, R.E. Wareham, and John Gaillard in the compilation of the American War Standards and taught statistical process control (SPC) techniques to workers engaged in wartime production. Statistical methods were widely applied during World War II, but faded into disuse a few years later in the face of huge overseas demand for American mass-produced products.

Work in Japan                                                                                                                               In 1947, Deming was involved in early planning for the 1951 Japanese Census. The Allied powers were occupying Japan, and he was asked by theUnited States Department of the Army to assist with the census. While in Japan, Deming's expertise in quality control techniques, combined with his involvement in Japanese society, led to his receiving an invitation from the Japanese Union of Scientists and Engineers (JUSE).                                                                                                                                                                                                                                                                                                         

From June–August 1950, Deming trained hundreds of engineers, managers, and scholars in statistical process control (SPC) and concepts of quality. He also conducted at least one session for top management. Deming's message to Japan's chief executives: improving quality will reduce expenses while increasing productivity and market share.                                                  A number of Japanese manufacturers applied his techniques widely and experienced thereto unheard-of levels of quality and productivity. The improved quality combined with the lowered cost created new international demand for Japanese products.

Deming philosophy synopsis

The philosophy of W. Edwards Deming has been summarized as follows:

 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.

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 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.

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 and 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. 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.

Deming advocated that all managers need to have what he called a System of Profound Knowledge, consisting of four parts:

1. Appreciation of a system: understanding the overall processes involving suppliers, producers, and customers (or recipients) of goods and services ;
2. Knowledge of variation: the range and causes of variation in quality, and use of statistical sampling in measurements;
3. Theory of knowledge: the concepts explaining knowledge and the limits of what can be known.
4. Knowledge of psychology: concepts of human nature.

Deming explained that one need not be eminent in any part nor in all four parts in order to understand it and to apply it. The 14 points for management in industry, education, and government follow naturally as application of this outside knowledge, for transformation from the present style of Western management to one of optimization.                                                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. A psychologist that possesses even a crude understanding of variation could no longer participate in refinement of a plan for ranking people.

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.                                                                                                                                           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.                                            The System of Profound Knowledge is the basis for application of Deming's famous 14 Points for Management as described below.

Key principles                                                                                                                           Deming offered fourteen key principles to managers for transforming business effectiveness. The points were first presented in his book Out of the Crisis. (p. 23-24). Although Deming does not use the term in his book, it is credited with launching the Total Quality Management movement. These point are as outlined below:

1. Create constancy of purpose toward 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. Therefore, management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.
3. Cease dependence on inspection to achieve quality. Eliminate the need for massive inspection by building quality into the product in the first place.
4. End the practice of awarding business on the basis of a price tag. Instead, minimize total cost. Move towards 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, machines and gadgets 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, in order to foresee problems of production and usage 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 work standards (quotas) on the factory floor. Substitute with leadership.
    (b). Eliminate management by objective. Eliminate management by numbers and numerical goals. Instead substitute with 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, 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.

Massive training is required to instill the courage to break with tradition. Every activity and every job is a part of the process.

Seven Deadly Obstacles                                                                                                               The "Seven Deadly Obstacles" include:

1. Lack of constancy of purpose
2. Emphasis on short-term profits
3. Evaluation by performance, merit rating, or annual review of performance
4. Mobility of management
5. Running a company on visible figures alone
6. Excessive medical costs
7. Excessive costs of warranty, fueled by lawyers who work for contingency fees

A Lesser Category of Obstacles includes;

1. Neglecting long-range planning.
2. Relying on technology to solve problems.
3. Seeking examples to follow rather than developing solutions.
4. Excuses, such as our problems are different.
5. Obsolescence in school that management skill can be taught in classes.
6. Reliance on quality control departments rather than management, supervisors, managers of purchasing and production workers.
7. Placing blame on workforces who are only responsible for 15% of mistakes where the system designed by management is responsible for 85% of the unintended consequences
8. Relying on quality inspection rather than improving product quality

Deming's advocacy of the Plan-Do-Check-Act cycle, his 14 Points, and Seven Deadly Diseases have had tremendous influence outside of manufacturing and have been applied in other arenas, such as in the relatively new field of sales process engineering.

Quotations and concepts

 Dr. Deming taught many concepts, which he emphasized by key sayings or quotations that he repeated. A number of these quotes are as follows;

• "There is no substitute for knowledge." This statement emphasizes the need to know more, about everything in the system. It is considered as a contrast to the old statement, "There is no substitute for hard work" by Thomas Alva Edison (1847–1931). Instead, a small amount of knowledge could save many hours of hard work.

• "The most important things cannot be measured." The issues that are most important, long term cannot be measured in advance. However, they might be among the factors that an organization is measuring, just not understood as most important at the time.

• "The most important things are unknown or unknowable." The factors that have the greatest impact, long term, can be quite surprising. Analogous to an earthquake that disrupts service; other "earth-shattering" events that most affect an organization will be unknown or unknowable, in advance. Other examples of important things would be: a drastic change in technology, or new investment capital.

• "Experience by itself teaches nothing." This statement emphasizes the need to interpret and apply information against a theory or framework of concepts that is the basis for knowledge about a system. It is considered as a contrast to the old statement, "Experience is the best teacher" (Dr. Deming disagreed with that). To Dr. Deming, knowledge is best taught by a master who explains the overall system through which experience is judged; experience without understanding the underlying system, is just raw data that can be misinterpreted against a flawed theory of reality. Deming's view of experience is related to Shewhart's concept, "Data has no meaning apart from its context".

• "By what method?... Only the method counts." When information is obtained, or data is measured, the method, or process used to gather information, greatly affects the results. For example, the "Hawthorne effect" showed that people just asking frequently for opinions seemed to affect the resulting outcome, since some people felt better just being asked for their opinion. Dr. Deming warned that basing judgments on customer complaints alone ignored the general population of other opinions, which should be judged together, such as in a statistical sample of the whole, not just isolated complaints: survey the entire group about their likes and dislikes .The extreme complaints might not represent the attitudes of the whole group. Similarly, measuring or counting data depends on the instrument or method used. Changing the method changes the results. Aim and method are essential. An aim without a method is useless. A method without an aim is dangerous. It leads to action without direction and without constancy of purpose. Deming used an illustration of washing a table to teach a lesson about the relationship between purpose and method. If you tell someone to wash a table, but not the reason for washing it, they cannot do the job properly (will the table be used for chopping food or potting plants?). That does not mean just giving the explanation without an operational definition. The information about why the table needs to be washed, and what is to be done with it, makes it possible to do the job intelligently.

• "You can expect what you inspect." Dr. Deming emphasized the importance of measuring and testing to predict typical results. If a phase consists of inputs + process + outputs, all 3 are inspected to some extent. Problems with inputs are a major source of trouble, but the process using those inputs can also have problems. By inspecting the inputs and the process more, the outputs can be better predicted, and inspected less. Rather than use mass inspection of every output product, the output can be statistically sampled in a cause-effect relationship through the process.

• "Special Causes and Common Causes": Dr. Deming considered anomalies in quality to be variations outside the control limits of a process. Such variations could be attributed to one-time events called "special causes" or to repeated events called "common causes" that hinder quality.

• Acceptable Defects: Rather than waste efforts on zero-defect goals, Dr. Deming stressed the importance of establishing a level of variation, or anomalies, acceptable to the recipient (or customer) in the next phase of a process. Often, some defects are quite acceptable, and efforts to remove all defects would be an excessive waste of time and money.

• The Deming Cycle (or Shewhart Cycle): As a repetitive process to determine the next action, the Deming Cycle describes a simple method to test information before making a major decision. The 4 steps in the Deming Cycle are: Plan-Do-Check-Act (PDCA), also known as Plan-Do-Study-Act or PDSA. Dr. Deming called the cycle the Shewhart Cycle, after Walter A. Shewhart. The cycle can be used in various ways, such as running an experiment: PLAN (design) the experiment; DO the experiment by performing the steps; CHECK the results by testing information; and ACT on the decisions based on those results.

• "The problem is at the top; management is the problem." Dr. Deming emphasized that the top-level management had to change to produce significant differences, in a long-term, continuous manner. As a consultant, Deming would offer advice to top-level managers, if asked repeatedly, in a continuous manner.

• "What is a system? A system is a network of interdependent components that work together to try to accomplish the aim of the system. A system must have an aim. Without an aim, there is no system. The aim of the system must be clear to everyone in the system. The aim must include plans for the future. The aim is a value judgment."

• "A system must be managed. It will not manage itself. Left to themselves in the Western world, components become selfish, competitive. We cannot afford the destructive effect of competition."

• "To successfully respond to the myriad of changes that shake the world, transformation into a new style of management is required. The route to take is what I call profound knowledge—knowledge for leadership of transformation."

• "The worker is not the problem. The problem is at the top Management!"  It is management’s job to direct the efforts of all components toward the aim of the system. The first step is clarification: everyone in the organization must understand the aim of the system, and how to direct his efforts toward it. Everyone must understand the damage and loss to the whole organization from a team that seeks to become a selfish, independent, profit centre."

• "They realized that the gains that you get by statistical methods are gains that you get without new machinery, without new people. Anybody can produce quality if he lowers his production rate. Statistical thinking and statistical methods are to Japanese production workers, foremen, and all the way through the company, a second language. In statistical control, you have a reproducible product hour after hour, day after day. And see how comforting that is to management, they now know what they can produce, they know what their costs are going to be."

• "Knowledge is theory. We should be thankful if action of management is based on theory. Knowledge has temporal spread. Information is not knowledge. The world is drowning in information but is slow in acquisition of knowledge. There is no substitute for knowledge." This statement emphasizes the need for theory of knowledge.