“Deming’s 14 key principles to managers for transforming business effectiveness”

William Edwards Deming known for his 14 Points (Out of the Crisis, by W. Edwards Deming, preface) and his system of thought he called the “System of Profound Knowledge”, was an American engineer, statistician, professor, author, lecturer, and management consultant,

According to him, there can be considerable increase in the quality and parallel reduction in cost if these 14 principles are adhered to by the organizations.

The factors which may help in reduction in cost may include eliminating wastage, optimum utilization of resources, reduction in rework and repair cost, customer disputes etc.

The great scholar has advised the organizations for continuous improvement in a systematic way.

Source- research papers of scholars and publications of the Deming Institute and various other sources from online publications

Transformation Process

Introduction

“Quality is never an accident, it is always the result of high intention, sincere effort, intelligent direction, and skillful execution, it represents the wise choice of many alternatives”……….William A. Foster.

Every business organization whether dealing in manufacturing of goods or providing services to the customers is evaluated on the “Quality” of their work. Time has gone when numbers were important for measuring the actual performance of the organization. Now a days quality and performance go hand in hand. Moreover it has been rightly said that that “Quality attracts Quality, People want to be on a good show”, which is also evident from the fact that Quality concern has now become a part of modern management philosophy. Japanese businesses like Toyota, Fuji, and Sony saw great success once they started focusing on the maintenance of quality as the foremost parameter for achieving the desired objectives of cost reduction and capturing market effectively based upon a certain set of defined principles. One thing was common among all these concerns that they were working on the principles derived by William Edwards Deming. In fact these principles have become a standard reference for quality improvement, increasing productivity and simultaneously reducing the cost.

The concept of Management and Total Quality Management

Management in its simple terms means the art of getting things done through and with others. Over the years this concept has been studied by a number of experts such as Fedrick Winslow Taylor, Henry Fayol, Peter F. Drucker and many more but considering different aspects. For instance Taylor elaborated on his management theories in 1911, when he published The Principles of Scientific Management. He explained the management in terms of its principles related to time study, motion study, fatigue study with an objective to improve labor productivity.

In 19th century, Taylor also emphasized that frequent inspections of manufacturing facilities were critical in the effective and efficient management of factory shop floors. Taylor mainly focused on the following-

– Inspections are important for workers and managers

– Concentration should be upon producing high quality goods rather than on producing goods quickly.

– Inspection is in fact a means of quality control

In the era of 1920’s & 1930’s, this theory got further advancement when WA Shew heart developed a scientific process for Quality Management. He explained that this concept is really important & also responsible for maintaining the industry standards. He developed the ‘Control Chart Theory’ in which he laid stress on following 3 key Quality Management processes such as control limits, and assignable and chance causes of variation.

The need and actual importance of the quality management principles was felt by Japanese when after World War II they were not left with any option apart from concentrating on re-building their empires after a lot of devastation took place.

Edwards Deming is best known for his 14 management points which he called as key principles to managers for transforming business effectiveness. He worked a lot for quality improvement techniques and linked his work with the concept of Total Quality Management. These 14 points of management are required for transforming the present style of management to an optimized style of management. In fact Deming’s work is recognized as an applicability of the statistical control measures given by WA Shew heart.

Historical Development of Total Quality Management

Quality as a concept has always been of prominent importance for every organization. The ancient rulers have also emphasized is importance even in the times when there was no organized structure or formal organizations. Below table explains the recognition of this concept since 19th century till the present times-

Period/ Era of

 
1700 BC King Hammurabi ruled the Babylonian Kingdom He made a very strong ruling on product quality and liability in the construction sector by stating;

“If a builder constructed a building then it falls into pieces and the owner is killed then the builder shall also receive the death penalty. If the children of the owner are killed then the builders’ children shall also die.”(Denis 1997)

At the end of the 13th century Artisans started to form guilds in order to develop product quality and organize themselves formally (Juran 1995)
At the beginning of the 19th century The products of the artisans were frequently inspected and high quality goods were marked with special symbols (Wolek 1999)
In the medieval guilds Other inspection techniques such as Variance minimization, manufactured goods were produced by individual craftsmen on a single item basis etc (Wolek 1999)
In the late 19th century Taylor argued that frequent inspections of manufacturing facilities were critical in the effective and efficient management of factory shop floors (Sliwa and Wilcox, 2008).
In the 1920s and 1930s WA Shew heart developed a scientific process for QM that was responsible for setting industry standards well into the 1950s. (Sliwa and Wilcox, 2008)
Between 1951 and 1989 A complete change in how the concept of quality was viewed within organizational cultures Atkinson (1990)
Feigenbaum Introduced the ‘cost-of-quality’ idea in his book entitled Total Quality Control

QM Model

There after, when Japan was struggling enough to re-attain its existence post world war II, Deming came up with this fantastic tool which is also considered to be the main helping hand in helping the Japanese to reorganize their business and management systems.

Deming studied the Japanese, American, and European management styles which helped him to identify the differences among all and most important the much needed revolutionarily step for the Japanese.

Basis for application of 14 points of Management- System of Profound Knowledge

The System of Profound Knowledge is the basis for application of Deming’s famous 14 Points for Management. All the segments are inter-related and interdependent. In other words one aspect is totally incomplete without the other, to be more precise we can say that without appreciation of the system a manger cannot have the correct knowledge of the statistical theory and so on.

Deming explained that “The prevailing style of management must undergo transformation. A system cannot understand itself. The transformation requires a view from outside. It provides a map of theory by which to understand the organizations that we work in”.

Deming's System

1. Appreciation of a system: The managers need to understand the overall processes of the organization which may involve suppliers, producers, and customers/ consumers of goods and services

2. Knowledge of variation: every manager should be fully aware of the reasons of variation in quality, and further use of statistical sampling in the measurements;

3. Theory of knowledge: the concepts explaining knowledge and the limits of what is known & what can be known.

4. Knowledge of psychology: it includes the varied subjective concepts of human nature.

“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.” Deming, W. Edwards. 1993. The New Economics for Industry, Government, Education, second edition.

Key Principles

Deming propounded below mentioned 14 principles to be used and adopted by the managers if they really want to transform their business and create a favorable effect on the working of the organization. These principles were first presented in his book Out of the Crisis. These points apply to all or any type of organization and size of business. In fact these principles are equally relevant for manufacturing and service industries both.

Principle

Main focus Area
Create constancy of purpose toward improvement of product and service, with the aim to become competitive, to stay in business and to provide jobs. Constant improvement of products and services
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 change. Making employees adaptable to the change
Cease dependence on inspection to achieve quality. Eliminate the need for massive inspection by building quality into the product in the first place. Improve production process instead of incurring additional cost afterwards
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. Quality should note be compromised for lower purchase cost.
Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs. Continuous improvement of process
Institute training on the job. Management to provide requisite training
Institute leadership. The aim of supervision should be to help people and machines and gadgets do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers. Supervision should be superseded by leadership.
Drive out fear, so that everyone may work effectively for the company. Make an employee feel safe and secure
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. Eliminate poor communication
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. Focus on improvement of the process
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. The focus should be changed from Quantity to Quality.
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 objectives
Institute a vigorous program of education and self-improvement.
Put everybody in the company to work to accomplish the transformation. The transformation is everybody’s job. Every person has to contribute in its best possible way

Principle 1- Create constancy of purpose toward improvement of product and service, with the aim to become competitive, to stay in business and to provide jobs.

Explanation-

Deming explained that for any business to be successful in long run, it has to follow a certain set of constant guidelines. The focus should be clear and confirmed towards continuous improvement of the products and services which are being offered to the customers. In today’s competitive environment, where every working organization is struggling to beat the competitor, constant improvement is the only key to success.

Principle 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 change.

Explanation-

This principle lays stress on leadership for change. Management should take the responsibility to effectively train the people with the changing business environment. The employees working should not be reluctant to change themselves and to adapt with new technology up gradations.

Principle 3- Cease dependence on inspection to achieve quality. Eliminate the need for massive inspection by building quality into the product in the first place.

Explanation-

Inspection in literal terms means a process of physically reviewing the product with respect to its stated specifications and parameters. To simplify we can say that this process is carried out when a product has been completed or produced to analyze whether the final outcome is as per the required standards. Deming explained that inspection / rework etc cannot improve the quality of the product instead it would lead to an additional cost. One should focus on improving the production process itself instead of taking actions after wards which are called as inspections etc.

“We cannot rely on mass inspection to improve quality , though there are times when 100 percent inspection is necessary. As Harold S. Dodge said many years ago, ‘you cannot inspect a quality into a product’. The quality is there or it isn’t by the time its inspected”….

.W. Edwards Deming

Principle 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.

Explanation-

The focus should be on minimizing the total cost instead of linking the procurement process solely on the basis of lesser costly parts and compromising the quality of the product. The single source is favorable for the organizations.

Principle 5- Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.

Principle 6- Institute training on the job.

Explanation-

It is of immense important that management should provide requisite training to all the individuals working across the organization to ensure that people are fully aware of the work they are doing. They will surely lack defined approach and systematic methodology of they are not fully trained for the work they are doing.

Principle 7- Institute leadership. The aim of supervision should be to help people and machines and gadgets do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.

Explanation-

Supervision should be superseded by leadership. Fault finding technique should be avoided. Proper training induces a great leader which in turns promote effective culture.

Principle 8- Drive out fear, so that everyone may work effectively for the company.

Explanation- The management should take utmost care to make an employee feel safe and secure. Fear drives nothing and the talent gets wasted.

Principle 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.

Explanation-

Lack of proper communication between all the departments can lead to serious consequences which will ultimately affects the working of the organization

Principle 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.

Explanation-

The slogans cannot achieve the desired objectives if there are deficiencies in the process itself. The slogans can only suffice the purpose of motivation but cannot replace the need of improving the process / activity by which the quality goal is to be achieved.

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.

Principle 11- 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.

Principle 12- 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 objectives .

Explanation to 11 & 12-

It is very important that the management should facilitate core training to all the workers for ensuring quality of the production. The focus should be changed from Quantity to Quality.

Principle 13Institute a vigorous program of education and self-improvement.

Principle 14- Put everybody in the company to work to accomplish the transformation. The transformation is everybody’s job.

Explanation-

For achieving the desired results, every person has to contribute in its best possible way. It cannot be done in isolation.

The Deming Prize

With the application of the above stated principles, Japanese were able to cope up with the set back received after the devastation which took place during World War II. His principles were acknowledged across the country and by all business houses. To honor his principles and teachings, Japanese Union of Scientists and Engineers, started with the concept of Deming prize. This is a globally recognized prize which is usually given to the companies who have established higher quantity standards especially w.r.t. Total Quality Management. The award is given to individuals as well for  their contribution in the field of Quality Management. Two categories of awards are made annually, the Deming Prize for Individuals and the Deming Application Prize.

Winners of individual award
Winners of application prize
  • 1951: Motosaburo Masuyama
  • 1952: Tetsuichi Asaka, Kaoru Ishikawa, Masao Kogure, Masao Goto, Hidehiko Higashi, Shin Miura, Shigeru Mizuno, Eizo Watanabe[2]
  • 1953: Toshio Kitagawa
  • 1954: Eizaburo Nishibori
1951

  • Fuji Iron & Steel Co., Ltd. (now part of Nippon Steel)
  • Showa Denko K.K.
  • Tanabe Seiyaku Co., Ltd.
  • Yawata Iron & Steel Co., Ltd (now part of Nippon Steel)

1958

  • Kaneka Corporation

1989

  • Florida Power & Light (first non-Japanese winner of award)

1994

  • Lucent Technologies, Power Systems (first American manufacturer to win award)[3]

1998

  • Sundaram Clayton brakes division[4]

2002

  • TVS Motor Company (TVSMC)[5]

2003

  • Brakes India limited.,foundry division
  • Mahindra & Mahindra Ltd., the world’s first tractor company to win.[6]
  • Rane Brake Lining Ltd.
  • Sona Koyo Steering Systems Ltd.

2004

  • Indo Gulf Fertilisers Ltd.
  • LUCAS TVS[citation needed]
  • SRF limited [7]

2005

  • Rane Engine Valve Ltd
  • Rane TRW Steering Systems Ltd.(SGD)
  • Krishna Maruti Ltd., Seat Division

2006

  • Sanden International (Singapore) Pte Ltd (SIS), the first Singapore-based company to win.[2]

2007

  • Rane (Madras) Ltd.

2008

  • Tata Steel, the first integrated steel plant in Asia to win Deming award

2010

  • National Engineering Industries Ltd, part of the 150-year-old, multi-billion CK Birla Group. NEI is the second bearing company in the world after NTN Corporation, Japan to win this coveted award. Mr Rohit Saboo ( President & CEO ) received the award in a glittering ceremony in Osaka, Japan.

2011

  • Sanden Vikas (India) Limited, (India)

2012

  • SRF Limited, Chemicals Business (India)

Mr. Roop Salotra, President and CEO

  • Mahindra & Mahindra Limited, Farm Equipment Sector, Swaraj Division (India)

Mr. Bishwambhar Mishra, Chief Executive

2013

  • RSB Transmissions(I) Limited, Auto Division (Jamshedpur(Unit 1), Pune & Pant Nagar Plant) (India)

2014

  • GC America (USA)
  • Yaskawa

2016

  • Ashok Leyland, pantnagar plant – World’s first commercial vehicle to get deming award (India)

 Conclusion

Deming had a very clear idea for the successful business organizations when he said that Innovation comes from people who take joy in their work. The management should always keep in mind that customers don’t measure you on how hard you tried. They measure them on the basis of the product/ service they deliver. The principles explained above totally focus on the fact that quality is never an accident, it comes from a consistent and joint effort of all the concerned from bottom to top and vertical to horizontal level.

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One response to “Total Quality Management- “Deming’s 14 key principles to managers for transforming business effectiveness””

  1. Tabassum Mumtaz says:

    fantastic

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