Who has heard of Deming? - US auto vs Japanese auto

[MB_722]

Who has heard of Deming?
Friday, 12 October 2007
Who has heard of Deming?

Louis Coutts
The other day someone asked me about Deming. Ever heard of him? Unfortunately, we become preoccupied with the next snake oil solution to growing our businesses and making money.

Deming exposed these new cabs off the rank by introducing into management some basic enduring principles. W. Edwards Deming  was an American statistician who made a lot of discoveries about the causes of product variability which, he said, creates a crisis because consumers are reluctant to buy products that vary in quality.

In the sixties, Deming was concerned about American manufactured goods because of the variability in quality, particularly motor cars produced in Detroit that were made with the philosophy that if problems were found in manufacture, the vehicles could be recalled.

He pointed out that this approach caused at least two major problems. One was the cost of fixing the product once it reached the market, and the other was the damage to consumer confidence by product failure such as Ford Pinto’s burning and killing its occupants.

No one would listen to him, so he went to Japan and the Japanese listened to him. The rest is history, as Toyota is now the number one auto maker in the world while GE and Ford are bleeding profusely.

So what was Deming’s secret? One of his students reduced it to a mathematical proportion which, in its simplest form is: 1: 24: 96

What lies behind this formula was a discovery by the Japanese under the direction of Deming that if you fix a problem in the design stage it costs a dollar. If you only pick up the problem in the manufacturing stage it costs $24 to fix, but if the fault gets into the market place, it costs $96 to fix.

In other words, it is 96 times more expensive to fix a problem once it reaches the marketplace than it is to fix it in design. Some American author whose name now escapes me cottoned on to this discovery and turned it into a managerial cliché – “Get it right first time” – which in turn was reduced to the acronym GIFT.

More importantly, Deming came to understand the reason for not getting things right at the design stage. He found that when a problem arose, people would tend to respond by fixing the specific problem whereas the fundamental cause of the problem was the system operating in the business. If you don’t fix the system, you are going to constantly get into the 24 and 96 categories.

A glaring example was the foreign trading disaster at the National Bank. The immediate cause of the problem was the greed of the operators. The real cause was the incentive scheme in operation at the bank that encouraged and rewarded risk taking.

One of the major causes of product variability according to Deming related to systems that did not encourage workers to take initiatives when on-job problems arose. They worked within a system that was designed by management, and even though they might not agree with the system, they would go along with it for fear of ridicule or making a fool of themselves. This drains a business of the principal source of innovation.

Deming is forgotten, and so I was surprised when someone asked me about him. I had the great fortune of being taught the Deming way by a wonderful guy, Professor John Whitney of Colombia. He introduced me to the most basic and wonderful managerial tool that Deming invented. It is called the circle of constant improvement. It looks something like this.



It is called the PDCA circle of constant improvement. The first thing you have to do is to plan something. We often do that, but then tend to get nervous about taking the next step for fear that it won’t work or we might be ridiculed. Deming says, don’t stop there, but DO IT.

Then, once you have implemented your plan, you can check to see if it is working. You can then act on what you have discovered and improve the idea. Once you have done that, you can start all over again, planning further modifications or improvements.

So many great ideas stall at the doing stage because of this fear thing that haunts all of us. As a result, opportunities for growth, innovation and development are frequently shelved. All we have to do is overcome our fear and put the plan into operation knowing that we have the safety net of checking.

So Deming is now dead (he died two years ago at the age of 93) and largely forgotten, but he left some great and enduring concepts that have helped lowly manufactures like Toyota and Sony to become household names.

So, if you want to grow, Deming might not be a bad starting point rather than the most recent snake oil formula.

[Dan-O]

I heard of Deming in the early 90's.  "Made in Japan" used to be synonymous with "crap."  He changed all that.  Maybe US manufacturers could stand to implement some of his principles.  It's such a wacky idea it just might work.

[240 is Back]

6 sigma, read a lot about him in the mba.  japan worshipped the guy and used his ideas.

[Soul Crusher]

I heard of Deming in the early 90's.  "Made in Japan" used to be synonymous with "crap."  He changed all that.  Maybe US manufacturers could stand to implement some of his principles.  It's such a wacky idea it just might work.

The Management,  UAW, and the dealerships wont allow this.

They make more money on fixing problems than selling cars.

Ask anyone about their experience with the service department of either Ford or Chevy.

[24KT]

He first came to my attention in the 90's during the launch of a network mktg company no less. no joke.

[Soul Crusher]

He first came to my attention in the 90's during the launch of a network mktg company no less. no joke.

My understanding is that the US Auto companies rejected this guy.

 

[24KT]

My understanding is that the US Auto companies rejected this guy.
 

Not only did the US Auto industry reject his teachings, ...but also the educational system as well.
Genius always finds an outlet for expression though, ...and the Japanese who were in a rebuilding mode took his teachings and applied them not only to their automotive sector, but across the board in every sector of their society, including their educational system, ...and that's why the Japanese have been kicking tush ever since.

I find them to be an absolutely fascinating & charming people with a fascinating culture. Natural born diplomats.

[Soul Crusher]

Not only did the US Auto industry reject his teachings, ...but also the educational system as well.
Genius always finds an outlet for expression though, ...and the Japanese who were in a rebuilding mode took his teachings and applied them not only to their automotive sector, but across the board in every sector of their society, including their educational system, ...and that's why the Japanese have been kicking tush ever since.

I find them to be an absolutely fascinating & charming people with a fascinating culture. Natural born diplomats.

Absolutely.  We are our own worst enemy is almost every area.

 

[Hedgehog]

This is why I think the near-bankruptcy of the US car industry could actually lead to some gigantic leaps in research and design.

After all, USA has done it before.

And now, with the back against the wall, perhaps USA will finally show their muscles like they did in the 30's and during the race to the moon in the 60's.

If the effort is made, USA could probably even have good electric engine cars in production in 5-10 years.

The regular car engine is over 100 years old, and hasn't improved much over the years.

IMO it's only USA who has the resources to develop a totally new type of engine.

[24KT]

This is why I think the near-bankruptcy of the US car industry could actually lead to some gigantic leaps in research and design.

After all, USA has done it before.

And now, with the back against the wall, perhaps USA will finally show their muscles like they did in the 30's and during the race to the moon in the 60's.

If the effort is made, USA could probably even have good electric engine cars in production in 5-10 years.

The regular car engine is over 100 years old, and hasn't improved much over the years.

IMO it's only USA who has the resources to develop a totally new type of engine.

The effort was made, ...and GM produced an electric car. They also killed it. 

www.whokilledtheelectriccar.com

or click here to search through you tube

[Soul Crusher]

The effort was made, ...and GM produced an electric car. They also killed it. 

www.whokilledtheelectriccar.com

or click here to search through you tube

If GM could produce a practical affordable electric car, they would.  The bottom line is that people do not want a 4k car that only goes 40 miles before it needs recharging.

[shootfighter1]

Yep, the technology for an electric car is not here....at this time.  Doesn't mean they should stop persuing, just that we have to do the best with what we have for now.

[Hedgehog]

Something pretty interesting I noticed is  how the energy corps are starting to run ads for electric cars and that apparently they're putting up small 'fueling' docks on all the main roads.
So the electric car may actually be a real alternative in a few years.
Electric engines performs better as well.