Key Takeaways
1. Management's Failure is the Root Cause of Decline
The basic cause of sickness in American industry and resulting unemployment is failure of top management to manage.
Short-term focus. American industry's competitive decline stems from top management's failure to plan for the future, prioritizing short-term profits over long-term survival. This emphasis starves innovation, new product development, and job creation, leading to waste of manpower, materials, and machine-time. The consequence is higher costs, uncompetitive products, and job losses, which are neither inevitable nor acceptable.
Random walk. When top management senses market loss but lacks direction, they often embark on a "random walk," trying disparate ideas without a coherent strategy. This erratic behavior creates bewilderment and paralysis throughout the organization, dissipating energy and failing to achieve any meaningful goal. Such instability prevents effective work and undermines the company's welfare.
New job. Management's role has fundamentally changed, requiring knowledge beyond traditional experience or academic curricula. They must learn a new theory of management to improve quality, productivity, and competitive position. This demands a long-term commitment to new learning and philosophy, as quick results are a delusion.
2. Quality Drives Productivity and Lowers Costs
Less rework.
Counter-intuitive truth. The folklore that quality and production are incompatible is false; in reality, productivity increases as quality improves. This is because improved quality, achieved through process enhancement, reduces rework, mistakes, and waste of resources like manpower, machine-time, and materials. The direct result is increased output with less effort.
Immediate gains. Benefits of improved quality are immediate and substantial, often requiring zero cost or new investment. For example, clarifying operational definitions for acceptable work can drastically reduce defective products, leading to:
- Increased production of good product
- Higher capacity
- Lower cost per unit
- Improved profit
- Happier customers and workforce
System improvement. These gains are not from working harder, but from working smarter by improving the system itself. Eliminating causes of variation, such as over-adjusting machines or using unsuitable materials, leads to consistent quality and significant cost savings. This frees up resources for innovation and further process refinement.
3. Adopt the 14 Points for Management Transformation
The 14 points are obviously the responsibilities of top management. No one else can carry them out.
New philosophy. The 14 Points constitute a comprehensive theory of management for improving quality, productivity, and competitive position in the new economic age. They are not merely a checklist but a framework for a fundamental shift in organizational culture, requiring top management's unwavering commitment and active leadership.
Core responsibilities: These points demand that management:
- Create constancy of purpose for long-term improvement.
- Adopt a new philosophy rejecting common levels of defects and delays.
- Cease dependence on mass inspection.
- End awarding business based solely on price.
- Continuously improve the system of production and service.
- Institute modern training and supervision methods.
- Drive out fear.
- Break down departmental barriers.
- Eliminate numerical goals and quotas.
- Remove barriers to pride of workmanship.
- Institute vigorous education and retraining.
- Create a top management structure to drive these points daily.
Universal applicability. The 14 Points apply universally to all organizations, regardless of size or sector, from manufacturing to service industries. Their adoption signals management's intent to stay in business, protect investments, and ensure jobs through continuous improvement of product and service.
4. Cease Dependence on Mass Inspection
Inspection is too late, ineffective, costly.
Planning for defects. Routine 100% inspection is an admission of failure, signifying that the production process cannot consistently produce correct products or that specifications are unclear. It is a costly, ineffective, and unreliable method that does not improve quality; rather, it plans for defects and perpetuates them.
Quality built-in. Quality does not come from inspection, but from improvement of the process itself. Scrap, downgrading, and rework are not corrective actions; they are consequences of a flawed system. The only permissible exceptions for 100% inspection are critical or semi-critical parts where failure has severe consequences, and even then, the goal is to minimize total cost.
Beyond inspection. Instead of relying on inspection, management must focus on improving the process to eliminate the need for it. This involves:
- Ensuring quality is built into every stage.
- Using statistical evidence to confirm quality.
- Minimizing total costs by understanding when inspection is truly necessary.
- Recognizing that acceptance plans based on samples often advertise a market for defective material.
5. End Awarding Business on Price Tag Alone
Price has no meaning without a measure of the quality being purchased.
False economy. The practice of awarding business solely based on the lowest price tag is a major cause of poor quality and low productivity in American industry and government. Without meaningful measures of quality, this policy inevitably leads to low-quality incoming materials, tools, and machines, ultimately increasing overall costs.
New purchasing role. Purchasing managers must abandon the outdated policy of constantly driving down prices without regard for quality and service. Their new job requires understanding statistical control of quality to assess supplier qualifications and engage in statistical language. This involves:
- Evaluating suppliers based on statistical evidence of quality, not just price.
- Understanding how materials perform in the purchaser's production process.
- Developing long-term, mutually confident relationships with fewer, qualified suppliers.
Long-term partnership. A long-term relationship with a single, high-quality supplier fosters innovation and economy in their production processes, benefiting both parties. This approach reduces variability, simplifies operations, and ensures a steady, dependable source of materials, ultimately leading to better quality and lower total costs for everyone.
6. Understand and Act on Two Sources of Variation: Common and Special Causes
Confusion between common causes and special causes leads to frustration of everyone, and leads to greater variability and to higher costs, exactly contrary to what is needed.
Two types of causes. All variation in a process stems from two sources: special causes and common causes. Special causes are specific, identifiable events or conditions (e.g., a faulty machine, a poorly trained worker) that can be found and removed by those directly connected to the operation. Common causes, however, are inherent in the system itself (e.g., poor design, inadequate training, unsuitable materials) and are the sole responsibility of management to address.
Statistical signals. Simple statistical techniques, particularly control charts, are essential for distinguishing between these two types of causes. They provide objective signals, such as points outside control limits or sustained trends, indicating the presence of a special cause. Without these signals, human judgment is unreliable and often leads to costly mistakes, like blaming workers for systemic issues.
Management's role. Most causes of low quality and productivity belong to the system (common causes), which only management can correct or reduce. Attempting to fix common causes as if they were special causes, or vice versa, leads to frustration, increased variability, and higher costs. A stable process, achieved by eliminating special causes, then allows management to focus on improving the system itself, leading to predictable performance and continuous innovation.
7. Drive Out Fear and Empower Workers
The economic loss from fear is appalling.
Culture of insecurity. Fear is a pervasive and economically devastating obstacle in many organizations, preventing employees from working effectively. People, especially in management, often don't understand their jobs or feel secure enough to ask questions, take positions, or report problems like faulty equipment or unsuitable materials. This culture of insecurity stifles initiative and perpetuates problems.
Management's responsibility. Management must actively drive out fear by creating an environment where employees feel safe to express ideas, ask for clarification, and report issues without reprisal. Blaming workers for systemic failures, or penalizing them for conditions beyond their control, only exacerbates fear and demoralizes the workforce.
Removing barriers. A key step is to remove barriers that rob hourly workers of their right to pride of workmanship. This includes addressing issues like:
- Unclear operational definitions.
- Machines not maintained.
- Poor tools.
- Supervisors focused solely on numerical quotas.
- Lack of response to reported problems.
By tackling these systemic issues, management can restore dignity to workers, boost morale, and unlock their full potential for quality and productivity.
8. Eliminate Numerical Goals, Slogans, and Quotas
Slogans stress quality, but measure people on numbers.
Counterproductive exhortations. Numerical goals, targets, slogans, and posters urging workers to increase productivity or achieve "zero defects" are ineffective and often counterproductive. They fail to provide a roadmap for improvement, instead dumping management's responsibilities onto the workforce and generating frustration and resentment.
Negative consequences. Such exhortations, without systemic changes, typically lead to:
- Failure to accomplish the goal.
- Increased variability in output.
- Higher proportion of defective products.
- Increased costs.
- Demoralization of the workforce.
- Disrespect for management.
They force workers to prioritize quantity over quality, even if it means producing defective items or hiding problems.
Focus on the system. Instead of meaningless slogans, management should provide clear, actionable guidance and work on improving the system. Posters that explain management's efforts to improve the system, making it possible to work smarter, not harder, would genuinely boost morale. True improvement comes from understanding and addressing the root causes of problems, not from arbitrary numerical targets.
9. Institute Vigorous Education and Retraining
Management has a new job; so has everybody else.
Continuous learning. In the new economic age, everyone in the company, from top management to hourly workers, needs continuous education and retraining. This is essential to keep pace with changes in models, styles, materials, methods, and technology, and to adapt to new job responsibilities arising from productivity improvements.
Statistical literacy. A vigorous program of education in simple but powerful statistical techniques is required for all levels of management, engineers, scientists, inspectors, and service organization personnel. This knowledge enables them to:
- Understand and apply statistical control.
- Design and analyze tests effectively.
- Separate special causes from common causes.
- Improve inspection and measurement systems.
- Make informed decisions based on data, not guesswork.
Developing expertise. This educational program is a long-term, costly commitment, not an instant fix. It requires competent teachers, ideally statisticians with industrial experience, and a structure to nurture internal talent. While hourly workers can benefit from basic statistical methods in a clean environment, management must first remove systemic barriers that hinder pride of workmanship before such training can be truly effective.
10. The Consumer is the Most Important Part of the Production Line
The consumer is the most important part of the production line.
Beyond sales. The ultimate purpose of consumer research is to understand the consumer's current and future needs and wishes, enabling the design of products and services that enhance their lives. This goes beyond merely attracting sales; it involves ensuring products perform well in service and continuously redesigning them based on feedback.
The Shewhart Cycle. Deming advocates a continuous cycle of improvement:
- Design the product (with appropriate tests).
- Make it (testing in production and laboratory).
- Put it on the market.
- Test it in service (finding out user and non-user reactions).
- Redesign the product based on consumer feedback.
This iterative process, often called the Deming Cycle or PDCA (Plan-Do-Check-Act), drives continuous improvement and ensures products remain relevant and competitive.
Triangle of interaction. Quality is not solely determined by the product itself, but by the interaction of three elements:
- The product: Its design, manufacturing, and internal tests.
- The user: How they use, install, and maintain the product, and their expectations (often shaped by advertising).
- Service: Instructions for use, training for customers and repairmen, availability of parts, and warranty.
All three must be considered and continuously improved to achieve true customer satisfaction and long-term success.
11. Operational Definitions are Crucial for Communication and Consistency
An operational definition is one that people can do business with.
Communicable meaning. An operational definition provides a clear, communicable meaning for any quality characteristic or adjective (e.g., safe, round, reliable, clean, unemployed). It consists of a prescribed test method, a record of the result, and a criterion for judgment. Without such definitions, specifications are meaningless, leading to misunderstandings between vendors and purchasers, and within departments.
No "true value." It is a fundamental truth that there is no "true value" for any physical measurement or count. The result obtained depends entirely on the operational definition and procedure used. Different procedures yield different results, and neither is inherently "right" or "wrong." This concept is vital for commerce, science, and legal contexts, as it clarifies that agreement on a method is paramount, not the pursuit of an elusive absolute.
Impact on practice. Operational definitions are critical for:
- Contracts and regulations: Ensuring legal enforceability and clarity.
- Internal consistency: Aligning understanding between production workers and inspectors.
- Problem-solving: Preventing endless bickering and ensuring investigations are effective.
- Quality improvement: Providing a stable baseline for measuring changes and improvements in processes.
They transform abstract concepts into actionable, verifiable terms, enabling consistent performance and reliable communication across an organization and its supply chain.
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