Featuring NZOQ Board’s Award winners 2009 (Toyota Production System), back through Henry Ford, through Frank Gilbreth (process charts and time & motion study), Frederic Wilmslow

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NZOQ Board’s Strategic Plan

2010 NZOQ Board elections – candidates’ guide

Pursuit of excellence wins Beca-NZOQ prize

Missing ‘killed’ tone project wins Tait-NZOQ prize

How to pick the best quality improvement system

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Award winners 2009

Beca-NZOQ and Tait-NZOQ

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Horses for courses - picking your winner when it comes to quality improvement systemsThe following article is based on ian Hendra’s award winning presentation at the 2008 NZOQ learn-share-grow Conference.

There are a myriad of systems and gizmos that you read about and even get trained in that offer to do ‘continual improvement’ for you. Unfortunately there’s little advice about the one to back except from sales pitches. The point of this paper is to describe where a number of the more famous systems came from and what they were trying to achieve. That way, you might have a basis upon which to choose the right one – or more, of course.

Starting gateIn all organisations QA has to deal with a dilemma when it comes to where the funding comes from, and you can’t undertake any realistic continual improvement project without funding. The Venn diagram in Figure 1 shows the interrelationship among the three primary stakeholders: owners, staff and customers. The dilemma is that whilst revenue comes only from customers, staff and owners desire to share the rewards from margins added to costs. Hence funding for continual improvement represents a draw on staff remuneration and/or owners’ return on investment. So it helps to know whose interests are being served best by the various continual improvement systems around. We’ll return to this at the end of the paper.

figure1: the starting gate.

The fieldWe will look at the following in more detail (there are more but these represent the main runners): Lean; Deming & TQM; Zero Defects; Six Sigma; Investors in people; ISO 9000; and Baldrige Business Excellence.

1. leanFirst of all, you might think “Why isn’t he talking about “Lean Six Sigma”? That’s because they’re different and have different roots. We’ll cover Six Sigma separately.

In 1990, Womack, Jones & Roos wrote a book entitled: The Machine That Changed the World. The book is a history of automobile manufacturing that combines the development in Japanese, American and European assembly plants.

They coined the phrase Lean Manufacturing to describe processes that optimised efficiency: cell manufacturing, pull scheduling (Kanban) and 5S (sort, shine, set-in-place, standardise, sustain) are among the tools that emerge.

But they’re not new, they hail from Eichi Toyoda and Taichi Ohno (Toyota Production System), back through Henry Ford, through Frank Gilbreth (process charts and time & motion study), Frederic Wilmslow Taylor (standardised work) back to Eli Whitney in the 1850s and his innovation of interchangeable parts. Some say it stretches back even to ancient Rome...and it’s nothing more than common sense. Its target is operational efficiency.

2. deming & tQMDr W. Edwards Deming remains perhaps the most influential of all when it comes to modern quality assurance systems. Born in 1900, he became a statistician, and worked for the US Bureau of Statistics. Process management through performance management and reducing variation were the basis of his approach. See Figure 2 for a summary.

figure 2: dr deming and PdCa, and the essence of tQM.

During the 1920s Deming worked at Western Electric’s Hawthorne Works alongside Dr Walter Shewhart, the father of Statistical Quality Control (SQC). During WW2 he taught Shewhart’s methods to US suppliers for the war effort and in 1947 went to occupied Japan with General MacArthur. He taught SQC (by this time forgotten in the US) as the means to rebuild Japan’s decimated manufacturing industry.

Again derived from Shewhart’s work, he coined the Plan-Do-Check-Act model as the ‘scientific method’ for continual improvement projects at this time. By 1951, so impressed were the Japanese with the outcomes of Deming’s work, they set up The Deming Prize and he was officially honoured with the equivalent of a knighthood.

In 1980, with US manufacturing in decline while Japan’s was leading the world, the US TV network NBC produced a White Paper and aired a TV show called: ‘If Japan can…why can’t we?’ that chewed over why this had happened. It discovered

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American, Dr W Edwards Deming. Deming appeared on the show and was highly critical of American management – “America should export everything it can except American management!”

In a way it was the Watergate of the day, but Deming started teaching again, using the ‘Red Bead Experiment’. By this time he was already working with Nashua, but soon Ford, GM, Dow, Hughes and many others became interested. He promoted his 14 Points, the 7 Deadly Diseases, and the Obstacles and the seven Quality Control tools that are still taught on NZOQ’s Certificate of Quality Assurance.

In 1981 The Growth Opportunity Alliance of Lawrence (GOAL) was formed. “The Japanese have been using Deming techniques for 35 years but no-one was interested so none of it is in English,” wrote Bob King, founder of GOAL. The Memory Jogger series of books was launched and with it the training necessary to underpin Deming’s work.

In the background too, Dr Joseph Juran’s famous work on Quality Control served as reference. Soon Quality Function Deployment methods came along to provide tools that would better engage senior managers, and the TQM movement was alive and well. Once again, operational efficiency was the theme.

Dr Deming died in 1993.

3. Zero defectsDuring the 1970s, large companies in the automotive industry tried to cut costs by reducing their quality inspection processes and demanding that their suppliers dramatically improve the quality of their supplies. Whilst this was de rigueur in Japan and they understood how it was done, it was tiger country elsewhere.

In 1979 Phil Crosby, ex Quality Manager for ITT, wrote “Quality is Free – how to manage quality so that it becomes a source of profit for your business”. He focussed on management failure as the principal cause of poor quality, using his Quality Maturity Grid (still one of the best tools...) and a programme to facilitate improvement. Of particular note, he introduced the four concepts of Zero Defects as follows: 1. Quality is conformance to requirements.2. Defect prevention is preferable to quality inspection and

correction.3. Zero Defects is the quality standard.4. Quality is measured in monetary terms – the Price of Non-

conformance (PONC), hence “Quality is Free”.

Crosby brought a down-to-earth realistic approach that contrasted with the academic morés of Deming and Juran. And again, operational efficiency was the theme.

4. six sigmaDespite the hype and current fascination with Six Sigma as a silver bullet, most of it was there before.

Developed as an in-house project by Motorola in 1987, following a takeover by Japanese interests, Six Sigma derived its name from the Gaussian distribution (bell curve) and that at six standard deviations (sigmas), only 3.4 parts in a million fall outside the limits.

It follows that if you can reduce variation in the process so that Six Sigma applies to reject levels, the process is very efficient. To get a scale here Shewhart and Deming worked on 3 sigma (99.7%) but high quality semiconductor production is much better than Six Sigma (and so is air travel!).

The particulars of the methodology were first formulated by Bill Smith at Motorola in 1986.

Six Sigma was originally developed as a set of practices designed to improve manufacturing processes and eliminate defects, but its application was subsequently extended to other types of business processes.

Based heavily on a PDCA methodology called DMAIC (design, measure, analyse, improve, control), Six Sigma got a huge boost when Dr Jack Welch, Chairman & CEO of General Electric (GE) took it on board as a company standard. Welch attributes the influence of Six Sigma as of significance in bringing about GE’s turnaround.

The fact remains that Six Sigma was heavily inspired by six preceding decades of operational quality improvement methodologies such as quality control, TQM, and Zero Defects, based on the work of pioneers such as Shewhart, Deming, Juran, Ishikawa, Crosby, Taguchi and others.

5. investors in peopleNow for something completely different. The Investors in People standard was written in the UK. It’s a standard for the development of people within an organisation and is also based on a kind of PDCA methodology.

Initially it was administered through a section in the Department for Education and Employment (DfEE).

Investors in People UK was formed in 1993 to take national ownership of the Standard, protect its integrity and ensure its successful promotion and development.

As demand for, and interest in, the Standard grew the section became Investors in People UK.

Although the company is by definition UK-based and -orientated in its operations, interest from overseas has given the Standard an international dimension, both in terms of protection and of development. It has been most well received. Cranfield School of Management estimates there were about 40,000 registrations in 2008, covering 7.5 million people in the UK’s workforce. The focus is on people.

6. isO 9000When the defence of your realm and the safety of your troops is your major concern, it’s not hard to understand that you need reliable supplies of armaments, vehicles, clothing, fuel and food. You need assurance that your procured matériel will work right first time, every time. And you don’t want to be dependent on suppliers who may be out of reach. You need to manage the tactical risks, in other words.

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In 1969 the Allied Quality Assurance Procedures (AQAPs) appeared from work undertaken during the Cold War (since 1955) by committee AC-250 of the North Atlantic Treaty Organisation (NATO – that’s their acronym). AC 250 was a committee of experts in quality assurance, and it still is (see the references for its URL). Their concern was how to assure supplies for a defence in Western Europe when the Atlantic was all but closed to shipping, as it had been for almost all of WW2. Winston Churchill regarded the Battle of the Atlantic as the longest of the war and the advent of Soviet nuclear powered submarines made it almost impossible to defend.

The AQAPs were all about how to select suppliers to ensure that what was wanted was actually delivered, but they focussed on the importance of ensuring that quality and safety were designed into products. NATO had learned from experience that quality and safety could not be inspected into product after it had been made.AC 250 made the breakthrough when they realised that effective management was the key. Accordingly, they set up a set of 20 criteria against which to assess supplier management systems. If a supplier’s systems were successfully assessed as meeting the criteria, NATO would buy from them, if they didn’t...etc, etc – simple as that. Taken seriously and applied properly, the criteria gave a good measure of a supplier’s capability but they stopped short of describing a specification for a full quality system: this is a point missed by supporters and detractors of ISO 9000 alike. There are three obvious reasons. First, quality systems are unique to each organisation; what suits in one place won’t suit in another, so there is no such thing as a common specification. Second, it would never have been possible to assess the effectiveness of a full quality system within the time that was allowed for assessment. Third, with national security in mind it made no sense at all to expect contractors to bare all when it came to classified designs and processes, even if the external assessors were from MoD itself. These three constraints apply equally to ISO 9001 certification today, of course. The time allowed for assessment is so small as to be almost meaningless in many cases, so there is almost total reliance on the client’s self declaration. Likewise for commercially sensitive information, certification body clients have a duty to their stakeholders to protect their IP.Buzz words change but people don’t, so many would call the whole ISO 9000 thing risk management and likely be unaware that NATO’s AQAP standards became BS 5750 in 1979 and ISO 9001 in 1987. Some might call it Supply Chain Management and others Project Quality Assurance and be just as unaware.It’s notable too that from this work, the whole ISO 9000 movement grew, and with it a whole new profession concerned with quality assurance management.Since its adoption as an international standard in 1987, ISO 9001 has become the most successful standard the world has ever seen. The 2007 ISO survey counted 951,486 certifications to ISO 9001:2000 in 175 countries, with about 20% in China. ISO 9000 is about having a closed-loop management system visible to your customers.

7. Baldrige Business excellenceHoward Malcolm Baldrige Jr was Secretary of Commerce in the Reagan administration from January 1981 until his untimely death in a rodeo accident on July 25 1987. His service was one of the longest in history.

He was a proponent of quality management as a key to this country’s prosperity and long-term strength. He

took a personal interest in the legislation that became the Quality Improvement Act of 1987 and helped draft one of the early versions.

In recognition of his contributions, Congress named the annual award for product quality in his honour.

The approach taken by the Criteria for Business Excellence that bears his name is a whole business approach in which business performance is the most heavily weighted factor. The criteria are amended annually and by national business excellence franchises to meet national needs. Candidates apply to have their score against the criteria validated by an assessment team of peers.

In America, Baldrige Awards are under the auspices of the National Institute for Science & Technology (NIST) and awards are presented annually by the President. Here in New Zealand the criteria are under the auspices of the New Zealand Business Excellence Foundation (NZBEF) and awards are presented by the Prime Minister.

Baldrige Business Excellence is the Rolls Royce; it covers the whole organisation and probably has the best potential for expediting improvement.

figure 3: Baldrige criteria for performance excellence framework.

The FinishLet’s revisit Figure 1. Figure 4 shows that only ISO 9001 comes at quality assurance from the customer’s side of the supply contract; only Investors in People focuses exclusively on the workforce; only Baldrige takes the holistic view; and all the rest are focussed on operational efficiency from an owner’s perspective in terms of reducing waste and improving returns.

14 | Official Magazine of the New Zealand Organisation for Quality – January/February 2010

figure 4: the summary.

Maybe this gives a rationale for picking your winner?If your customers are demanding access and visibility of your quality systems, ISO 9000 is for you. However, never forget that just doing enough to get the certificate won’t help you nor will it impress your customers. Unless you commit to it, ‘applying ISO 9001’ doesn’t work, although if you’re a ‘good business’ you’ll probably comply by default. The requirements are only the tip of the iceberg. There are, however, two scenarios that make it useful. First, use it if getting the certificate doesn’t matter. Second, use it if it helps you get work but don’t think of it as a chore, because what you put in is what you get out. If it does nothing for you don’t blame the auditor or the certifier. On the other hand, if you do commit to ISO 9001, you get a closed-loop quality system that enables you to hold gains made anywhere, and that’s important with respect to all the other methodologies.If you believe your staff are your key to quality assurance, then pick Investors in People. You wouldn’t be alone in taking this view. Builder of billion dollar business eight times over, Sir Richard Branson said “Convention dictates that a company should look after its shareholders first, its customers second, and last of all, worry about its employees. Virgin does the opposite. For us, our employees matter most. It just seems common sense to me that, if you start off with a happy, well-motivated workforce, you’re much more likely to have happy customers. And in due course the resulting profits will make your shareholders happy.” Next, if your main concern is to improve operational efficiency and reduce variation, or in other words, get a better return on your owner’s buck, then pick from the rest. Most lead you to develop a good view of the customer’s requirements, but they work at the coal face level. And of course, they don’t work at all without staff co-operation, a closed-loop management system to hold the gains and the commitment of your top management. Finally, if you want to boost your QA system in an holistic way, use Baldrige Business Excellence Criteria, but once again note that it requires your people to cooperate, a closed-loop system and management commitment.

ConclusionsAny of the systems described above will produce improve-ment. Knowing where to start and how to hold the gains is important, and the key is knowing which problem to solve first. Hopefully figure four provides a route to help with that. One organisation I know shied away from Six Sigma and Baldrige Business Excellence. They used the ISO 9000:2000 model redrawn to emphasise PDCA, include all the primary stakeholders and link to governance areas. Then they

plugged in the TQM tools (7QC & 7MP) in GOAL/QPC’s Memory Jogger II at each step and trained all their senior managers in how to use them.But there’s a sting-in-the-tale, and a frustrating one, none of these continual improvement systems and processes works unless top management wants it.Top management commitment to the extent of providing demonstrable focussed leadership is an absolute necessity. That means they have to deliver more than smart talk (as described by Pfeffer and Sutton); they have to get in there, engage at the intellectual level and do the hard yards. David Crosby’s excellent article ‘What should the Quality Manager Do?’ in Quality Digest from March 2009 made the point well. The conventional world of business doesn’t focus on QA, even though ensuring the supply of deliverables at the right quality is the only reason managers are there. For many top managers QA doesn’t exist or it’s a ‘detail’ for someone else to worry about. So, if ever you hear something like “I haven’t got time for this, I’m too busy running the business” you’re in trouble, you’re dealing with a dinosaur, or someone who soon will be. On the other hand, if you get a bite (and a budget) go for gold but spend wisely – use figure four and find the easy gains, the ‘low-hanging fruit’...or is that the terminology of smart talk??For further information contact [email protected]

References1. http://www.strategosinc.com/2. The Lean Enterprise Memory Jogger – GOAL/QPC 20023. http://en.wikipedia.org/wiki/W._Edwards_Deming4. Aguayo Rafael, Dr Deming: The man who taught the Japanese

about quality, Mercury, 1990, ISBN 1 85251085 4, 5. Walton Mary, The Deming Management Method, Penguin Group,

1988, ISBN-13: 97803995500036. Juran J M, The Quality Control Handbook – 3rd Edition, McGraw

Hill, 1971, ISBN 0 07 033175 87. The Memory Jogger II GOAL/QPC 19948. http://www.philipcrosby.com/ 9. Crosby Philip B, Quality is Free - The Art of Making Quality Certain,

McGraw Hill, 1979, ISBN 0 07 014512 110. http://en.wikipedia.org/wiki/Six_Sigma 11. Welch, Dr Jack, Jack, Warner, 2001, ISBN 0 7553 1043 812. The Six Sigma Memory Jogger II GOAL/QPC 200213. http://www.investorsinpeople.co.uk/Pages/Home.aspx http://www.

iipnz.co.nz/ for the IPP standard itself 14. http://www.som.cranfield.ac.uk/som/dinamic-content/news/

documents/iipmikebourne.pdf for the Canfield Report: The Impact of Investors in People on People Management Practices and Firm Performance.

15. http://www.nato.int/structur/AC/250/html/english/welcomepa-geenglish.htm

16. http://en.wikipedia.org/wiki/Battle_of_the_Atlantic_%281939%E2%80%931945%29

17. http://en.wikipedia.org/wiki/ISO_9001 18. The New Requirements for Defence Procurement - MoD

Procurement Directorate 1972 HMSO. The ISO 9000 family of standards is available from Standards New Zealand at www.standards.co.nz

19. http://www.nzbef.org.nz/ for the criteria and how to apply them20. http://en.wikipedia.org/wiki/Malcolm_Baldrige,_Jr. 21. http://www.baldrige.nist.gov/ 22. Branson Richard, Losing my virginity - the autobiography, Virgin

Books 1998, ISBN 1 74051 183 223. Branson Richard, Business Stripped Bare - Adventures of a Global

Entrepreneur, Virgin Books 2008, ISBN 978075351502024. http://www.qualitydigest.com/inside/fda-compliance-column/what-

should-quality-manager-do.html 25. Pfeffer Jeffery and Robert I Sutton, The Smart Talk Trap, Harvard

Business Review, May-June 1999.

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