Full Transcript
Welcome to this program on improving quality and reducing quality
related costs. This is our opening session and our subject is proof of the need.
Let's begin by stating our objective. Our objective is to develop the habit of annual
improvements in quality and annual reductions in quality related costs. Why do
we need annual improvements?
We need them to keep our products saleable and our costs competitive, our why's we lose ground to every competitor who does make annual improvement. For a classic example look at the Japanese revolution in quality, following world war two, the Japanese tried to convert their industries to civilian products but they were unable to export due to poor quality so they launched a revolution in quality, let's diagram that out with a need of our mysterious Mystica.
In this model the horizontal axis is time in decades, the vertical axis is quality, saleability of the product. In 1950 western quality was high, it has kept improving but at an evolutionary pace, in 1950 Japanese quality was poor, the Japanese then invested in a massive training program, they learned how to improve quality then they made quality improvements at a revolutionary pace year after year my estimate is that by the mid-1970s they had equaled Western quality. That revolution has progressively made Japanese products saleable then competitive and now in some product lines superior in quality. These quality improvements were nearly always accompanied by cost reductions.
A classic example is that of a color television set until 1974 Quasar was an American old color television factory it was competitive in quality in the US market. Quasar was then sold to a Japanese company who introduced changes in product designs, vendor relations, manufacturing processes and so on. Look at the effect of those changes on the costs of poor quality incidentally during these sessions I will be showing many visual aids on the screen on Mystica on the TV monitor. Most of these aids are reproduced in your workbook under the tab corresponding to the same session number, the page number will be flashed on the screen your workbook will usually include sacramental explanation beyond that contained in my own presentation.
The cost of service calls during warranty declined from 22 million per year now the formative the number of factory personnel needed to find and repair in-house defects declined from 120 to 15 so the new owners attained the best of both worlds better quality for the users due to lower field failure rates and lower costs for the manufacturer. Not only do we need improvement we need the habit of improvement. To develop that habit our management teams should accept the responsibility for improvement understand the universal sequence of events to which managers make improvements, learn the key concepts techniques and tools and finally apply the universal sequence to actual company problems. Ours is an action program not merely an educational program. Talking about quality improvement but what do we mean by that word improvement? First let us define what we mean by control. Control is the process of detecting and correcting adverse change. Let's explain this by a graph the horizontal scale is time, the vertical scale is performance. Anything that goes up is bad. Now suppose that our past performance has been 10% defective, suppose also that we've been unable to get rid of that 10%. Typically we conclude at least let's make sure that things don't get worse so we set up to measure our actual performance. Similar is our actual performance stays close to that 10% all remains quiet we have learned that we were that 10%, subconsciously we've accepted 10% as a sort of a standard. Now suppose there's a sporadic rise to 20%. That rise triggers many alarm signals, the supervision of converges on the scene and takes corrective actions. We call that firefighting troubleshooting and so on now going from 20% to 10% is a sort of improvement but it is not the kind of improvement we are talking about as we are talking about is this big bionic area under the 10% line. If we could reduce that 10% say to 3% that would be a big gain and it would go on and on.
Reduction in that chronic level is the kind of improvement we are talking about and is very different from fighting sporadic fires. Now if you wish to explain the distinction between sporadic and chronic to your colleagues you can use the dialogue between the drunk and the half-wit. The drunk says you're stupid and the half-wit says you are drunk and the response is, correct I am drunk but tomorrow I'll be sober and tomorrow you'll still be stupid. Now is that chronic loss a fate or problem?
Look at smallpox, once it was called the scourge of God, a fate beyond the ability of humans to do anything about it. Then some determined humans waited in and looked at the history of smallpox in the United States. We see a chronic condition with occasional sporadic peaks, now smallpox is extinct, it was a problem after all. Any improvement to unprecedented levels we will call breakthrough. We’ll use those two words improvement and breakthrough interchangeably. We define breakthrough as the organized creation of beneficial change. We will review many cases of breakthrough, we’ll find that there is a universal sequence of events through which all managers made their improvements.
Let's look at that universal sequence, first there's proof of the need, why change what we're doing? Then there's project identification, specifically what are we going to tackle, then comes organization, organization to guide each project and organization to diagnose or analyze each project. Then follows diagnosis, a breakthrough in knowledge, next comes remedial action under new knowledge including overcoming resistance to change and finally there is control at the new level. This sequence is universal, all breakthroughs follow that sequence, we will use this sequence at our road map, the first step is proof of the need.
We need them to keep our products saleable and our costs competitive, our why's we lose ground to every competitor who does make annual improvement. For a classic example look at the Japanese revolution in quality, following world war two, the Japanese tried to convert their industries to civilian products but they were unable to export due to poor quality so they launched a revolution in quality, let's diagram that out with a need of our mysterious Mystica.
In this model the horizontal axis is time in decades, the vertical axis is quality, saleability of the product. In 1950 western quality was high, it has kept improving but at an evolutionary pace, in 1950 Japanese quality was poor, the Japanese then invested in a massive training program, they learned how to improve quality then they made quality improvements at a revolutionary pace year after year my estimate is that by the mid-1970s they had equaled Western quality. That revolution has progressively made Japanese products saleable then competitive and now in some product lines superior in quality. These quality improvements were nearly always accompanied by cost reductions.
A classic example is that of a color television set until 1974 Quasar was an American old color television factory it was competitive in quality in the US market. Quasar was then sold to a Japanese company who introduced changes in product designs, vendor relations, manufacturing processes and so on. Look at the effect of those changes on the costs of poor quality incidentally during these sessions I will be showing many visual aids on the screen on Mystica on the TV monitor. Most of these aids are reproduced in your workbook under the tab corresponding to the same session number, the page number will be flashed on the screen your workbook will usually include sacramental explanation beyond that contained in my own presentation.
The cost of service calls during warranty declined from 22 million per year now the formative the number of factory personnel needed to find and repair in-house defects declined from 120 to 15 so the new owners attained the best of both worlds better quality for the users due to lower field failure rates and lower costs for the manufacturer. Not only do we need improvement we need the habit of improvement. To develop that habit our management teams should accept the responsibility for improvement understand the universal sequence of events to which managers make improvements, learn the key concepts techniques and tools and finally apply the universal sequence to actual company problems. Ours is an action program not merely an educational program. Talking about quality improvement but what do we mean by that word improvement? First let us define what we mean by control. Control is the process of detecting and correcting adverse change. Let's explain this by a graph the horizontal scale is time, the vertical scale is performance. Anything that goes up is bad. Now suppose that our past performance has been 10% defective, suppose also that we've been unable to get rid of that 10%. Typically we conclude at least let's make sure that things don't get worse so we set up to measure our actual performance. Similar is our actual performance stays close to that 10% all remains quiet we have learned that we were that 10%, subconsciously we've accepted 10% as a sort of a standard. Now suppose there's a sporadic rise to 20%. That rise triggers many alarm signals, the supervision of converges on the scene and takes corrective actions. We call that firefighting troubleshooting and so on now going from 20% to 10% is a sort of improvement but it is not the kind of improvement we are talking about as we are talking about is this big bionic area under the 10% line. If we could reduce that 10% say to 3% that would be a big gain and it would go on and on.
Reduction in that chronic level is the kind of improvement we are talking about and is very different from fighting sporadic fires. Now if you wish to explain the distinction between sporadic and chronic to your colleagues you can use the dialogue between the drunk and the half-wit. The drunk says you're stupid and the half-wit says you are drunk and the response is, correct I am drunk but tomorrow I'll be sober and tomorrow you'll still be stupid. Now is that chronic loss a fate or problem?
Look at smallpox, once it was called the scourge of God, a fate beyond the ability of humans to do anything about it. Then some determined humans waited in and looked at the history of smallpox in the United States. We see a chronic condition with occasional sporadic peaks, now smallpox is extinct, it was a problem after all. Any improvement to unprecedented levels we will call breakthrough. We’ll use those two words improvement and breakthrough interchangeably. We define breakthrough as the organized creation of beneficial change. We will review many cases of breakthrough, we’ll find that there is a universal sequence of events through which all managers made their improvements.
Let's look at that universal sequence, first there's proof of the need, why change what we're doing? Then there's project identification, specifically what are we going to tackle, then comes organization, organization to guide each project and organization to diagnose or analyze each project. Then follows diagnosis, a breakthrough in knowledge, next comes remedial action under new knowledge including overcoming resistance to change and finally there is control at the new level. This sequence is universal, all breakthroughs follow that sequence, we will use this sequence at our road map, the first step is proof of the need.
