Google Analystics

Wednesday, 8 October 2014

Tempted to cut quality to cut costs? Think again.

The name W. Edwards Deming looms huge in the history of quality management and the use of statistical sampling methods to control costs through controlling quality. He also made a huge contribution to the efficiency and quality improvement phenomenon in post-war Japan. Reading a Wikipedia article on Deming I was intrigued to find that Japanese disciples of Deming summarized his philosophy into a formula with an 'a' versus 'b' comparison:

(a) When people and organizations focus primarily on quality, defined by the following ratio,

quality tends to increase and costs fall over time.

(b) However, when people and organizations focus primarily on costs, costs tend to rise and quality declines over time.

In Deming's 1950 Lecture to Japanese Management he stressed to senior managers and owners how crucial it was for them to provide the leadership necessary for quality to reduce costs: "No matter how excellent your technicians, you who are leaders, must strive for advances in the improvement of product quality and uniformity if your technicians are to be able to make improvements. The first step, therefore, belongs with management. First, your company technicians and your factories must know that you have a fervor for advancing product quality and uniformity and a sense of responsibility for product quality."

Steps for Managers

Even if your organization (service or manufacturing) is not certified to an ISO standard, the ISO 9001 international standard provides helpful pointers for any organization's leadership to take control of quality in their organization. I like to use the catch phrase, "Measure, Monitor, Manage".

Measure frequently and monitor by regularly reviewing the following:

Audits, inspections or site visits: what was good and what can or should be improved?

Clients, customers, patients, residents: Are we soliciting feedback with surveys or other means? Are we getting complaints? Where are our "customers" on the unhappy-satisfied-delighted spectrum?

Product or Service: How satisfactorily are we meeting our own internal standards? Do we even have standards? Are they adequate?

Corrections, Corrective and Preventive Actions: Are these effective? Is there a backlog?

Action items: Have we followed through on decisions made in previous management reviews of quality?

Changes: Are there any recent changes, or impending changes, that could impact the good functioning of our organization?

Recommendations: Are there any good ideas or recommendations for improvement from any quarter, whether from within or from outside the organization? Are we actively encouraging creative input for improvement or are we fighting to maintain the status quo and suppressing 'heretical' ideas? (Consider this blog a source of recommendation for improvement.)

After diligent review of the above, manage by making decisions and assigning action items that will result in improved effectiveness and efficiency of organization processes and practices, happier clients/patients/residents or improved product with happier (and returning) customers. Consider whether you have the resources, human or material, to achieve this and what you can do if you don't.

By focusing on effective and efficient processes to ensure a quality outcome to delight customers, clients, patients or residents, costs should fall over time. Don't take my word for it. Sixty-four years ago Deming preached that message to Japanese businessmen. Organizations like Toyota still vouch for the validity of his message today.

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