TQM Creating Unique Organizational Capability

TQM
Creating Unique
Organizational Capability
Rev 02.2 (Nov ’03)

Kiran Deshmukh
Sona Koyo Steering Systems Ltd.
“What I Understand by TQM” – an
Exercise
20
Rules for Learning
5
The Path to Skill The new form is drilled into our
muscle memory, and we feel
completely natural doing it.
Unconscious competence
Conscious competence
With practice, we feel somewhat
more comfortable. However, we
still wonder if this is “right for
me.”
Conscious incompetence
An expert shows us how to, and

we feel awkward: “This doesn’t
work for me.”
Unconscious incompetence
Swinging a tennis racket
without knowing how to do it.
A Setting for Learning
1. Information + commentary  knowledge

When people talk about something they have read, the words come
right out of the information source; this is knowledge.
2. Knowledge + feedback  understanding

You deepen knowledge into understanding by speaking about the
subject with someone who already understands it and by attempting to
use the knowledge in different ways.
3. Understanding + drive to use and schedule

 skill
Ideas have to be used and practiced before they become skills. In
practice, developing a skill useful in actual situations takes both
motivation—a powerful reason to use the skill instead of playing it safe
—and a commitment to use the skills, which often takes the form of a
schedule.
Attitudes That Block Openness to Learning
IAKI I Already Know It

NIH Not Invented Here
PITM Prove It To Me
NMJ Not My Job
WCNDT We Could Never Do That

Attitude That Promotes Openness to Learning
Participate, Participate,
PPP
and Participate
Demonstrating the Importance of
‘Knowledge’ – an Exercise
10
The TQM Model
Business Evolution
• The practice of business has evolved over the past

century, and it continues to evolve at an increasing pace.
• The evolution of business practice has been driven
substantially by an evolution in the definition of quality or
customer satisfaction.
– Customers have a greater variety of expectations.
– They have more options for satisfying these expectations than
ever before.
• To face these challenges, each organization needs to
become the unique organization it wants to be.
• Organization needs to transform itself to become unique.
An Organization Needs a Transformation Process
Unique Organization
(Transformation Process)
Inherent / Initial state of being

The Two Fundamental Issues Facing Organizations
• Figuring out what the

market wants and the
Customer / intersection of that with
market
what the company can
provide.
What to do How to do it • Aligning and mobilizing
itself to deliver what is
needed.
Company
processes
The Transformation Process
Unique Organization
(Transformation Process)

The What and How Drive the Transformation
Unique Organization
Company
Customer /
processes
market
How
What (Transformation Process)

The Components of the Transformation Process
Unique Organization
Customer /
market
How
What People
Methods

The Components of the Transformation Process
Unique Organization
Customer /
market
How
Total
What Continuous participation
improvement • Individuals
• Teams
methods •
Organizations

The Four Revolutions Transform an Organization
Unique Organization
What How
Total Societal
Continuous participation
improvement • Individuals Networking
Customer • Teams
methods •
Focus Organizations

The TQM Model
Customer
Focus
Unique
Organizational
Capability
Continuous Total
Improvement Participation
Societal Networking
TQM Means …
TQM m e ans ...
Custom e r
Tho rough
Socie ty
Custom e r N e xt Proce ss
Orie nte d
f
to
Fa ilit lo t io n
en
Good fruits com e TQM
ir ie p m
n
ab ve iva
t io
from good factors
ot
scie ntific & quality
ua
ev s
M
and proce sse s.
al
e
orie nte d m anage m e nt for
D
custo m e r satisfactio n by
participation of all
Think m uch of m e m be rs in the com pany Hum anize d
Factors and Ope rations
Rete ntio n
Proce sse s
Im provem e nt
Base d o n Facts
Customer Focus
Customer
Focus
Unique
Organizational
Capability
Continuous Total
Societal Networking
The Evolution of Customer
Satisfaction
The Evolution of Customer Satisfaction Concept – 1
Standardization
Statistical process control
Fitness to standard
inspection
Standardization
Fitness to standard
inspection
Market research
Cross-functional involvement
Fitness to use
Standardization
Fitness to standard
inspection
Market research
Fitness to use
QC Circles
7 QC steps, 7 QC tools
Fitness to cost
=improvement methods
Standardization
Customer Focus
Fitness to standard
inspection
Market research
Fitness to use
QC Circles
Fitness to cost
QFD
7 Management tools Fitness to latent
requirement
Company Focus
Standardization
External
Fitness to standard
inspection
Market research
Fitness to use
QC Circles
Fitness to cost
QFD
7 Management tools Fitness to latent
requirement
Internal
A New Fitness
External
Fitness to standard
Fitness to use
Fitness to cost
Fitness to latent
requirement
Fitness of
corporate culture
Internal
Two New Fitnesses
External
Fitness to standard
Fitness to use
Fitness to cost
Fitness to latent
requirement
Fitness of
corporate culture
Fitness for social and

Internal global environment
Change in Work Concept
The Product-Out Concept
Standard
Work
Manual
The Market-In Concept
Means
Standard Purpose
Satisfaction of customer
Work
(outside and inside)
Manual
Improvement
Market-In Enables Management in the Face of Rapid
Change
Market-in
Means
Standard Purpose
Work
Manual
Improvement
Unforeseen
rapid changes in
diverse areas
Market-In Concept Includes Process Improvement
• Identify the work you do.

– That is, the product.
• Identify whom you do it for.
– That is, the customer.
• What do you need to do your work and from whom do you
need it?
– That is, the suppliers.
• Map the process.
• Mistake-proof the process and eliminate delays (including
non-value-added time).
• Establish quality and cycle time measurement and
improvement goals.
Philosophy-In and Philosophy-Out
Market-in Philosophy-out
Means
Standard Purpose
Society
Work
Manual
Improvement
Unforeseen
rapid changes in Philosophy-in
diverse areas
Understanding Customers’
Requirements
Listen, Observe, Interpret, and Integrate
• Have a process to:

– Listen to what the customers and potential customers
have to say.
– Observe what they do.
• Analyze and interpret what the customers have

said in the context of the observed actions.
• Intersect and integrate company’s own concerns
and the concerns it has interpreted from various
current and future customers.
Translating Customer Requirements into a New Product
Invisible
needs
Making
customer Product and
Product
requirements process Production
design
visible and development
explicit
Operationally Concept generation

defining the voice and selection
of customer
Stage 1: Stage 3:
Stage 2: New product
Develop an Operationally
Convert
understanding of define requirements
understanding
customers’ needs for downstream
into requirements
and environment development
Transforming the Voice of Customer into Customer
Requirements (CRs)
Collect the
voice of the
customer
Translate to
Extract Check CR
Link voice statement of
the against voice
to context customer
key item and image
requirement
Collect and
identify scenes
of using the
products / services
Kano’s Dimensions of Product Quality
Satisfaction
Customer Satisfaction
Dysfunctional Fully Functional
Indifferent
One-dimensional
Attractive
Must-be
Dissatisfaction
Kano’s Dimensions of Product Quality
Satisfaction
Customer Satisfaction
Dysfunctional Fully Functional
Heater
Seating System
GPS Navigation
Brakes
Dissatisfaction
A Customer Requirement Classification Questionnaire –
an Example
1. I enjoy it that way.

Fu If the water drains 2. I expect it that way.
ncti quickly out of the 3. I am neutral.
oni basket, how do you 4. I dislike it, but I can live with it
ng feel? that way.
5. I dislike it, and I cannot accept it.
1. I enjoy it that way.

Dy 2. I expect it that way.
If the water drains
sfu
slowly out of the 3. I am neutral.
ncti
basket, how do you 4. I dislike it, but I can live with it
on
feel? that way.
al
5. I dislike it, and I cannot accept it.
Kano’s CR Evaluation Table
Dysfunctional
Customer 1. 2. 3. 4. 5.
Requirements Enjoy Expect Neutral Live with Dislike
1.
Enjoy
A A A O
2.
Expect
R I I I M
Functio 3.
R I I I M
ning Neutral
4.
Live with
R I I I M
5.
Dislike
R R R R
A: Attractive; M: Must-be; R: Reverse; O: One-dimensional;

I: Indifferent.
Tabulation of Kano Survey Results
Dysfunctional
Customer
1. 2. 3. 4. 5.
Requirements Enjoy Expect Neutral Live with Dislike
1.
Enjoy
O
2.
n Table
atio
Expect
Functionin 3.
oE valu
Kan
g Neutral
aire
o nn
4.
esti
Live with
Qu 5.
Dislike
1. I like it that way

CR1 2. It must be that way
Functional 3. I am neutral
4. I can live with it that way
5. I dislike it that way
CR A M O R Q I Total Grade
CR1 1. I like it that way
Dysfunctional 2. It must be that way 1.
3. I am neutral
4. I
5. 2.
e ys
3.
f S urv
a ti on o
ul
… Tab
…
Relationship Between Kano’s Dimensions and the Four
Fitnesses
Kano
One-
Attractive Must-be
dimensional
(‘delighters’) (‘dissatisfiers’)
(‘satisfiers’)
To latent
requirement O
Fou
r Of cost O O O
Fitn
ess To use O O
es
To standard O
Quality Table
necessary
 Not
Quality Variables
A B C D
1
Q
Custo
2
mer D D  Weakly
covered
Requir
3
ement O O
s
4  Not
covered
Conclusions – Customer Focus
Conclusions – Meaning of Customer Focus
Consumer Orientation Is the Desire to Produce Goods and

Services That Customers Want and That They Will Be
Happy to Buy
The fundamental aim of quality management is to develop, manufacture

and sell goods and services that satisfy customers and are acceptable to
society. The “market in” philosophy is essential for this .
The “market in” philosophy means placing oneself in the user’s shoes
and manufacturing goods and services that meet market needs. This
contrasts with the “product out” philosophy, a manufacturer-centered
approach that consists of forcing onto the market goods and services
produced for the manufacturer’s benefit.
Conclusions – Keys to Customer Focus
• Identify market wants and needs, and plan and develop

goods and services that meet them.
• Strengthen and enhance the quality assurance system,
design and manufacture products from the user’s
standpoint, and produce defect free products.
• Provide an effective after sales service, deal with
complaints promptly, and use the information obtained to
prevent any recurrence.
TQM and Customer Focus
TQM m e ans ...
Custom e r
Tho rough
Socie ty
Orie nte d
f
to
Fa ilit lo t io n
en
ir ie p m
n
ab ve iva
t io
from good factors
ot
ua
ev s
M
and proce sse s.
al
e
D
Rete ntio n
Proce sse s
Im provem e nt
Base d o n Facts
Continuous Improvement
Customer
Focus
Unique
Organizational
Capability
Continuous Total
Societal Networking
The Meaning of Continuous
Improvement
Continuous Improvement versus Breakthrough
• Continuous improvement technique of TQM covers

repeated improvements of all sizes, including those that
are beyond the incremental improvements.
• The words “continuous improvement” do not preclude
innovation, creativity and breakthrough.
• We need continuous or repeated innovation, creativity, and
breakthrough as well as continuous incremental
improvement.
• Frequently, small things that prevent breakthrough are
examples of weak process control.
• What people call breakthrough is almost always a feeling
of climax or appearance of great change that has resulted
from extended incremental efforts.
Continuous Improvement versus Innovation
I can show that It’s a mistaken dichotomy that

continuous improvement and innovation are two
different things and that, in fact, innovation
often contains a great deal of continuous
improvement and that continuous improvement
involves innovation.
Prof. Robert E Cole

University of California’s Haas School of Business
Continuous Improvement versus Innovation
“Secret of my success? Five per cent

inspiration and ninety-five per cent
perspiration!”
Thomas Alva Edison

The Greatest Inventor of All Times
(1093 Patents registered)
Breakthrough Is When the Result of the Work Becomes
Apparent
Improvement As a Process
Management by Process
P
Develop
Develop plan D
for measuring
implementation Execute
Set new or whether
plan for Implementation and
revised goal implementation
accomplishing Measurement plans
OUTPUT
plan is being
the goal
followed
Analyze reasons for

Monitor results
poor adherence to
and adherence to
implementation plan
implementation plan
A or poor results
C
Meaning of Management by Process
• Implicit in this concept is the idea that any activity

can be improved if you:
– Systematically plan the improvement,
– Understand the current practice,
– Plan solutions and implement them,
– Analyze the result and its causes, and
– Cycle through these steps again.
• This scientific approach can be applied to
– Improving a company’s process for anticipating its
customers’ needs.
– Improving the capabilities of the employees.
The Model for Improvement Activities
Choose specific
Sense improvement Plan Standardize
problem activity solution solution
Level of
thought
data data data

Level of
experienc
e
Process Control
• An effective standard process

exists to perform some business or
manufacturing function.
• The process is being monitored to
make sure it is working as
intended.
• If the process gets out of control,
one takes corrective action as
predetermined as described in the
maintenance manual.
• This is the SDCA (have standards,
do, check and act) cycle.
The SDCA Cycle
Act to return to
standard (A)
Have standard (S)
Check / evaluate
effects (C)
Do / use
Level of standard (D)
thought
data
Level of
experienc Control
e
Reactive Improvement
• When the process control is weak,

the process results go out of
control often.
• Even if one takes corrective
actions according to the SDCA
cycle, still the process goes out of
control.
• One has to collect data, analyze it,
find the root cause of the problem,
and implement appropriate
countermeasures.
• The specific problem is solved
through the 7 steps of problem
solving.
The 7 Steps for Reactive Improvement
7. Reflect on process 6. Standardize

and next problem solution
1. Select 4. Plan
theme and …
2. Collect
3. Analyze Implement 5. Evaluate
and analyze
causes solution effects
data
Level of
thought
data data
Level of
experienc Reactive
e
Proactive Improvement
• In many cases one does not start with a clear idea

of a specific needed improvement.
• One may have to decide a direction for the
company before starting an improvement activity.
• At first, one is generally aware that there is a
problem.
– One senses a problem.
– The situation is explored broadly.
– Having explored the situation broadly, the problem is
formulated.
• This is the proactive improvement.
Proactive Improvement Steps

Sense 1. Select 4. Plan

problem theme and …
2. Collect
Explore Formulate 3. Analyze Implement 5. Evaluate
and analyze
situation problem causes solution effects
data
Level of
thought
data data data

Level of
experienc
e
Proactive
Three Types of Improvement


2. Collect
and analyze
data
Level of
thought
Control
Level of
experienc Reactive
e
Proactive
Focus on the “Vital Few”
• Many opportunities exist for making

improvements, but the resources for doing so are
limited.
• Experience has shown that only a few of the
actions taken have significant effect.
• Current and future customer satisfaction should
be guidelines in making key decisions about
company products, practices, and systems,
highlighting the few activities that will have the
greatest impact on business success.
Iterative Improvement
• Implicit in our model of

improvements is the
idea of iterative
improvement—the
cycling back to work
Sense 1. Select 4. Plan on the next problem or
the continual
Explore Formulate
2. Collect
improvement of an
already improved
and analyze
data
Level
process.
of
though
t
Control
Level of
experienc Reactive
e
Proactive • This is the famous
PDCA (plan, do,
check, act) cycle.
The PDCA Cycle
Plan Determine analytically and

quantitatively what the key
problems are with the
existing activities and how
they might be solved.
P D Do Implement the plan
Plan Do Check Confirm quantitatively and

analytically that the plan
A C works and that it results in
improved performance.
Higher Quality
Act Check
Act Modify the previous process
appropriately, document the
revised process, and use it.
PDCA symbolizes the principle of iteration in problem solving

—making improvements in a step-by-step fashion and
repeating the improvement cycle many times—doing the best
job you can within relatively short improvement cycles.
Stepwise Improvement versus Tackling a Large Problem
with a Single Effort
Rotation 3
P D
Plan Do
A C
Act Check
Rotation 2
P
P D
Plan Do
D
A C Plan Do
Act Check
Rotation 1
P
Plan
D
Do
A C
Act Check
A C
Act Check
Compared with one big

step, repeated PDCA cycles
are a more efficient path to
the current target and yet
let you keep adapting as the
target—in real life—keeps
moving.
PDCA for Incremental and Breakthrough Improvements
Incremental
Improvement
P D
Normal Problem Plan Do PDCA1
Standard Work A C
Process Act Check
Type of
C A
problem
D S Breakthrough
Improvement
SDCA
P D
Profound Problem
Plan Do
A C
PDCA2 Act Check
Continuous Improvement and the Scientific Method
• Continuous improvement means: “apply the scientific

method”.
• In a scientific method, we:
– Try something,
– Digest what this tells us about how the world works,
– Try it again to confirm whether or not our presumption was right.
• Without theories that can be tested, measured, repeated,

etc., we are left with the uncertainty of folklore and being
wrong.
• Managers need to run experiments and find out what
genuinely works in their situation.
Process Discovery and Management
Every Process Has Measurable Output(s) and
Controllable Input(s)
Process Parameters Mechanical Properties
• Temperature • Size growth
• Carbon potential • Bend
• Time • Others
• Quench agitation
HEAT TREATMENT Output

Inputs
PROCESS (Heat Treated Parts)
(Carburizing
Furnace)
Metallurgical Properties
Others
• Case depth
• Furnace Consistency
• Surface hardness
• Raw material properties
• Core hardness
• Microstructure
We Use the Feedback From the Output to Modify or
Improve the Inputs
Process Parameters Mechanical Properties
• Temperature Feedback • Size growth
• Carbon potential • Bend
• Time • Others
• Quench agitation
HEAT TREATMENT Output

Inputs
PROCESS (Heat Treated Parts)
(Carburizing
Furnace)
Metallurgical Properties
Others
• Case depth
• Furnace Consistency
• Surface hardness
• Raw material properties Feedback
• Core hardness
• Microstructure
All Work Is a Process
Requirements Requirements
PROCESS
Supplier Inputs Participants Output Customer
Value-added tasks
Feedback Feedback
Our work can be managed well if we manage our

process well!
Components of Process Management
PROCESS DISCOVERY
Understand the customer
and the process
PROCESS CONTROL REACTIVE

Assessing conformance to IMPROVEMENT
customer requirements The 7 Steps method
Process Management – I
• Process Discovery:
– What are my products / services?
• Who owns the process?
– Who are my customers?
– What do my customers need?
• What are my needs?
– What is my standard work process?
PROCESS DISCOVERY
Understand the customer
and the process
Process Management – II
PROCESS CONTROL
Assessing conformance to
• Process Control: customer requirements
– What are my customers’ quantitative specifications?

– Do my products / services satisfy or exceed customer
specifications?
• Identify and remove non-standard sources of variation.
• Determine if the standard process is capable of meeting quality
specifications.
• Reactive Improvement:
– What activities are needed to improve my process?
• Identify largest source of variation in standard process.
• Find and eliminate root cause of variation.
• Define new standard process.
REACTIVE
IMPROVEMENT
The 7 Steps method
Steps for Process Discovery
1. Who are our customers?

2. What products and services do we provide?
3. What are the customers’ requirements?
4. What measures and targets apply to their requirements?
5. What is our process?
6. What do we require to deliver the product or service
successfully?
7. Do our products and services meet or exceed their
requirements?
1. Our Customers
• People doing tasks do not think about having

customers. They just do their assigned task as
they are told to do it.
• Why do the task, if someone does not use it
eventually?
– We call this user the customer.
• The first step in discovering one’s process is

understanding who his or her customers are.
2. Products and Services That We Provide
• Think in terms of what products and services are

provided to each customer identified in step one.
• Each product and service should have a
customer.
– If a product or service does not have a clear customer,
then the function is probably not needed.
• Focus improvement efforts first on the products
and services that are most important to key
customers.
3. Customers’ Requirements
• People think that they know the best what the customer
wants.
– Without asking the customer about customer’s requirements, one
cannot be sure the products and services one is providing are the
right ones.
• Think in terms of Quality-Cost-Delivery (QCD).
– Q: functionality provided to the customer.
– C: total cost to the customer—both tangible and intangible.
– D: the place, the time, and the method of delivery.
• The different customer requirements should be easily

described in a few well-chosen words that capture the
essence of the need.
4. Measures and Targets As Applied to the Customers’
Requirements
• By determining the measures and targets relating

to the customer requirements, one is likely to
learn more about what the requirements really
mean.
• For each customer requirement under
consideration, discover how the customers
measure whether their need is being met.
• We also need to determine how we are going to
take the relevant measurements of the outputs of
our process.
5. Our Process
• Is our process clearly related to the customer and

the product or service under consideration?
– We need to explicitly understand everything we are
doing.
– We need to make explicit the order we are doing it in.
– We need to write it down so we can look at it and
analyze it.
• We need to draw the process flow chart.
– Once documented, many opportunities for eliminating
inefficiency and ineffectiveness will be visible.
– We cannot change a process unless we understand it
fully.
6. Our Requirements
• Think of ourselves as customers of others and

how we specify our needs, measures, and targets
to our suppliers.
– The suppliers whom we give explicit purchase orders.
– The suppliers whom we depend upon but may seldom
think of in terms of purchasing services.
7. Meeting or Exceeding Customers’ Requirements
• We may be able to directly compare quantitative

versions of customer requirements (metrics and
specifications) with quantitative measures of our
products and services.
• We may have to ask our customers if they are
satisfied with our products and services.
Benefits of Process Discovery
• It will prevent working on problems unimportant to

our customers.
• It will deter us from tampering with our process.
• It will enable us to identify “non-value-added”
activities.
• It will help provide focus on the few vital
improvements we must do and for which there are
resources.
Sample Process Discovery Worksheet
Customers Products / Requirements Metrics / Meet /

Services Targets Exceed?
s …
l low
Fo
ent
a rtm
ep
ol lD
r
ay
ofP
p le
x am
n E
A
Customers of the Payroll Department
• The employees who get paid.

• Various government tax agencies that must be
notified of amounts paid to each employee.
• Payroll service bureau that takes a pay list from
the payroll department and prints the cheques.
• Banks to which the payroll department sends
direct deposits to employee accounts.
• The subset of employees who are paid in cash.
Continued
Customers of the Payroll Department
• Insurance companies to which a portion of an employee’s

pay along with an employer contribution are sent.
• Retirement trusts to which a portion of an employee’s pay
along with an employer contribution are sent.
• Unions to which a portion of some employee’s pay is sent
for union dues.
• Company cash management department which must be
kept up to date on the company’s cash needs.
• The human resource department which needs payroll
information to do its job.
• The controller’s office which needs various reports to
monitor the function of the payroll department.
Payroll Department’s Products and Services for
Employees
Customers Products / Services
Employees Pay in hand or at bank

Employee tax forms
Distributions to insurance, etc.
Changes in distribution amounts
Pay slip with summary information
Answers to employee questions
Answers to others to help employees
Pay advance in emergencies
Payroll service bureau ……………………

Employee Requirements for Pay Cheque and Pay Slip
Quality Cost Delivery

Accurate amount Local currency On time
Accurate To right address
distributions
To special location
To the right bank
Easy to understand
pay slip
Vacation day total on
pay slip
Measures and Targets As Applied to the Requirements
Quality Cost Delivery

Accurate amount Local currency On time
Accurate To right address
distributions
To special location
To the right bank
Easy to understand
pay slip
Vacation day total on
pay slip
Minutes after midnight at

the end of payday by which
the pay is available in the
employees bank account
Process Discovery – an Exercise
Process Control
The SDCA Cycle of Process Control
Act to return to
standard (A)
Have standard (S)
Check / evaluate
effects (C)
Do / use
Level of standard (D)
thought
data
Level of
experienc Control
e
Process Control Can Be Applied to Any Repetitive
Process
• Many senior managers are not familiar with the basic
concepts of process control.
• If they knew process control exists, they cannot imagine
that it could apply outside the manufacturing area.
• In fact, process control can be applied to processes as
varied as:
– Order entry.
– Training course delivery.
– Billing.
– Recruiting.
– Daily cash forecasting.
Process control can be
– Developing products. applied to any repetitive and
– Corporate budgeting. measurable process!
Typical Struggle with Variation
18
Target = 1700
17
16
15
Leads ('00)
Assume that we are in the marketing

14 department and are responsible for
generating leads
13
12
11
10
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Adds ($K)
PR ($K)
Leads ('00) 15
18
Target = 1700
17
16
15
Leads ('00)
14
13
12
11
10
Adds ($K) 20
PR ($K) 0
Leads ('00) 15 14
18
Target = 1700
17
16
15
Leads ('00)
14
13
12
11
10
Adds ($K) 20 22
PR ($K) 0 0
Leads ('00) 15 14 13
18
Target = 1700
17
16
15
Leads ('00)
14
13
12
11
10
Adds ($K) 20 22 24
PR ($K) 0 0 0
Leads ('00) 15 14 13 14
18
Target = 1700
17
16
15
Leads ('00)
14
13
12
11
10
Adds ($K) 20 22 24 24
PR ($K) 0 0 0 0
Leads ('00) 15 14 13 14 15
18
Target = 1700
17
16
15
Leads ('00)
14
13
12
11
10
Adds ($K) 20 22 24 24 24
PR ($K) 0 0 0 0 0
Leads ('00) 15 14 13 14 15 16
18
Target = 1700
17
16
15
Leads ('00)
14
13
12
11
10
Adds ($K) 20 22 24 24 24 26
PR ($K) 0 0 0 0 0 0
Leads ('00) 15 14 13 14 15 16 13
18
Target = 1700
17
16
15
Leads ('00)
14
13
12
11
10
Adds ($K) 20 22 24 24 24 26 20
PR ($K) 0 0 0 0 0 0 2
Leads ('00) 15 14 13 14 15 16 13 14
18
Target = 1700
17
16
15
Leads ('00)
14
13
12
11
10
Adds ($K) 20 22 24 24 24 26 20 20
PR ($K) 0 0 0 0 0 0 2 4
Leads ('00) 15 14 13 14 15 16 13 14 13
18
Target = 1700
17
16
15
Leads ('00)
14
13
12
11
10
Adds ($K) 20 22 24 24 24 26 20 20 20
PR ($K) 0 0 0 0 0 0 2 4 4
Leads ('00) 15 14 13 14 15 16 13 14 13 14.5
18
Target = 1700
17
16
15
Leads ('00)
14
13
12
11
10
Adds ($K) 20 22 24 24 24 26 20 20 20 20
PR ($K) 0 0 0 0 0 0 2 4 4 4
Leads ('00) 15 14 13 14 15 16 13 14 13 14.5 16
18
Target = 1700
17
16
15
Leads ('00)
14
13
12
11
10
Adds ($K) 20 22 24 24 24 26 20 20 20 20 20
PR ($K) 0 0 0 0 0 0 2 4 4 4 6
Leads ('00) 15 14 13 14 15 16 13 14 13 14.5 16 13
18
Target = 1700
17
16
15
Leads ('00)
14
13
12
11
10
Adds ($K) 20 22 24 24 24 26 20 20 20 20 20 20
PR ($K) 0 0 0 0 0 0 2 4 4 4 6 2
Leads ('00) 15 14 13 14 15 16 13 14 13 14.5 16 13 14
18
Target = 1700
17
16
15
Leads ('00)
14
13
12
11
10
Adds ($K) 20 22 24 24 24 26 20 20 20 20 20 20 20
PR ($K) 0 0 0 0 0 0 2 4 4 4 6 2 0
Leads ('00) 15 14 13 14 15 16 13 14 13 14.5 16 13 14 13
18
Target = 1700
17
16
15
Leads ('00)
14
13
i ng ts
a ry pu
12 v n
r e g i ngs o
s a yin hi d se
11 l t r t e
s u va ke , w the h
re are ma ver w eac
10 h e e o e ho o
T
Jan Febw Mar t w d Jun t Jul Aug Sep Oct
d n g Apr H o May n te
Nov Dec Jan Feb Mar
i
n
Adds ($K) 20 a 22try 24 e r. 24rsta24ela 26! 20 20 20 20 20 20 20 20
e tt de s r her
PR ($K) 0 0 b 0 u n 0 on 0 t 0 2 4 4 4 6 2 0 0
t t i o
Leads ('00) 15 14 no13 ria14 15 16 13 14 13 14.5 16 13 14 13 12.5
va
Rules About Output of a Process
• Customer needs determine the desired output.

• The process actually used determines the actual
output.
• The actual process output inevitably has variance.
• Not inspection, but reduction in variation will result
in output that will satisfy customer’s requirements.
Customer Needs Determine the Desired Output
• The goal of business processes should be to

satisfy an external or internal customer.
• Customer needs must determine the desired
outputs of the processes of companies.
– One needs to know what customers care about.
– One needs valid quantitative measures to track what
the customers care about.
Lower
Specification Upper
Limit (LSL) Customer desired Specification
Limit (USL)
specifications
The Process Actually Used Determines the Actual
Output
• The actual results produced come from the

process and its inputs and not from what the
customer has specified.
• If you have a process that produces outputs within
certain range, the outputs will be within that range
regardless of the outputs customers desire.
PROCESS
Men 
Materials 
OUTPUT
Methods 
The Actual Process Output Inevitably Has Variance
• Any process has some variability in its results.

• For example:
– In the cash management system, the cash balance at the end of
each day will vary from the target for the day. Some of these
variations will be acceptable (results fall within specifications), and
some results will vary so widely that they fall outside of
specifications.
• This variability of response is typically described in terms
of two characteristics that can be learned from the
statistics of the output:
– A central tendency (mean).
– Natural variability (distribution of responses over the range of
responses).
Process Output Varies According to Normal Distribution
Normal Frequency Distribution

Bank Utilization at the End of Every Day
Mean = 1228
9
12
8
10 7 Lower Natural Upper Natural
8 6
Limit = 942 Limit = 1513
,%
6 5
cy
y
n
c
e
n
u
q
e
4 4
re
u
F
Freq
2 3
2
0
1
0
0
0
5
0
0
5
1
1
1
1
~
1~
1~
~
~
0
0
0
0
1
1
1
4
8
2
6
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
8
8
9
9
9
2
6
0
4
8
2
8
2
6
0
4
8
6
4
0
1
2
5
0
0
1
1
2
3
3
3
4
4
5
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
Rs. lac Rs. lac
(August 1, ’02 ~ September 30, ’02) • Central tendency: 1228
• Natural variability: 942 ~ 1513
Specifications Come From Customers; Results Come
From the Process
Lower
Specification Upper
Limit (LSL) Customer desired Specification
Limit (USL)
specifications
Lower Natural
Process Limit
Upper Natural
(LNPL)
Process Limit
(UNPL)
Actual process performance

Not Inspection, but Reduction in Process Variation Will
Result in Meeting Customer Requirements
Inspection Reducing the

Rejection! Variance
Customer desired Customer desired

specifications specifications
Actual process performance Actual

process
performance
Stable Pattern of Variation
Routine variation (due to what Dr. Deming called

‘common causes’) is the variation inherent in the
process—natural variation imposed by the physical
limits of the process. Routine variation is statistically
the same as the process is run from one time to the
next or from one day to the next.
Unstable Pattern of Variation
Exceptional variation (due to what Dr. Deming called

‘special causes’) typically results from not following
the process reliably. That is, each time the process is
run, it is run differently. This can happen because of
poor employee training, problems with equipment,
poor process documentation, unreliable supplier
performance, or many other factors that can change
over time.
Routine Variation
• Since routine variation is inherent in the process,

it cannot be reduced except through a change in
the process.
– Demanding that employees do a better job will not
reduce the routine variation inherent in the process.
– Demanding that the specifications be met will also have
no effect on the variation of the process.
– Whether the results of a process are within
specification (or, meeting the objectives) depends on
the natural variation of the process, not the
specifications (or, the objectives set).
Exceptional Variation
• Exceptional variation can be, on the other hand,

removed by controlling the inputs and following
the process accurately.
– Without understanding the sources of exceptional
variation, one cannot eliminate it.
– Reorganizing in response to poor performance without
understanding the causes of poor performance is a
form of frequently practiced management ‘tampering’ of
the process.
Reducing Process Variation
• Make the process behave in stable fashion by:

– Finding the sources of exceptional variation, and
– Eliminating the sources of exceptional variation.
• Find the sources of routine variation.

• Change the process to remove the sources of
routine variation.
• Decrease the variation so that all results are well
within the specification limits.
Process Behavior Chart Is a Tool to Distinguish the Two
Types of Variation
Unstable Variation Stable Variation
Mean UNPL LNPL Mean UNPL LNPL

Voice of Process and Voice of Customer
Upper and lower

specification limits
Voice of Customer
(Customer Determined)
PROCESS
Men 
Materials 
OUTPUT
Methods 
Upper and lower

natural process limits
Voice of Process (Process Determined)
Alternation of SDCA and PDCA Cycles
Check
improvement
Do results
improvement
D C
Improvement
activities
Plan
P A Act: either
improvement standardize, or
re-plan
Act: either use

present Use standard
standard, or
A S
improve
Routine work
Check work C D Do work
against
standard
The Struggle with Variation – the Process Behavior Chart
f a s hion
bl e
in a s ta
e m ix o f
24
e ha ving ke in th c e ss
een b em a ep r o
a s b e s w r d , t h of
e s sh h ang r w o b l e
22
he p ro c
o f t he c
n o th e
i n c ap a
a l l o ur
T e all P R. I t wa s , and
es p it n d t ha a d s
ga y le
20 d dvertisin le in a wa out 1700 wasted.
a stab a n ab sh were
w a s th
o re gui
Leads ('00)
ng m d a n
18 uci ts a n
prod e ff or
Target UNPL = 1751
16
Mean = 1400
14
12
LNPL = 1049
10 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Adds ($K) 20 22 24 24 24 26 20 20 20 20 20 20 20 20
PR ($K) 0 0 0 0 0 0 2 4 4 4 6 2 0 0
Leads ('00) 15 14 13 14 15 16 13 14 13 14.5 16 13 14 13 12.5
Importance of Process Behavior Chart
• In the absence of using process behavior charts, this is

very common result.
• We make changes in order to improve, but we have no
way to tell whether our process is behaving in a stable
fashion or not.
• When our goal is reducing variation, we do not know if the
process variation is routine (indicating a stable process) or
exceptional (indicating process instability).
• When our goal is to change the process results
significantly, we do not know if the process variation is
routine (“we are having no effect”) or exceptional (“we
have made a difference”).
Taking Appropriate Actions for Improvement
e se cond
a y of th of four,
24 i l an d M factor ere
A p r y a a t w
f M arch, efforts b duced th ion,
t
22 the end o eased PR were pro ine varia .
At e i n cr su lts r o ut r e nce
w r e r o m f fe
y ear, s t s om e e c te df
a de a di
20 t la ex p dm
and a nd those at we ha
beyo cating th
Leads ('00)
18 indi
Target UNPL = 1751
16
Mean = 1400
14
12
LNPL = 1049
10 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Adds ($K) 20 22 24 24 24 26 20 20 20 20 20 20 20 20 5 5 5
PR ($K) 0 0 0 0 0 0 2 4 4 4 6 2 0 0 15 15 15
Leads ('00) 15 14 13 14 15 16 13 14 13 14.5 16 13 14 13 12.5 20 22 24
Process Control – Conclusions
• Process control can be applied to a wide range of

business processes.
• Customer needs determine the desired output.
• The process actually used determines the actual
output.
• Inspection is a poor primary control method.
• To meet the desired output specifications, reduce
the variance of the actual output by finding and
removing the sources of variation in the process.
Continued
Process Control – Conclusions
• The actual process output inevitably has variance.

• To reduce successfully the variation, the variation
and its general stability (or lack of it) needs to be
understood.
• The process behavior chart provides a tool to
distinguish stable and unstable variation.
• Process outputs and a process behavior chart
indicate the proper course of action.
• Much of the efforts and anxiety we put into
making things better is wasted when we do not
use the methods of process control.
Reactive Improvement
The 7 Steps for Reactive Improvement

1. Select 4. Plan
theme and …
2. Collect
and analyze
causes solution effects
data
Level of
thought
data data
Level of
experienc Reactive
e
Mobilization of Reactive Improvement and Learning
Identify problem
(including weakness orientation)
Run PDCA Apply standard steps and tools
Management diagnosis of QC
Story
Develop skill
Reactive Improvement – the 7 Step Method
Step No. Basic Steps Action Items

• Identify
1 Select topic problem
• Decide topic
Understand Situation and Understand situation
2 Set Targets
• Collect data
• Decide characteristic to attack
Set targets
• Decide target (value and deadline)
Plan Activities • Decide what to do

3 • Decide schedule, division of responsibilities etc.
Analyze Causes • Check present values of characteristics

4 • List possible causes
• Analyze causes
• Decide items to tackle
5 Consider and implement Consider countermeasures

countermeasure • Promote ideas for countermeasures
• Discuss how to put countermeasures into effect
• Check details of countermeasures
Implement countermeasures
• Plan how to Implement countermeasures
• Implement countermeasures
6 Check Results • Check result of countermeasures

• Compare results with targets
• Identify tangible and intangible benefits
Standardize and Establish Standardize

7 • Establish new standards and revise old ones
Control • Decide methods of control
Establish control
• Familiarize relevant people with new methods
• educate those responsible
• Verify that benefits are being maintained
Note: Although the above basic order should be followed, it may be adjusted in some cases. For example, we may proceed from being given a target to
understanding the situation , or we may select a topic first understanding the situation.
General Guidelines for Managers Diagnosing a QC Story
• Nonverbal signs show management interest.

– During a presentation, the senior manager must be present at all
times.
– Senior managers must sit on the edge of their chairs and lean
forward, expressing interest by behavior instead of words.
– In response to good points, they should nod their heads and say,
“Very good”.
– They should be seen taking notes; they should not interrupt
presenters.
– They should show attentiveness by asking questions at the end of
the presentations.
• Don’t suggest going back.
• The QC Story should follow the 7 steps format.
Run PDCA and Develop Skill
• Sometimes, when you undertake an improvement effort you will get a

poor or incomplete result. In such cases, you must simply try again.
The concept of PDCA provides for such repetition.
• PDCA teaches you to start again from step one of the 7 steps rather
than going back to redo the last few steps.
• You must build on what you did and learned during the previous PDCA
cycle.
• If the theme has been completely addressed, the facts will lead to the
next most prominent and tractable theme to address.
• Iteration of the PDCA cycle will build a variety of skills: insight into
problem area, skill with 7 steps method, skill in working in teams, skill
at diagnosing.
PLAN 1. Select theme 2. Collect data 3. Analyze causes
DO 4. Plan and implement solutions

CHECK 5. Evaluate effects
ACT 6. Standardize solutions 7. Reflect on process

Proactive Improvement
Proactive Improvement Steps


2. Collect
and analyze
data
Level of
thought
data data data

Level of
experienc
e
Proactive
The Three Kinds of Data
Qualitative data
used to design a Quantitative
product or to data used to
make other control
business processes.
direction
choices.
This data falls

between data 1
and data 2.
Level of
thought
data 1 data 2 data 3

Level of
experienc
e
Collecting Data 1 – Kawakita’s 5 Principles
1. 360-degree view:
– No hypothesis.
– Walk all around reality.
– You want to find something new; forget your biased
opinion.
2. Stepping stones:
– Leave a flexible schedule.
– Be able to step from one person / place to the next as
the opportunity arises.
Collecting Data 1 – Kawakita’s 5 Principles
3. By chance:
– Utilize chances.
– If you are sensitive about a problem, you can see details you
couldn’t see before.
• Concentrate on the problem to increase and amplify sensitivity.
4. Intuitive capability:
– Logic may tell you certain data, but if your intuition says
otherwise, then they are important.
• Human intuition has great capability to find something new.
5. Qualitative data:
– Numbers are not so important.
– Cases and personal experiences are important.
• Different types of defects are more important than numbers of
defects.
Language Data and Use of Semantics
• Just as statistical methods root out the underlying

facts from numerical data, so are semantics
methods the basis for discovering the underlying
facts from language data.
• Semantics is the scientific study of relation
between language and reality.
• As per semantics, there are two kinds of
languages:
– Affective language.
– Report language.
Affective Language Is Important
• Conveying enthusiasm and encouragement to the

staff:
– “Leadership through quality.”
• Getting along with colleagues:

– “Your idea is very good, but I have another suggestion.”
• Marketing:
– “Oh! What you do for me!”
• Achieving personal happiness:

– “I would enjoy spending more time with you.”
Affective Language Needs to Be Converted Into Report
Language
• Affective language is often used to express latent

requirements.
• We must convert it into the report language if we
have to understand the situation sufficiently to
improve it.
• Semantics concepts can be used to convert
affective data into data that precisely represents
reality, and describes reality in report language.
Comparison of Affective and Report Language
Affective Language and Report Language

Leading Question for
Transmission
Accountants aren’t concerned with Accountants give us the accounting
the important aspects of our rules that must be followed, and
business. these prevent us from doing some
things we want to do.
[What makes you feel that way?]
Salespeople lie to customers to get Salespersons promise delivery to
orders. get firm orders, even though they
know the product cannot be
[what evidence you have of this?]
delivered on time.
Engineers live in ivory towers. Product designs often omit features

customers want.
[What makes you feel that way?]
This can still be improved

Keys to Clear Expression
• Opinion versus fact.

• Ladder of abstraction.
• 5Ws and 1H.
• Multi-valued versus two-valued thought.
Opinion versus Fact
• He is not a good operator.

– He did not operate the machine according to the
manual.
• The boss was very angry.
– The boss hit his fist on the table top.
• He does not know how to operate the machine

correctly.
– He turned the valve left when the instructions said to
turn it right.
Ladder of Abstraction
HIGH
CONCEPT
• We have to go step
by step up or down
• Hoshin
management is one
LOW example of this
FACT ladder
Ladder of Abstraction – an Example
People can’t stand working in this lab
The lab has a temperature problem
The lab is too cold
Cold air comes up through cracks in the door

5Ws and 1H
Who Who does it, who should do it, who else can do it?
What What to do, what is being done, what can be done?
Where to do it, where is it done, where else should it be

Where
done
When to do it, when is it done, when else should it be

When
done?
Why Why, why, why, …  real facts of a problem.
How to do it, how is it done, how should it be done, how

How
can this method be used elsewhere?
Two-valued versus Multi-valued Statements
Refined, Multi-valued
Two-Valued Statement
Statement
The day is hot. It was 42 degree C at noon.
3 percent of the units were returned

Quality is acceptable.
under warranty.
75 percent of projects reaching

We don’t follow our standard stage 3 didn’t get stage 2 sign-off by
development process. the VP (R&D), as our process
requires.
Examples of Proactive Improvements
• Safety round to identify potential unsafe conditions and

potential unsafe operations for zero accidents.
• Design FMEA (failure mode effect analysis).
• Process FMEA.
• Horizontal deployment of reactive improvements for zero
defects (in products) and zero failures (of equipment).
• Development of a completely new product—right from
‘concept’ to ‘manufacturing’.
• Customer visitation for identifying potential customer
concerns, and developing new products based on this
information.
George Fisher’s Five Principles of Customer Visitation
1. Start with the CEO.

• It is an important, visible sign of respect to the customer,
2. Don’t sell.
• Don’t visit to sell, but to visit and listen to the customer.
3. Ask key questions.
• What does the customer like about doing business with your
company? What does he not like about doing business with your
company?
4. Meet the toughest customer.
• If you can make him happy, you can satisfy any customer.
5. Meet customers you want to understand.
• If you want to see your product used, see an end customer. If
want to understand the distribution channels, visit a dealer.
Key Points of Customer Visitation
• Clarify the purpose.

– To know the customer requirements (current, future, latent).
– To learn about competitors.
– To demonstrate customer focus.
• Set a concrete target.

– Always create a deadline and plan from the future to the present,
not toward the future.
• Train for visits.
– Don’t ask for facts, facts and facts all the time. People want to talk
in generalities, not specifics.
– Keep the 5Ws and 1H in mind.
– Do not use a tape-recorder; take extensive notes, instead.
Key Points of Customer Visitation
• Respect the customer.

• Learn PDCA.
• It is not necessary to meet many customers.
– With data 3 (numeric), more data gives better results.
With data 1 (language data), after about 20 visits, you
reach a point of diminishing returns.
• Apply fishbowl principle.
Watching Fishes From Outside
This means listening to customers with

preconceived idea (Hypothesis).
Jumping in the Fish Bowl and Swimming With Fishes
Conclusions – Continuous
Improvement
• Dissect and improve present working methods.

• Pay attention to standardization.
– Standardize the best working methods.
– Teach the standards.
– See that these are observed.
• Quality is built in via the process; not through inspection.
• Reducing variance is the key to improvement.
• Look beyond the results.
– Reflect on the process that produced the results.
– Improve working methods, and raise the quality of work.
• Carry out the gap-analysis and control the cause-and-
effect system.
• Use proactive improvement methods to find new

directions.
• Use semantics concepts to obtain valuable
information from feelings and opinions.
• Use the 4G principle (go to the place, see and
touch the actual object, find the principles
governing the phenomenon, and check what
should be in accordance with the principle) for all
the improvement activities—control, reactive and
proactive.
TQM and Continuous Improvement
TQM m e ans ...
Custom e r
Tho rough
Socie ty
Orie nte d
f
to
Fa ilit lo t io n
en
ir ie p m
n
ab ve iva
t io
from good factors
ot
ua
ev s
M
and proce sse s.
al
e
D
Rete ntio n
Proce sse s
Im provem e nt
Base d o n Facts
Total Participation
Customer
Focus
Unique
Organizational
Capability
Continuous Total
Societal Networking
What and How of Management
15
Five Steps in Management
A. Plan … Think future and plan.

B. Do …… organize all resources to realize goal of
the plan.
C. Check . Check the results comparing goal of
plan and actual.
D. Act ….. Take countermeasure and prevention.
E. Next Plan.
Countermeasure: corrective action to reduce difference

between plan and actualities.
Prevention: action to fix good results for future, prevent
repeat of bad result in future.
Effect of Prevention
Customer
Complaint
Customer
Complaint
In-house
Rejection
In-house
Rejection
Fix
position by
prevention
Improvement
PREVENTION: Improvement in standards / procedures, installation of pokayokes

Function of Management
• Retainment: to maintain quality level of already

achieved.
• Improvement: improve quality level more than that
of achieved.
• Breakthrough: innovation of improvement.
PDCA for Retainment, Improvement and Breakthrough
Incremental
Improvement
P D
Normal Problem Plan Do PDCA1
Standard Work A C
Process Act Check
Type of
C A
problem
D S Breakthrough
Improvement
SDCA
P D
Profound Problem
Plan Do
A C
PDCA2 Act Check
Division of Work
Executive
Breakthrough
(PDCA2)
Division Head
Improvement
Deptt. Head (PDCA1)
Supervisor
Retainment
(SDCA)
Operator
Reforming Functional Management
30
Three Key Categories in Management
Authority: delegated right of decision
Responsibility: responsibility to act
Accountability: range of responsibility

that he feel as the result
of his action
An Example of the Three Categories for Manager of
Production Engineering
• Authority:
– Decide specifications of production equipment,
methods of preventive maintenance, etc.
• Responsibility:
– Build up production method, provide capacity of
production, implement preventive maintenance, etc.
• Accountability:
– Method availability for production, cost of maintenance,
quality of products, etc.
Three Models about Coverage of the Key Categories
CEO
Middle
Manager
Common
People
Authority Responsibility Accountability

Authority and Responsibility
are matter of Job description
but
Accountability is matter of commitment
The First Step:
Ask Managers to choose

Managing Points and Checking Points
Managing Points:
Numerical indicators of success or un-success
in his responsibility
Checking Points:
Indicators of soundness of his business process
Process Result
Checking point
Managing Points
Checking Point
An example in production engineering

Lost hours by accidental breakdown
Maintenance cost Production cost
Quality cost of defective and scrap
Selected Assembly of Managing Point Shows Under
Which Model the Manager is Working
Many managers want to prefer Common

People’s Model for his work
- insufficient ownership
A few managers want too wide accountability
to compare his range of authority and
responsibility
- a dreamer, overconfidence, symptom of
paranoia
Selected assembly of Checking Points
shows
- How he is recognizing his business process

and,
- How he is controlling his process.
The Second Step:
Promote extension of Accountability

and
Re-build processfor high quality with
method of control
through interview with manager
- Improve Managing Points

and,
- Improve Checking Points
The Chosen Managing- and Checking-Points Build
Hierarchical Structure
CEO: Managing Points - Checking points
=
Division Head: Managing Points - Checking points
=
Dept. Manager: Managing Point -
That is System of Management

The Third Step:
Interpret company goals to

the goals of Managing Points
in each hierarchy
Corporate Goals
Division Goals
Department Goals
Individual Goals
Attention in daily
work
The Fourth Step:
Promote implementation of cycle of

management
1. Defining cycle interval of PDCA according to

each hierarchical level
2. Promote challenging commitment for goals
3. Coach resource plan and plan of
implementation
4. Coach countermeasure and prevention
Breakthrough Project (Deep Analysis)
10
Take up a Breakthrough Subject
- not achieved goal for many years trials

- not fixed trouble of staying for many years
Breakthrough is not mere

improvement.
The Breakthrough Subject is the
Trouble derived by essential and/or
constitutional faults of the way of
managing a company
Formulate Cross-functional Team Assembling People
Form Functions Related to Breakthrough Subject
Members should be consisted by multi-

disciplines like as mixture of
manager, engineers, clerical officer,
first line managers of operation,
operator etc..
Implement Root Cause Analysis …
Finding facts, Collecting facts, gathering facts, and

analyzing facts, with repeated questions of “Why”
Pursue the root cause not only

technological causes of phenomena,
but up to the constitutional faults of
management, like as the area:
Lack of competence, Manner of daily
work management, Method of
operation, Standardization, Un-
awareness of Customer's needs, etc..
Follow Steps of QC Story Coming to Completed
Prevention
- Study on subject adopting managerial

and technological view points.
- Cause analysis based on Facts.
- Formulate and implement Corrective
Action for the trouble.
- Confirm effect of Corrective Action
- Formulate Prevention based on findings
in Root Cause.
- Follow up effect of Prevention.
Teamwork
15
Why Teamwork
• For anything more difficult than one person can

accommodate, people often form into groups to
work together on a task.
• To deal with the speed and complexity of business
today, we need more than the sum of the
capabilities of individuals.
– We need the power than comes with pulling in the
same direction and actively supporting each other.
– We need the collective genius of our employees.
– We need teamwork.
Teamwork Consists of Individual Work
• Teamwork is not just work done in a group.

• Teamwork requires two kinds of effort: group work
and individual work.
– A consensus is sought on targets (tasks to be done)
and the methods to accomplishing the task.
– Tasks are allocated to individuals or combinations of
individuals for execution.
• Much of the work is actually done as the work of
individuals or combination of individuals.
Some Types of Groups
Setup Members Problem to Duration of

Solve work
Task Force Ordered by Selected by Work-related, Duration of

superior management but given the task
QC Circle Volunteers All workers in Work-related, To work

groups but self- continuously
(GKA) selected as long as
the work
group exists
Informal Volunteers Volunteers Not work- To work
related and continuously
not given as long as
the members
exist
GKA Provides Self-fulfillment to Employees
No team
Team formation
Extra job
Enthusiastic change
agent Closer communication
Active middle
Feeling of belonging
managers
Study QC tools and
encouragement practices
Organizational
Chance for implementation
infrastructure
Presentation of
awards Success
Feeling of recognition Self-fulfillment

Barriers to the Activities of Cross-functional Team
- Too many work with limited work forces

- Inadequate delegation of authority to team leader
- Two boss for part-time team members
- Lack of commitment by functional managers
to provide appropriate environment for team
activities
Method for Management of Cross-functional Project
1. Ask team leader to report its progress in

monthly management review in presence of
managers.
2. The chairman define barriers for the progress
3. Assign responsibility of functional managers

to remove identified barriers
Management for Cross-functional Team Activities
Departments
Managers Dept. B
Dept. A Dept. C
Chairman
Team members
Report Attend
Regular management
meeting Cross-functional team
Management for Cross- Functional Team Project

Quality Visit by Top Management
15
Why Quality Visit?
It is a school of business in company.

In this school,
there are no separated role of teachers and students.
All people study from others and teach others
through
talking about their practices of TQM
Purpose of Quality Visit
Aiming to encourage people

who are trying to be better in their work
Aiming to know what are the people's

difficulty to be creative and challenging.
Aiming to know how quality is given the
first priority in their work
Aiming to know more the process of quality

than the result in quality like as usual
performance review.
Who Visit and Who Receive the Visit
Visitors group Receivers group
Product Development F
Executives U
Head of function N
Staff of function C
Executive committee Working people who T
member present their activities of I
Head of functions except improvement O
head of function being
visited
N
Sales S
Production Plant
etc.
Agenda of the Visit
Presentation by function head about

quality result and their actions
Presentation about improvement by

operating people and action team
members
Question and answer seeing documents,

records, manuals, method of working
etc. visiting to working site
Short feedback about good, to be improved

and suggestion of way of improvement
Effect of Visit
For Visitors:
* Improvement of communication between
top and working people.
* Learning chance for top seeing reality
of operation
* Training for top to be as top
For people who receive visit

* Refresh their way of thinking for managing
process by writing report and presenting achievement
* Get input and suggestion for further
improvement from different view point.
* Able to evaluate their progress comparing
that of other functions
President’s Diagnosis
• The president hears and sees what is really happening

(e.g. Changes, latent problems, environmental pressures).
This is important because subordinates hesitate to speak
about problems, and some presidents are disinclined to
hear about them.
• The president gets continuing education about quality: the
accompanying change agent, an outside quality expert,
asks questions that enlightens the president.
• The president personally participates in a PDCA cycle and
becomes more adept in using proactive PDCA.
• The president is able to compare divisions and identify
strong and weak models.
Management for Objectives (MfO)
70
Purpose of MfO
• Management for Objectives (MfO) or Hoshin Kanri

(or Policy Deployment) aligns the activities of
people throughout the company so the company
can achieve key goals and react quickly to
changing environment.
• MfO involves all of the managers in a coordinated
way in the annual planning cycle of the company.
• It provides an important strategy for total
participation as well as fulfilling its obvious
purpose of company alignment.
MfO and Alignment
• It aims to align all the people throughout the company

toward the key company goals, using indirect rather than
direct enforcement, creating a sense of urgency. Thus,
even workers are influenced to choose activities with
strategically important objectives.
• It aims to align all jobs and tasks, whether routine work or
improvement work, focusing and coordinating efforts and
resources toward the key company goals in order to create
breakthroughs.
• It aims to bring the company’s goals and activities quickly
and effectively into alignment with rapid societal or
environmental changes.
Power of Alignment
People and
jobs
Key
= company
goals
Strong force aimed toward company goals

=
People and tasks realign quickly

to the changed company goals Environmental change
due to environmental change
Elements of MfO
• MfO consists of statements of the desired

outcome for the year (company target), plus the
means of accomplishing the desired outcome
(guidelines) and measuring the accomplishment
(objectives).
• MfO includes the following elements:
– Statement of desired outcome for next year.
– Focused means (guidelines).
– Metrics to measure progress (objectives).
– Target values for metrics (measures of objectives).
– Deadline date (target date for achieving each
objective).
An Example of MfO
Statement of desired Daily practice of market-in concept

outcome for next year
Focused means (Guidelines) Create attractive product by
improving market research
Increase customer satisfaction of
our product by using quality tables
Assume on-time delivery by
improving processes
Improve quality of production
process by using SPC
Metric to measure progress On-time delivery rate
Target value for metric 100 percent
Deadline date March 2003

Components of MfO
Long-term
vision and Environmental
plan changes
Company’s Diagnosis by
mid-term plan president
PLAN DO
Policy and
measurement Control by
Annual policy
plan measurement
deployment
Act Check
The Proactive, Reactive, and Control Phases in MfO
Long-term
vision and Environmental
plan changes Proactive
Company’s Diagnosis by
mid-term plan president
Control
PLAN DO
Policy and
Annual policy
plan measurement
deployment
Act Check
Reactive
The Five Phases of MfO
• Strategic planning and setting the policy

(proactive).
• Policy deployment.
• Monitoring the policy; Controlling with metrics
(control).
• Check and act (reactive).
• President’s diagnosis.
Strategic Planning and Setting the Policy
Level of customer
satisfaction
Improvement
Difference
required
Forecast
improvement
from daily
management
Present Target date
Analyze to achieve
required
Deployment of improvement
solution
Improvement
of current New job Solution
job or task or task
Daily job and work

The Annual MfO Planning Process
Environment Given
Past Future
“Should”
Reflection
mid-term plan
Last MfO
Focus to vital few

year’s system
result of
MfO Long-term
plan
(is) (will, be, wish)
MfO
Fact Vision
(what must be)
Detailed Kinds of Data From Three Sources
Past Data Future Data Environment Data

•Reflection on what •Mid-term goals. •Economic issues.
has been done in •Long-term goals. •Political issues.
the past.
•Noble goals. •Social issues.
•Strength /
weakness analysis •Company vision. •Regulatory issues.
of prior year’s plan.
•Company mission. •Technology
•Analysis of prior issues.
year’s MfO.
•Customer’s
•Diagnosis of the environment.
MfO system.
•Competitive
environment.
Long-term and Mid-term Goals
Long-term Performance
Mid-term goals
goals measure
Customer To be rated #1 vendor of Best place to buy.
satisfaction choice by our customers.
Stockholder Sales growth > 25%. Best place to
satisfaction invest.
OPBT > 25%.
Return on equity > 25%.
Employee •Quality work environment Best place to work.
satisfaction •Feeling secure and
important.
•Having fun, being proud.
Deploying MfO to the Functional Divisions
Production
President’s MfO
Engineering
Reduce costs by
decreasing length Sales
of business cycles;
percent decrease:
20%
Marketing
Administration
Analyzing Facts About Key Goals and Stratifying to
Select Problems for the Next Level MfO
Engineers have product-out orientation
Defects are not

detected until final
inspection Why are
cycle times
long?
Fully qualified prospects don’t buy
Next level MfO

Function-level Analysis of Barriers to Achieve
President’s MfO
Production Unresponsive
procurement and
inventory system
President’s MfO
Engineering Products which meet

product specs aren’t
accepted by beta-test
customers
Reduce costs by
decreasing length Sales Qualified prospects
of business cycles; unexpectedly decline to
percent decrease: purchase at last minute
20%
Marketing Each new product
What prevents requires a new effort to
achievement of line up distributors
president’s MfO?
Unnecessary approval
Administration loops
Development of Functional Division MfO
Function What prevents achievement of Functional division MfO

president’s MfO
Production Unresponsive procurement

and inventory system
Decrease manufacturing cycle
time by implementing JIT;
percent decrease: 50%.
Engineering Products which meet product

specs aren’t accepted by
Decrease average time to
successful product release by
beta-test customers understanding of customer
context; percent decrease:
30%.
Sales Qualified prospects

unexpectedly decline to
Decrease average sales cycle
by decreasing qualified
purchase at last minute prospects who do not buy;
Marketing Each new product requires a

new effort to line up
Decrease average time to
release a new product by
distributors creating strategic alliance;
percent decrease: 50%
Administration Unnecessary approval loops Decrease key administration

and finance cycles by
flowcharting processes and
eliminating NVA work; percent
decrease: 40%.
Analysis of Barriers to Achieving Sales MfO
What prevents? solution
Direct sales No system for Use PDPC to

evaluating and anticipate
addressing objections and
Sales MfO possible provide
objections countermeasures
Decease
average sales
cycle by
decreasing
Sales Support User difficulty in Hold user’s
qualified
using product hand during
prospects who
results in product trials
don’t buy;
unsuccessful
percent
product trials
decrease: 30%
Deploying MfO to the Next Level
Prod’n Decrease manufacturing cycle

time by implementing JIT;
President’s MfO Engg Decrease average time to

successful product release by
understanding of customer
context; percent decrease:
30%.
Direct sales:
Decrease average sales cycle by Use PDPC to
Sales decreasing qualified prospects anticipate objections
Reduce costs by who do not buy; percent and provide
countermeasures
decreasing length decrease: 30%.
of business cycles; Sales

Support:
percent decrease:
Market’g Decrease average time to Hold user’s hand
20% release a new product by

during product
trials
creating strategic alliance;
percent decrease: 50%
Decrease key administration

Admin and finance cycles by
flowcharting processes and
eliminating NVA work;
Policy Deployment Chart
P O L IC Y D E P L O Y M E N T C H A R T
* 3 . 1 .3 S e le c t c a p a b le s u p p lie r s a n d in v o lv e t h e m in t h e d e v e lo p m e n t a c t iv it ie s .
* 3 . 1 .2 E s t a b lis h c o m p a n y s t r u c t u r e t o c o p e u p w it h la r g e n u m b e r o f n e w p r o d u c t d e v e lo p m e n t s .
* 3 . 1 .1 P r o m o t e a n d r e in f o r c e d e s ig n a n d d e v e lo p m e n t a u t o m a t io n t h r o u g h c o m p u t e r iz a t io n ( C A D / C A M / C A E ) .
* 2 . 2 .3 R a t io n a liz e s lo w - m o v in g in v e n t o r ie s .
* 2 . 2 .2 C o n s o lid a t e p u r c h a s in g o f r a w m a t e r ia ls a n d s e m i- f in is h e d p a r t s .
* 2 . 2 .1 I m p le m e n t J u s t - I n - T im e d e liv e r ie s t h r o u g h t h e u s e o f K a n b a n s .
* 2 . 1 .4 A p p ly V A / V E t e c h n iq u e s in t h e e n t ir e o p e r a t io n s t o o b t a in c o s t r e d u c t io n s .
* 2 . 1 .3 R e d u c e v a r ia b le c o s t s b y 7 % .
* 2 . 1 .2 R e d u c e f ixe d c o s t s b y R s 1 0 0 la c .
* 2 . 1 .1 I m p r o v e P la n t E f f ic ie n c y t o a b o v e 7 0 % .
* 1 . 1 .1 C o n d u c t p r o c e s s r e v ie w s o f c u r r e n t p r o d u c t s t o im p r o v e t h e ir p e r f o r m a n c e .
* * 1 . 0 .2 I m p le m e n t a n d m o n it o r a s y s t e m o f c o n t in u a l p r o c e s s a u d it s .
* * 1 . 0 .1 U s e J id o k a e xt e n s iv e ly t o p r e v e n t n o n - c o n f o r m it ie s f r o m o c u r in g a n d f r o m p a s s in g o n t o t h e c u s t o m e r .
* * * 0 . 0 .3 I m p r o v e p r o c e s s c a p a b ilit y .
* * * * * 0 . 0 .2 I m p le m e n t " E xa c t n e s s " in a ll t h e d iv is io n s .
* * * * * 0 . 0 .1 P r o v id e t r a in in g t o e m p lo y e e s f o r im p r o v in g t h e ir ( t e c h n ic a l a s w e ll a s n o n t e c h n ic a l) s k ills .
737 1300
11.0 24.0
G U ID E L IN E S
94
0.14
275
To
100
0.28
1407
From
CM D
3.1 New Product Development Index
ACTION PLAN
OBJECTIVES
2.2 Inventory Turnover Ratio
1.1 Warranty Rejections, %

1.2 Customer Returns, ppm
D IV IS IO N
2.1 All Costs, %
O B JE C T IV E S F ro m To
R & D
R E S P O N S' L I T Y
AS S URANCE
P R O D 'N E N G G
ACCOUNT S
M A R K E T IN G
1999~2000
QU A L I T Y
PPC
P R O D U C T IO N
D
C
O PN . M E
&
Q A
P
M A T E R IA L S
A CCOU N TS
R
P
In C ha rge P & A
D iv is io n E D P
Guidelines for Selecting Targets
• Targets should be challenging but persuasive.

• Local issues need not be included as MfO.
• Include in MfO, the few issues that will get special
attention.
• The superior must provide implementation plans
(means) for key hard items.
• The superior provides “points to consider” for a
few items.
• Subordinates develop the rest of the means
themselves.
Unifying Routine Work with MfO
• MfO’s of an individual need to be correlated with:

– The components that support his or her current daily
routine work.
– New tasks that must be added as necessary to
accomplish the MfO.
• From this correlation matrix,
– Understand which routine job tasks have higher priority,
because they address MfO.
– Understand that new routine job tasks have to be
added so that the person addresses previously un-
addressed MfO.
– Everyone understands what each other is doing.
Checking and Acting to Modify the Plan
Once the annual plan has been made (Plan)

and deployed over the year (Do), it is time to
check for weaknesses in the plan or the way
it was carried out (Check) and to Act
Changes to long-
appropriately to influence the next year’s plan
term or mid-term
plan or possibly the long-term or mid-term plans.
PLAN DO
Policy and
Annual policy
plan measurement
deployment
Act Check
Analyzing the Difference Between Plan and Reality
The ‘Check’ step entails discovering why the Using the data
planned process did not achieve the desired taken as part of the
results. The planned process can be analyzed measurement plan,
using reactive improvement methods, and one can discover
one uses the 7 steps to analyze the difference whether parts of
between the plan and reality and then the plan were not
determine the main causes of the difference. carried out or were
carried out but did
not produce the
planned results.
Results
Plan / goal
Difference It is important to enforce such
fact-based analysis through
Reality use of 7 steps. For this
purpose MfO dictates use of
analysis data sheets that the
president or division head
Time
“diagnoses” to make sure they
are done.
Example of Review Table
Actual Summary of
Objective / Implications
Performance & Judgment Analysis of
Strategy for Future
Limits Deviations
(, , )
(P) (A)
(D) (C)
1. ….
2. ….
3. ….
4. ….
Comparison of Management by Objectives (MBO) and
Management for Objectives (MfO)
MBO MfO
Deploy a portion of the top-level target to each Deploy targets with different metrics to each
segment at each level (no change of units of segment at each level (change of units of measure).
measure).
Lower level management is responsible for Higher level management is responsible for
providing the means. providing the means.
Some negotiations of targets (considerable Catchball of targets and means based on facts and
pressure for lower level management to accept analysis.
targets proposed by higher level management).
Little monitoring of the means (if it works, it’s OK). Some targets and metrics are aimed at controlling
adherence to the means.
Analysis of causes and failures of the means of the

last planning cycle is used to improve methods
proposed in next planning cycle.
Presidential recriminations for missing targets and Presidential diagnosis of the CAPD cycle and
sometimes replacement of the responsible suggestions on how to improve next time
manager.
New manager blames predecessor’s system for Old manager learns from past to do a better job
past problems and begins to plan a new system. next time.
Dependence on undocumented skill in heads of Attempt to document needed skill and

hopefully capable individual managers. institutionalize it in the company.
MfO – Conclusions
• MfO begins by analysis of:

– The environment,
– The vision,
– The mid-term plan, and.
– Last year’s weaknesses.
• Through this analysis, we discover the top-level

(company or MD’s) MfO.
• The top-level MfOs address the means necessary
to achieve both the mid-term plan and the annual
business goals.
MfO – Conclusions
• The top-level MfO’s are deployed downward through the

organization using a common language of effective
change:
– Facts: using measurable data.
– Process: using Ishikawa diagrams to understand what’s really
happening.
– Focus: using Pareto diagrams to be sure to address the vital few.
• The control by measurement is used to develop the basis

of the interleaved SDCA (maintenance) and PDCA
(incremental improvement) cycles through which the
deployed plan is implemented.
• Metrics are needed to measure the results and the means.
MfO is a vehicle to integrate the entire

organization to achieve the company goals.
TQM and Total Participation
TQM m e ans ...
Custom e r
Tho rough
Socie ty
Orie nte d
f
to
Fa ilit lo t io n
en
ir ie p m
n
ab ve iva
t io
from good factors
ot
ua
ev s
M
and proce sse s.
al
e
D
Rete ntio n
Proce sse s
Im provem e nt
Base d o n Facts
Societal Networking
Customer
Focus
Unique
Organizational
Capability
Continuous Total
Societal Networking
Networking and Societal Diffusion
5
Why Societal Networking?
• Societal learning can be thought of as network learning or

learning from the network of companies, customers,
suppliers, and others who are trying to improve the ways
their companies function.
• Such mutual learning is necessary because the methods
of organizational change and improvement are not a
theory a company can simply learn and follow.
• Companies are developing new practices through trial and
error. By sharing, this pool of knowledge can be used by a
vast number of companies and individuals.
• It is, also, too limiting for each company to discover
organizational means of developing its organizational
change and improvement capability by itself.
Deming Diagnosis
25
Many Methods of TQM Have Been Developed, Tested,
and Refined
Methods of TQM like as;

- Management for Objective
(Policy Deployment, Houshin Kanri)
- Quality Visit by Top Executives
- Cross Functional way of managing
quality, cost, delivery etc.
- Daily Work Management as realization
of corporate strategic goals through
daily work
- People’s involvement as Quality Circle
Jury Examination – That Is Far More Than the Judgment
for Award
Examination
- Hearing TQM practices in company Questions
- Examining reality on working site
Make sense of
insufficiency and
Examination Report
inappropriateness
Help to make idea
for breakthrough
Comment and
Suggestion based Applicant
on Suitable Mode of
company
TQM for applicant company
How Deming Prize Jury makes Difference than Self
Assessment (1)
Criteria
Suitableness Level of Effectiveness

of adopted Implementation of implemented
TQM to TQM to Purpose
applicant of applicant
How Deming Prize Jury makes Difference than Self
Assessment (2)
Examination Report
that is Proposed TQM Model suitable for applicant,
expressed by comments and suggestions
Learn Business Comment and Suggestion
Examine Business Process Compare applicant model

and TQM implementation with examiner’s model
Breakdown Business process Verify feasibility of
into detailed facts of findings Model by fact in applicant
Reconstruct TQM Model

suitable for applicant
Creating Excellence by Synergy
Presentation of Proposed Suitable

Applicant’s TQM TQM Model for
Model and Implementation Applicant by Jury
Thesis Antithesis
Trials of Applicant
implementing
Suggestions
Refine and Develop

Create Excellence methods and Model
in Applicant of TQM
Synthesis
What is TQM?
Customer
Focus
Unique
Organizational
Capability
Continuous Total
Societal Networking
“What I Understand by TQM” – an
Exercise
15
TQM Means
5
TQM Means …
TQM m e ans ...
Custom e r
Tho rough
Socie ty
Orie nte d
f
to
Fa ilit lo t io n
en
ir ie p m
n
ab ve iva
t io
from good factors
ot
ua
ev s
M
and proce sse s.
al
e
D
Rete ntio n
Proce sse s
Im provem e nt
Base d o n Facts
TQM and the Changing Environment
• TQM may be thought of as a system for changing

demands of the environment.
• TQM is a system for learning.
• Customer focus, continuous improvement, total
participation, and societal networking are
concepts that support and focus the learning
system.
• By applying the principles of TQM to itself, TQM
will invent or acquire those quality concepts and
practices necessary to meet the changing
demands of the modern world.
The Four Themes of TQM
• Practice systematic development of skill.

• Treat management as a coherent system.
• Focus on people and their purposes.
• Integrate best practices.
“What I Will Do In My Daily Work In
Order to Apply the Learning of TQM”
– an Exercise
45
Discussions
© Sona Koyo Steering Systems Ltd.

TQM Creating Unique Organizational Capability

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

TQM Creating Unique Organizational Capability

Uploaded by

Copyright:

Available Formats

TQM

Rev 02.2 (Nov ’03)

An expert shows us how to, and

1. Information + commentary  knowledge

2. Knowledge + feedback  understanding

3. Understanding + drive to use and schedule

IAKI I Already Know It

WCNDT We Could Never Do That

• The practice of business has evolved over the past

Inherent / Initial state of being

• Figuring out what the

Inherent / Initial state of being

Inherent / Initial state of being

Inherent / Initial state of being

Inherent / Initial state of being

Inherent / Initial state of being

TQM m e ans ...

Fitness for social and

• Identify the work you do.

• Have a process to:

• Analyze and interpret what the customers have

Operationally Concept generation

1. I enjoy it that way.

1. I enjoy it that way.

A: Attractive; M: Must-be; R: Reverse; O: One-dimensional;

1. I like it that way

Consumer Orientation Is the Desire to Produce Goods and

The fundamental aim of quality management is to develop, manufacture

• Identify market wants and needs, and plan and develop

TQM m e ans ...

• Continuous improvement technique of TQM covers

I can show that It’s a mistaken dichotomy that

Prof. Robert E Cole

“Secret of my success? Five per cent

Thomas Alva Edison

Analyze reasons for

• Implicit in this concept is the idea that any activity

data data data

• An effective standard process

Have standard (S)

• When the process control is weak,

7. Reflect on process 6. Standardize

• In many cases one does not start with a clear idea

7. Reflect on process 6. Standardize

Sense 1. Select 4. Plan

data data data

7. Reflect on process 6. Standardize

Sense 1. Select 4. Plan

• Many opportunities exist for making

• Implicit in our model of

Plan Determine analytically and

P D Do Implement the plan

Plan Do Check Confirm quantitatively and

PDCA symbolizes the principle of iteration in problem solving

Compared with one big

• Continuous improvement means: “apply the scientific

• Without theories that can be tested, measured, repeated,

HEAT TREATMENT Output

HEAT TREATMENT Output

Our work can be managed well if we manage our

PROCESS CONTROL REACTIVE

• Process Control: customer requirements

– What are my customers’ quantitative specifications?

1. Who are our customers?