Management Guru 6

SHB2034 – Management Guru & Quality Chapter 4: Quantitative Management

TABLE OF CONTENTS OBJECTIVES.........................................................................................................2 ABSTRACT............................................................................................................2 4.1 INTRODUCTION..............................................................................................3 4.2 WILLIAM EDWARDS DEMING ......................................................................4 4.3 JOSEPH M. JURAN ........................................................................................6 4.4 ARMAND VALLIN FEIGENBAUM...................................................................8 4.5 PHILIP BAYARD CROSBY ...........................................................................10 4.6 KAORU ISHIKAWA........................................................................................12 4.7 WALTER SHEWHART ..................................................................................14 4.8 MYRON TRIBUS ...........................................................................................15 ADDITIONAL MATERIALS..................................................................................17

OBJECTIVES At the end of this topic, you will be able to: • Enable learners to understand the lives, philosophies, ideas and contributions of Quantitative Management Gurus and Thinkers • Enable learners to assess and evaluate the importance and impact of those ideas in organizations and society • Enable learners to relate the ideas to other management gurus from other disciplines of knowledge • Enable learners to apply the best and the most relevant concepts formulated by management gurus and thinkers in behaviors and practices in daily lives.

ABSTRACT Quantitative Management is a contemporary management approach that emphasizes the application of quantitative analysis to managerial analysis and problems.

4.1 INTRODUCTION The quantitative management involves the use of quantitative tools to manage the organization. This approach was born during World War 2 with research teams that developed radar, guidance systems, jet engines, information theory, and atomic bomb. Since then quantitative tools have been applied to every aspect of business. To determine the quality of products and services, quantitative and qualitative measurement must be used. People are the key, and highly motivated and committed people make quality decisions and deliver quality outputs. Companies must develop and utilize the leadership potential that exits within their employees. Among the management thinkers that contributed their theories in quantitative management include Deming, Juran, Feigenbaum, Crosby, Ishikawa, Shewhart, and Tribus.

4.2 WILLIAM EDWARDS DEMING Deming was one of the most famous and influential advocates of Total Quality Management. Deming's message of quality was distilled down to his famed Fourteen Points. Deming blamed the problem of industry on management's failure to eliminate waste and establish control over variation in production processes, and advocated the use of rigorous statistical methods to reduce scrap and improve quality. His methods depended on a customer orientation and eliminating waste and improving quality at the point of production or service delivery. William Edwards Deming Deming was born in Iowa in 1900 and spent his childhood in Wyoming. He trained as an electrical engineer at the University of Wyoming and then received a PhD in mathematical physics from Yale in 1928. He worked as a civil servant in Washington at the Department of Agriculture. While working at the department he invited a statistician, Walter Shewhart, to give a lecture. In 1939, Deming become head statistician and mathematician for the US census. During World War 2 he championed the use of statistics to improve the quality of US production and, in 1945, he joined the faculty of New York University as a Professor of Statistics. He died in 1993. Total Quality Management Deming visited Japan for the first time in 1947 on the invitation of General Mac Arthur. He was to play a key role in the rebuilding of Japanese industry. In 1950 he gave a series of lecturer to Japanese industrialists on 'quality control'. Deming and the other American standard bearer of quality, Joseph Juran, conducted seminars and courses throughout Japan. Quality, in Deming's eyes, was not the preserve of the few but the responsibility of all. Quality, in Deming's eyes, was not the preserve of the few but the responsibility of all. Between 1950 and 1970 the Japanese Union of Scientists and Engineers taught statistical methods to 14,700 engineers and hundreds of others. The message - and the practice - spread. The Japanese were highly receptive to Deming's message. His timing was right - the country was desperate and willing to try anything. But, much more importantly, Deming's message of teamwork and shared responsibility struck a chord with Japanese culture. Deming's emphasis on group rather than individual achievement, enable the Japanese to share ideas and responsibility and promoted collective ownership in a way that the West found difficult to contemplate let alone understand.

Deming Fourteen Points Deming's message of quality was distilled down to his famed Fourteen Points: 1. Create constancy of purpose for improvement of product and service. 2. Adopt the new philosophy 3. Cease dependence on inspection to achieve quality 4. End the practice of awarding business on the basis of price tag alone. Instead, minimize total cost by working with a single supplier. 5. Improve constantly and forever every process for planning, production and service. 6. Institute training on the job. 7. Adopt and institute leadership. 8. Drive out fear 9. Break down barriers between staff areas 10. Eliminate slogans, exhortations and target for the workforce 11. Eliminate numerical quotas for the workforce and numerical goals for management 12. Remove barriers that rob people of pride of workmanship. Eliminate the annual rating or merit system. 13. Institute a vigorous program of education and self-improvement for everyone. 14. Put everybody in the company to work to accomplish the transformation. Eliminating Waste Toyota is the living example of Deming's theories. Toyota was the first to champion 'lean production' in the 1950s. Lean production grew from Toyota's crusade against waste; the waste of time caused by having to repair faulty products and waste of resources caused by keeping unnecessary large stocks. It has three principles: 1. To produce things only when they are needed - just in time rather than just in case. 2. To turn everybody into a quality checker, responsible for correcting errors as they happen. 3. To think of a company in terms of a value stream that extends all the way from suppliers to customers, rather than as isolated products and processes.

4.3 JOSEPH M. JURAN Juran insists that quality cannot be delegated and was an early exponent of what has come to be known as empowerment. To him, quality has to be the goal of each employee, individually and in teams, through self-supervision. His quality philosophy is focusing on human relations and built around a quality trilogy; quality planning, quality management, and quality implementation. Joseph Moses Juran Juran was born December 24, 1904, in the city of Braila, then and now part of Romania. His father, Jakob, was a village shoemaker. Sometime after 1904, the family moved to Gurahumora, a Carpathian mountain village then a part of the Austria Hungarian Empire. Here, Juran writes, "They had no quality problems. Never had a power failure, never had an automobile fail. Of course, they didn't have power; they didn't have any automobiles." In 1909, Jakob left Romania seeking a better life in America. His father's goodbye to five-year-old Joseph remains one of Juran's earliest memories-the boy would not see his father again for three years, when the entire family joined Jakob in Minnesota in 1912. Both the life and influence of Joseph M. Juran are characterized by a remarkable span and an extraordinary intensity. Juran's major contribution to our world has been in the field of management, particularly quality management. Astute observer, attentive listener, brilliant synthesizer and prescient prognosticator, Juran has been called the "father" of quality, a quality "guru" and the man who "taught quality to the Japanese." Perhaps most important, he is recognized as the person who added the human dimension to quality-broadening it from its statistical origins to what we now call Total Quality Management. Quality Trilogy Juran places quality in a historical perspective. Juran's message encapsulated in his book, 'Planning For Quality' - is that quality is nothing new. More specifically, Juran's quality planning comprises the following basics activities: • Identify the customers and their needs • Develop a product that responds to those needs • Develop a process that able to produce that product. In other words, quality planning, says Juran, can be produced through 'a road map…an invariable sequence of steps. These are: • Identify who are the customers • Determine the needs of those customers • Translate those needs into our language • Develop a product that can respond to those needs • Optimize the product features so as to meet our need as well as customers' needs. • Develop a process that is able to produce the product • Optimize the process • Prove that the process can produce the product under operating conditions • Transfer the process to the operating forces.

Furthermore, Juran explains that the involvement of management in implementing quality can become visible in various ways: • It is the responsibility of management to establish a Quality Council. This council plays the central role in co-ordinating the company's various activities regarding quality; for instance, quality improvement teams, TQM awareness activities and training programs. • Moreover, management should establish a Quality Policy. Quality policies are guides to managerial actions. The management of the company has to assign the responsibility for preparing a draft, to review the draft, to approve the final version, and to implement the quality policy. • Furthermore, management has to establish quality goals should be expressed, Juran argues, in numbers and should include a time frame. An example could be: within the next three years, the internal failure costs of the machine shop, which result from discrepancies detected prior to delivery to the external customer, shall be reduced by 40 percent. • Once management has established a specific goal, it is then the responsibility of management to provide the necessary resources needed to achieve the quality goals. This could mean additional training for some employees, monetary funds to improve a certain situation and time to work within a quality improvement team.

4.4 ARMAND VALLIN FEIGENBAUM Dr. Armand Vallin Feigenbaum can be designated as the originator of the concept of total quality control. In his book, ''Total Quality Control'' (1983), which was originally published in 1951 as ''Quality Control'', Feigenbaum develops his approach to Total Quality Management. Feigenbaum contributed two new aspects to the discussion about quality, which are quality is the responsibility of everybody and costs of control and costs of failure of control. Feigenbaum's intention is not so much to create managerial awareness of quality as to assist a business enterprise to design its own quality system, which involves every employee. He offers a highly structured approach to total quality, which, however, hardly covers the question of motivation and commitment of the individual employee to quality. Armand Vallin Feigenbaum In the 1950s Feigenbaum worked as quality manager at the General Electric Company and had intensive contacts with companies such as Toshiba and Hitachi. From 1958 to 1968 Feigenbaum became the worldwide Director of Manufacturing Operations at the General Electric Company. Approach to Total Quality Management This approach deals with elements like management of quality, the system for total quality, management strategies and quality, engineering technology and quality, statistical technology, and the application of total quality in the enterprise. Quality is the Responsibility of Everybody Quality is the responsibility of everybody in the company ranging from top management to the unskilled worker. TQM shall provide the fundamental basis of positive commitment to quality for all employees of the business organization, form management to assembly workers. TQM should build up employee's responsibility for product's quality. Quality is produced not only by the production department, but also by marketing, research and development, finance, purchasing, and any other department. It is the total participation of all employees and the total integration of all the company's technical and human resources that will lead to long-term business success. Costs of Control and Costs of Failure of Control Feigenbaum has recognized that costs of non-quality have to be categorized if they are to be managed. Costs of control and costs of failure of control have to be minimized by a quality improvement program. The costs of control should be measured, in two principal areas: prevention costs (e.g. quality training of employees) should keep defective parts from occurring and appraisal costs (e.g. quality audit costs) cover the costs for maintaining the quality level of the company. The costs of failure of control are also measured in two areas: internal failure costs (e.g. scrap) and external failure costs (e.g. customer complaints, reworked material). This traditional postproduction inspection syndrome only tries to separate the good parts from the defective ones, but does not make any allowance for prevention of defective parts during the production process itself. The inspection system only controls at a place where the production processes that have possibly generated the defective part have already been completed. More inspection also means higher appraisal costs. The intensified inspection does not have any real effect on eliminating the defects. Appraisal costs will thus remain at a high level as long as failure costs remain high.

Feigenbaum suggests, in order to reduce both failure costs and appraisal costs, increased the expenditure for prevention. Prevention of defects will lead to a reduction of defective parts. This will thus have a substantial reduction in failure costs. Moreover, an increase in prevention costs will result in fewer defective parts and, consequently, will lead to a reduced need for routine production inspection and extensive test activities. The final result is a clear reduction of the company's overall costs of non-quality and an improvement of its competitive situation.

4.5 PHILIP BAYARD CROSBY Philip Bayard Crosby (18 June 1926) has become known for his concept of "zero defects" and "do it right the first time" which he expects to be the only standard of performance. His emphasis on quality is a follow up on Edward Demings' Quality Control. Crosby said that quality is as important as scheduling and cost of production. He recommends applying his four absolutes of quality management: do it right first time, the system of quality is prevention, the performance standard is "zero defects" and The measurement of quality is the price of non-conformance. Philip Bayard Crosby Crosby was born in West Virginia in 18 June 1926. After high school he went to college, graduating as a Doctor of Podactric Medicine. In 1957, Crosby joined the Martin Company in Florida as a senior quality engineer. In 1961, he started to create the zero defects concept. In 1965, Crosby received an invitation from the ITT Corporation to become its quality director. In 1979, he wrote his best seller, ''Quality is Free'', published by McGraw-Hill. At that time he founded Philip Crosby Associates, Inc., which is now one of the largest quality consulting firms in the USA. In 1984, he published his second best seller, ''Quality Without Tears''. Quality Quality, according to Crosby, is conformance with established standards, and when you do not conform, there is simply an absence of quality. It should be measured, either in percentage or numbers, (preferably as a percentage of sales). Quality is applicable to any organization or any given situation. It is the responsibility of every department or unit in the organization and not just the concern of production alone. Crosby says, "quality is free… but it is not a gift" (Crosby, 1979). Like Demings, he believes that commitment to quality should come from the top, that workers should think the organization and not just their department or unit. Achievement of target should be displayed for all to see.

Four Absolutes of Quality Management Four absolutes of quality management are: 1. DIRFT - Do it right the first time ensure that clear requirements have been defined and that they are understood by both customers and suppliers. Quality must be defined as "conformance to requirement"' and not as goodness. It is then the responsibility of management to establish the internal requirements that the workers are to meet. Furthermore management has to supply the necessary means that the workers need to meet those requirements. Finally, management has to make an effort to encourage and support the workers to meet those requirements. 2. The system of quality is prevention - since post-production inspection is done after the fact by sorting the good parts from the bad which results in high appraisal costs, the system of quality has to be prevention. The system for causing quality, according to Crosby, are not appraisal but prevention of errors. 3. The performance standard is "zero defects" - is a performance standard. Mistakes are a function of the importance that an employee places on specific things. Employees are more careful about one act than another. Two different types of factors can cause mistakes: lack of attention and lack of knowledge. Lack of knowledge can be compensated for by appropriate training and deficiencies corrected. Lack of attention is to be corrected by the employee himself. The employee who is prepared to commit himself to monitor carefully each detail and avoid errors, takes an important step toward setting a goal of zero defects in all things while at work. This is his standard of performance. 4. The measurement of quality is the price of non-conformance - often quality is not the looked at in financial terms. Crosby divides the costs of quality into two areas: the price of conformance and the price of non-conformance. The price of conformance is understood as the amount, which it is necessary to spend in order to make things come out correctly. This includes all prevention efforts and quality training. The price of non-conformance includes all expenses involved in doing things wrong. This refers to, for instance, payments for warranty, correction of work procedures, etc. quality is measured as the price of non-conformance.

4.6 KAORU ISHIKAWA Basing his ideas on the works of Juran and Deming, Kaoru Ishikawa (1915) substantially influenced the Japanese understanding of quality. Ishikawa has become known for his work on, in particular, four aspects of TQM: quality circles, the question of continuous training, the quality tool "Ishikawa diagram"' and the quality chain. His approach to TQM comes very close to today's understanding of TQM. TQM emphasizes a clear customer orientation - internal and external. The needs of the customer have to satisfy. TQM is not limited to the quality department but involves all departments within the business organization. Top management has to lead by example and to demonstrate actively that they are serious about quality. TQM involves everyone within the company; every employee should contribute his ideas of how to improve the work processes. Kaoru Ishikawa Kaoru Ishikawa graduated form the Engineering Department of Tokyo University in 1939. He obtained his professorship in 1960. He was awarded the grant prize from the American Society for Quality Control for his writings on quality management. Ishikawa died in April 1989. Quality Circles In early 1950's, Ishikawa and the Union of Japanese scientist and engineers stated to organize what they called "Workshop to Quality Circle Study Groups". Since that time, this concept has spread rapidly in Japanese industry. It became one of the important reasons for Japan's business success and has been exported worldwide. The quality circle is a voluntary group of six to eight employees from the same department. They meet regularly in order to discuss aspects of their immediate job environment. It is the aim to improve the work processes these workers are responsible for. Thereby by full expertise, job knowledge and human capabilities of each employee can be fully used. The entire human resources are drawn out. This involvement increases and strengthens the commitment of the individual employee to the quality objectives of the company. Continuous Training Ishikawa claims that TQM "begins with education and ends with education" (Ishikawa, 1989). Because the workforce of a business organization is constantly changing, Ishikawa argued, and new employees are starting, education and training must be continued. In addition, the needs and expectations of the customers are a moving target and subject to constant change, and Ishikawa stresses the important that "QC training and education must also be carried out without interruption, through good times and bad'. The Japanese quality expert defines as the aim for a training program that quality should be made everybody's concern. Every employee should understand the new philosophy of quality. Another area of quality improvement that Ishikawa emphasized is quality throughout a product's life cycle -- not just during production. Although he believed strongly in creating standards, he felt that standards were like continuous quality improvement programs. Standards are not the ultimate source of decision making; customer satisfaction is. He wanted managers to consistently meet consumer needs; from these needs, all other decisions should stem. Besides his own developments, Ishikawa drew and expounded on principles from other quality gurus, including those of one man in particular: W. Edwards Deming, creator of the PlanDo-Check-Act model.

Ishikawa expanded Deming's four steps into the following six: • Determine goals and targets. • Determine methods of reaching goals. • Engage in education and training. • Implement work. • Check the effects of implementation. • Take appropriate action. Ishikawa Diagram In regard to the quality tool developed by Ishikawa; the "Fishbone" or 'Ishikawa" diagram. It is a quality tool, which helps to solve quality problems in a systematic manner. It indicates the relationship of the incident or work process being analyzed and the various parameters, which influence this process. With his cause and effect diagram (also called the "Ishikawa" or "fishbone" diagram), this management leader, made significant and specific advancements in quality improvement. With the use of this new diagram, the user can see all possible causes of a result, and hopefully find the root of process imperfections. By pinpointing root problems, this diagram provides quality improvement from the "bottom up."

Ishikawa Diagram Quality Chain The widening of understanding, which Ishikawa undertakes, is remarkable. He describes the importance not only of meeting the requirements of the external customer, but also of paying attention to 'internal' customers and internal relationships. He develops a continuous line of internal supplier-customer relations and invented the term ''The next process is your customers''. Sectionalism must be broken down. Every employee should be able to talk to other department members freely and frankly. It is necessary to learn to think from the standpoint of the other party. All the different departments within the company are living from the very same external customer. It must be the common goal of each department to fully satisfy this customer. Therefore it would be helpful if the next work process and the next work of the previous work station, is considered as a customer. The next work process should be treated like the external customer.

4.7 WALTER SHEWHART Shewhart developed the Shewhart Cycle Learning and Improvement Cycle, combining both creative management thinking with statistical analysis. This cycle consist four continuos steps: Plan, Do, Study, Act (PDSA Cycle). These steps, Shewhart believed, ultimately lead to total quality improvement. The cycle draws its structure from the notion that constant evaluation of management practices as well as the willingness of management to adopt and disregard unsupported ideas as keys to the evolution of a successful enterprise. Shewhart's charts were adopted by the American Society for Testing Materials (ASTM) in 1933 and advocated to improve production during World War II in American War Standards. It was during this period that W Edwards Deming founded a systematic critique of data-based management, premised on Shewhart's insights. Following the war, Deming went on to champion Shewhart's methods, working as an industrial consultant to Japanese, and latterly US, corporations from 1950 to 1990. Walter A. Shewhart Shewhart was born in New Canton, Illinois, USA on 18th March 1891. His schooling in physics at the Universities of Illinois and California led him to his doctorate and a brief spell as an academic. Shewhart, successfully brought together the disciplines of statistics, engineering, and economics and became known as the father of modern quality control. A strong background in the sciences and engineering prepared Shewhart for a life of accomplishments. He graduated from the University of Illinois with bachelor's and master's degrees, and he received a doctorate in physics from the University of California at Berkeley in 1917. He taught at the universities of Illinois and California, and he briefly headed the physics department at the Wisconsin Normal School in LaCrosse.He also lectured on quality control and applied statistics at the University of London, Stevens Institute of Technology, the graduate school of the U.S. Department of Agriculture, and in India. He was a member of the visiting committee at Harvard's Department of Social Relations, an honorary professor at Rutgers, and a member of the advisory committee of the Princeton mathematics department. In 1918, Shewhart joined the Western Electric Company, a manufacturer of telephony hardware for Bell Telephone. Bell Telephone's engineers had been working to improve the reliability of their transmission systems. Because amplifiers and other equipment had to be buried underground, there was a business need to reduce the frequency of failures and repairs. Bell Telephone had already realized the importance of reducing variation in a manufacturing process, the basis of all lean production. Moreover, they had realized that continual processadjustment in reaction to non-conformance actually increased variation and degraded quality. In 1924, Shewhart framed the problem in terms of "assignable-cause" and "chance-cause" variation and introduced the "control chart" as a tool for distinguishing between the two. Shewhart stressed that bringing a production process into a state of "statistical control", where there is only chance-cause variation, and keeping it in control, is necessary to predict future output and to manage a process economically. Shewhart worked to advance the thinking at Bell Telephone Laboratories from their foundation in 1925 until his retirement in 1956, publishing a series of papers in the Bell System Technical Journal.

4.8 MYRON TRIBUS Myron Tribus is a consulting engineer, specializing in Quality Management and Cognitive Modifiability, with special emphasis on education. He has published many papers and books on many topics ranging from academic subjects to applied topic. About a decade ago Tribus turned his attention to the theories and practices of Dr. Reuven Feuerstein, an Israeli Psychologist who developed the Theory of Structural Cognitive Modifiability. This theory, which has been in development for the past 60 years, has been used in many countries to increase the intelligence of people suffering from various types of learning disabilities. He has become a certified trainer of teachers who take Dr. Feuerstein's methods into schools in different countries. Myron Tribus Myron Tribus is one of the co-founders of Exergy, a company specializing in the design of advanced, high efficiency, power production systems. He recently retired from Exergy after 12 years as a director. Before starting Exergy, he retired from MIT after 11 1/2 years as Director of the Center for Advanced Engineering Study. Before coming to MIT he served as a Senior Vice President for Research and Engineering for the Xerox Corporation, where he was in charge of Research, Development and Engineering for the entire line of Xerox Copiers, Duplicators and Telecopiers. Before that he served for two years as Assistant Secretary for Science and Technology in the U. S. Department of Commerce. For eight years he was Dean of the Thayer School of Engineering at Dartmouth College, where he introduced the Unified Engineering Curriculum and led the faculty in developing a curriculum based on engineering design and entrepreneurship. Dr. Tribus served for 16 years on the faculty of the College of Engineering at UCLA and two years on the Faculty of the University of Michigan. He has worked as a design engineer for the Jet Engine Department of the General Electric Company. In 1958 he hosted the television show "Threshold" for CBS in Los Angeles. Dr. Tribus is a member of the National Academy of Engineering. He has served on several boards of directors and been a consultant to many companies and governmental bodies. He has received five awards for technical papers and public service and two honorary doctorates. He received the BS in Chemistry from the University of California, Berkeley in 1942 and the Ph.D. in Engineering from UCLA in 1949.

Papers and Books Tribus has published over 100 papers on topics ranging from academic subjects, such as heat transfer, fluid mechanics, probability theory, statistical inference and thermodynamics, to applied topics such as sea water demineralization, aircraft heating, aircraft ice prevention and the design of engineering curricula. He has published two books, "Thermostatics and Thermodynamics" (which provided the first textbook which bases the laws of thermodynamics on information theory instead of the classical arguments) and "Rational Descriptions, Decisions and Designs" (which introduces Bayesian Decision methods into the engineering design process). Dr. Tribus was active with Irving Langmuir in the pioneering days of cloud seeding and has published analyses of the role of statistics in weather modification. He has also published and lectured extensively on topics of social interest such as the position of engineers in politics, the decline of US competitiveness in world trade, the role of decision theory in political decision making and the role of technology in society. He has also written and lectured on the redesign of educational systems. Over the last 20 years, Dr. Tribus has become known through his writings on Dr. Deming's philosophy of management. He is one of the founders of the American Quality and Productivity Institute, which is devoted to teaching and promoting the fundamentals of quality management. The AQPI merged its efforts with the Transformation of American Industry project of Jackson Community College to form the Community Quality Council to foster the growth and development of community quality centers across the USA. This activity has recently been merged with the activities of the Association for Quality and Participation, which continues the support of community quality centers.

ADDITIONAL MATERIALS • • • •

http://www.asq.org/join/about/history/shewhart.html http://www.business.com/ http://www.in2in.org/tribus_bio.htm http://www.sigma-engineering.co.uk/light/shewhartbiog.htm