TOOLS OF QUALITY CONTROL

The seven basic tools of quality was first emphasized by Kaoru Ishikawa, a
professor of engineering at Tokyo University and the father of quality circles.
1. Cause-and-effect diagram (also called Ishikawa or fishbone chart):
Identifies many possible causes for an effect or problem and sorts ideas
into useful categories.
2. Check sheet: A structured, prepared form for collecting and analyzing
data; a generic tool that can be adapted for a wide variety of purposes.
3. Control charts: Graphs used to study how a process changes over time.
4. Histogram: The most commonly used graph for showing frequency
distributions, or how often each different value in a set of data occurs.
5. Pareto chart: Shows on a bar graph which factors are more significant.
6. Scatter diagram: Graphs pairs of numerical data, one variable on each
axis, to look for a relationship.
7. Flowchart: A picture of the separate steps of a process in sequential
order.
CauseandEffect Diagram (Ishikawa Diagram)
Variations: cause enumeration diagram, process fishbone, timedelay fishbone,
CEDAC (causeandeffect diagram with the addition of cards), desiredresult
fishbone, reverse fishbone diagram
The fishbone diagram identifies many possible causes for an effect or problem.
It can be used to structure a brainstorming session. It immediately sorts ideas
into useful categories.
When to Use a Fishbone Diagram
1. When identifying possible causes for a problem.
2. Especially when a teams thinking tends to fall into ruts.
Fishbone Diagram Procedure
Materials needed: flipchart or whiteboard, marking pens.
1. Agree on a problem statement (effect). Write it at the center right of the
flipchart or whiteboard. Draw a box around it and draw a horizontal
arrow running to it.
2. Brainstorm the major categories of causes of the problem. If this is
difficult use generic headings:
a. Methods

3.
4.

5.

6.

b. Machines (equipment)
c. People (manpower)
d. Materials
e. Measurement
f. Environment
Write the categories of causes as branches from the main arrow.
Brainstorm all the possible causes of the problem. Ask: Why does this
happen? As each idea is given, the facilitator writes it as a branch from
the appropriate category. Causes can be written in several places if they
relate to several categories.
Again ask why does this happen? about each cause. Write subcauses
branching off the causes. Continue to ask Why? and generate deeper
levels of causes. Layers of branches indicate causal relationships.
When the group runs out of ideas, focus attention to places on the chart
where ideas are few.

Check Sheet
Also called: defect concentration diagram
A check sheet is a structured, prepared form for collecting and analyzing data.
This is a generic tool that can be adapted for a wide variety of purposes.
When to Use a Check Sheet
1. When data can be observed and collected repeatedly by the same
person or at the same location.
2. When collecting data on the frequency or patterns of events, problems,
defects, defect location, defect causes, etc.
3. When collecting data from a production process.
Check Sheet Procedure
1. Decide what event or problem will be observed. Develop operational
definitions.
2. Decide when data will be collected and for how long.
3. Design the form. Set it up so that data can be recorded simply by
making check marks or Xs or similar symbols and so that data do not
have to be recopied for analysis.
4. Label all spaces on the form.
5. Test the check sheet for a short trial period to be sure it collects the
appropriate data and is easy to use.
6. Each time the targeted event or problem occurs, record data on the
check sheet.

Control Chart
Also called: statistical process control
The control chart is a graph used to study how a process changes over time.
Data are plotted in time order. A control chart always has a central line for the
average, an upper line for the upper control limit and a lower line for the lower
control limit. These lines are determined from historical data. By comparing
current data to these lines, you can draw conclusions about whether the
process variation is consistent (in control) or is unpredictable (out of control,
affected by special causes of variation).
Control charts for variable data are used in pairs. The top chart monitors the
average, or the centering of the distribution of data from the process. The
bottom chart monitors the range, or the width of the distribution. If your data
were shots in target practice, the average is where the shots are clustering,
and the range is how tightly they are clustered. Control charts for attribute data
are used singly.
When to Use a Control Chart
1. When controlling ongoing processes by finding and correcting problems
as they occur.
2. When predicting the expected range of outcomes from a process.
3. When determining whether a process is stable (in statistical control).
4. When analyzing patterns of process variation from special causes (nonroutine events) or common causes (built into the process).
5. When determining whether your quality improvement project should aim
to prevent specific problems or to make fundamental changes to the
process.
Control Chart Basic Procedure
1.
2.
3.
4.

Choose the appropriate control chart for your data.

Determine the appropriate time period for collecting and plotting data.
Collect data, construct your chart and analyze the data.
Look for out-of-control signals on the control chart. When one is
identified, mark it on the chart and investigate the cause. Document how
you investigated, what you learned, the cause and how it was corrected.
5. Continue to plot data as they are generated. As each new data point is
plotted, check for new out-of-control signals.
6. When you start a new control chart, the process may be out of control. If
so, the control limits calculated from the first 20 points are conditional

limits. When you have at least 20 sequential points from a period when
the process is operating in control, recalculate control limits.
Histogram
A frequency distribution shows how often each different value in a set of data
occurs. A histogram is the most commonly used graph to show frequency
distributions. It looks very much like a bar chart, but there are important
differences between them.
When to Use a Histogram
1. When the data are numerical.
2. When you want to see the shape of the datas distribution, especially
when determining whether the output of a process is distributed
approximately normally.
3. When analyzing whether a process can meet the customers
requirements.
4. When analyzing what the output from a suppliers process looks like.
5. When seeing whether a process change has occurred from one time
period to another.
6. When determining whether the outputs of two or more processes are
different.
7. When you wish to communicate the distribution of data quickly and
easily to others.
Histogram Construction
1. Collect at least 50 consecutive data points from a process.
2. Use the histogram worksheet to set up the histogram. It will help you
determine the number of bars, the range of numbers that go into each
bar and the labels for the bar edges. After calculating W in step 2 of the
worksheet, use your judgment to adjust it to a convenient number. For
example, you might decide to round 0.9 to an even 1.0. The value
for W must not have more decimal places than the numbers you will be
graphing.
3. Draw x- and y-axes on graph paper. Mark and label the y-axis for
counting data values. Mark and label the x-axis with the L values from
the worksheet. The spaces between these numbers will be the bars of
the histogram. Do not allow for spaces between bars.
4. For each data point, mark off one count above the appropriate bar with
an X or by shading that portion of the bar.
Histogram Analysis

Before drawing any conclusions from your histogram, satisfy yourself that the
process was operating normally during the time period being studied. If any
unusual events affected the process during the time period of the histogram,
your analysis of the histogram shape probably cannot be generalized to all
time periods.
Scatter Diagram
Also called: scatter plot, XY graph
The scatter diagram graphs pairs of numerical data, with one variable on each
axis, to look for a relationship between them. If the variables are correlated,
the points will fall along a line or curve. The better the correlation, the tighter
the points will hug the line.
When to Use a Scatter Diagram
1. When you have paired numerical data.
2. When your dependent variable may have multiple values for each value
of your independent variable.
3. When trying to determine whether the two variables are related, such
as
a. When trying to identify potential root causes of problems.
b. After brainstorming causes and effects using a fishbone
diagram, to determine objectively whether a particular cause
and effect are related.
c. When determining whether two effects that appear to be
related both occur with the same cause.
d. When testing for autocorrelation before constructing a control
chart.
Scatter Diagram Procedure
1. Collect pairs of data where a relationship is suspected.
2. Draw a graph with the independent variable on the horizontal axis and
the dependent variable on the vertical axis. For each pair of data, put a
dot or a symbol where the x-axis value intersects the y-axis value. (If two
dots fall together, put them side by side, touching, so that you can see
both.)
3. Look at the pattern of points to see if a relationship is obvious. If the data
clearly form a line or a curve, you may stop. The variables are
correlated. You may wish to use regression or correlation analysis now.
Otherwise, complete steps 4 through 7.

4. Divide points on the graph into four quadrants. If there are X points on
the graph,
5. Count X/2 points from top to bottom and draw a horizontal line.
6. Count X/2 points from left to right and draw a vertical line.
7. If number of points is odd, draw the line through the middle point.
8. Count the points in each quadrant. Do not count points on a line.

9. Add the diagonally opposite quadrants. Find the smaller sum and the
total
of
points
in
all
quadrants.
A
=
points
in
upper
left
+
points
in
lower
right
B
=
points
in
upper
right
+
points
in
lower
left
Q
=
the
smaller
of
A
and
B
N=A+B
10.Look up the limit for N on the trend test table.
If Q is less than the limit, the two variables are related.
If Q is greater than or equal to the limit, the pattern could have occurred
from random chance.

Pareto Chart
Also called: Pareto diagram, Pareto analysis
Variations: weighted Pareto chart, comparative Pareto charts
A Pareto chart is a bar graph. The lengths of the bars represent frequency or
cost (time or money), and are arranged with longest bars on the left and the
shortest to the right. In this way the chart visually depicts which situations are
more significant.
When to Use a Pareto Chart
1. When analyzing data about the frequency of problems or causes in a
process.
2. When there are many problems or causes and you want to focus on the
most significant.
3. When analyzing broad causes by looking at their specific components.
4. When communicating with others about your data.

Pareto Chart Procedure

1. Decide what categories you will use to group items.
2. Decide what measurement is appropriate. Common measurements are
frequency, quantity, cost and time.
3. Decide what period of time the Pareto chart will cover: One work cycle?
One full day? A week?
4. Collect the data, recording the category each time. (Or assemble data
that already exist.)
5. Subtotal the measurements for each category.
6. Determine the appropriate scale for the measurements you have
collected. The maximum value will be the largest subtotal from step 5. (If
you will do optional steps 8 and 9 below, the maximum value will be the
sum of all subtotals from step 5.) Mark the scale on the left side of the
chart.
7. Construct and label bars for each category. Place the tallest at the far
left, then the next tallest to its right and so on. If there are many
categories with small measurements, they can be grouped as other.
Steps 8 and 9 are optional but are useful for analysis and communication.
8. Calculate the percentage for each category: the subtotal for that
category divided by the total for all categories. Draw a right vertical axis
and label it with percentages. Be sure the two scales match: For
example, the left measurement that corresponds to one-half should be
exactly opposite 50% on the right scale.
9. Calculate and draw cumulative sums: Add the subtotals for the first and
second categories, and place a dot above the second bar indicating that
sum. To that sum add the subtotal for the third category, and place a dot
above the third bar for that new sum. Continue the process for all the
bars. Connect the dots, starting at the top of the first bar. The last dot
should reach 100 percent on the right scale.
Flowchart
Also called: process flowchart, process flow diagram.
Variations: macro flowchart, top-down flowchart, detailed flowchart (also called
process map, micro map, service map, or symbolic flowchart), deployment
flowchart (also called down-across or cross-functional flowchart), severalleveled flowchart.
A flowchart is a picture of the separate steps of a process in sequential order.

Elements that may be included are: sequence of actions, materials or services

entering or leaving the process (inputs and outputs), decisions that must be
made, people who become involved, time involved at each step and/or process
measurements.
The process described can be anything: a manufacturing process, an
administrative or service process, a project plan. This is a generic tool that can
be adapted for a wide variety of purposes.
When to Use a Flowchart
1.
2.
3.
4.

To develop understanding of how a process is done.

To study a process for improvement.
To communicate to others how a process is done.
When better communication is needed between people involved with the
same process.
5. To document a process.
6. When planning a project.
Flowchart Basic Procedure
Materials needed: sticky notes or cards, a large piece of flipchart paper
or newsprint, marking pens.
1. Define the process to be diagrammed. Write its title at the top of the
work surface.
2. Discuss and decide on the boundaries of your process: Where or when
does the process start? Where or when does it end? Discuss and decide
on the level of detail to be included in the diagram.
3. Brainstorm the activities that take place. Write each on a card or sticky
note. Sequence is not important at this point, although thinking in
sequence may help people remember all the steps.
4. Arrange the activities in proper sequence.
5. When all activities are included and everyone agrees that the sequence
is correct, draw arrows to show the flow of the process.
6. Review the flowchart with others involved in the process (workers,
supervisors, suppliers, customers) to see if they agree that the process is
drawn accurately.
Flowchart Considerations
1. Dont worry too much about drawing the flowchart the right way. The
right way is the way that helps those involved understand the process.
2. Identify and involve in the flowcharting process all key people involved
with the process. This includes those who do the work in the process:

suppliers, customers and supervisors. Involve them in the actual

flowcharting sessions by interviewing them before the sessions and/or by
showing them the developing flowchart between work sessions and
obtaining their feedback.
3. Do not assign a technical expert to draw the flowchart. People who
actually perform the process should do it.
4. Computer software is available for drawing flowcharts. Software is useful
for drawing a neat final diagram, but the method given here works better
for the messy initial stages of creating the flowchart.
Commonly Used Symbols in Detailed Flowcharts
One step in the process; the step is written inside the box. Usually,
only one arrow goes out of the box.
Direction of flow from one step or decision to another.
Decision based on a question. The question is written in the
diamond. More than one arrow goes out of the diamond, each one
showing the direction the process takes for a given answer to the
question. (Often the answers are yes and no.)
Delay or wait

Link to another page or another flowchart. The same symbol on

the other page indicates that the flow continues there.
Input or output

Document
Alternate symbols for start and end points

SIX SIGMA
Six Sigma is a methodology used to improve business processes by utilizing
statistical analysis rather than guesswork. This proven approach has been
implemented within a myriad of industries to achieve hard and soft money
savings, while increasing customer satisfaction. Six Sigma at many
organizations simply means a measure of quality that strives for near
perfection. Six Sigma is a disciplined, data-driven approach and methodology
for eliminating defects (driving toward six standard deviations between the
mean and the nearest specification limit) in any process from manufacturing to
transactional and from product to service.
Six Sigma is more than training; it is an approach based on data, geared
toward projects with quantifiable business outcomes. For instance, in 1999 GE
Capital was able to save $2 Billion with Six Sigma. Processes are improved by
controlling variation and understanding the intricacies within them. This results
in more predictable and profitable business processes.
The statistical representation of Six Sigma describes quantitatively how a
process is performing. To achieve Six Sigma, a process must not produce more
than 3.4 defects per million opportunities. A Six Sigma defect is defined as
anything outside of customer specifications. A Six Sigma opportunity is then
the total quantity of chances for a defect.
The fundamental objective of the Six Sigma methodology is the
implementation of a measurement-based strategy that focuses on process
improvement and variation reduction through the application of Six Sigma

improvement projects. This is accomplished through the use of two Six Sigma
sub-methodologies: DMAIC and DMADV. The Six Sigma DMAIC process
(define, measure, analyze, improve, control) is an improvement system
for existing processes falling below specification and looking for incremental
improvement. The Six Sigma DMADV process (define, measure, analyze,
design, verify) is an improvement system used to develop new processes or
products at Six Sigma quality levels. It can also be employed if a current
process requires more than just incremental improvement. Both Six Sigma
processes are executed by Six Sigma Green Belts and Six Sigma Black Belts,
and are overseen by Six Sigma Master Black Belts.
According to the Six Sigma Academy, Black Belts save companies
approximately $230,000 per project and can complete four to 6 projects per
year. General Electric, one of the most successful companies implementing Six
Sigma, has estimated benefits on the order of $10 billion during the first five
years of implementation. GE first began Six Sigma in 1995 after Motorola and
Allied Signal blazed the Six Sigma trail. Since then, thousands of companies
around the world have discovered the far reaching benefits of Six Sigma.
Many frameworks exist for implementing the Six Sigma methodology. Six
Sigma Consultants all over the world have developed proprietary
methodologies for implementing Six Sigma quality, based on the similar
change management philosophies and applications of tools.
Champions
-

Company executives who lead Six Sigma by backing projects.

Individuals who receive instruction regarding the basic principles of Six
Sigma and its methodology.
Responsible for choosing employees to be Belts and mentoring project
leaders.
Those who implement and back the introduction of Six Sigma within the
firm.

Master Black Belts

-

Aligned with the Champion to offer support and provide Project

Descriptions.
Those who will advise and instruct Green Belts and Black Belts.
Professionals with widespread project management knowledge.
Masters of Six Sigma Methodologies with proven track records.
Individuals with an advanced understanding of the Statistical Tools used
within Six Sigma.
Prospective leaders of a corporation.

Six Sigma Belts

-

Individuals who obtain instruction concerning the road map of Six Sigma.
Individuals who receive one-week to four-week training sessions that
provide them with an opportunity to progress through his or her project
as the skills are learned.
Individuals who successfully complete all required training, exams, and a
live project.

DEMING PRIZE
The Deming Prize is one of the highest awards on TQM (Total Quality
Management) in the world. It was established in 1951 in commemoration of the
late Dr. William Edwards Deming who contributed greatly to Japans
proliferation of statistical quality control after the World War II. His teachings
helped Japan build its foundation by which the level of Japans product quality
has been recognized as the highest in the world.
History
The late Dr. W. E. Deming (1900 - 1993), one of the foremost experts of
quality control in the United States, was invited to Japan by the Union of
Japanese Scientists and Engineers (JUSE) in July 1950.

Upon his visit, Dr. Deming lectured day after day his Eight-Day Course on
Quality Control at the Auditorium of the Japan Medical Association in KandaSurugadai, Tokyo. This was followed by Dr. Demings One-Day Course on
Quality Control for Top Management, held in Hakone. Through these seminars,
Dr. Deming taught the basics of statistical quality control plainly and thoroughly
to executives, managers, engineers and researchers of Japanese industry. His
teachings made a deep impression on the participants mind and provided
great impetus to quality control in Japan, which was in its infancy.
The transcript of the eight-day course, Dr. Demings Lectures on Statistical
Control of Quality, was compiled from stenographic records and distributed for
a charge. Dr. Deming donated his royalties to JUSE. In appreciation of Dr.
Demings generosity, the late Mr. Kenichi Koyanagi, managing director of JUSE,
proposed using it to fund a prize to commemorate Dr. Demings contribution
and friendship in a lasting way and to promote the continued development of
quality control in Japan. Upon receiving the proposal, the JUSE's board of
directors unanimously made a resolution to establish the Deming Prize.
Later, the Japanese translation of Dr. Demings book Some Theory of Sampling
was published. Dr. Deming further contributed to the fund using the royalties
from his book. Since then, the Deming Prize has grown considerably, and today
JUSE
carries
the
overall
administrative
costs
for
the
prize.

Categories of the Deming Prize

As shown in the table below, the categories of the Deming Prize are the
Deming Prize for Individuals, the Deming Application Prize and the Quality
Control Award for Operations Business Units.
The Deming
Individuals

Prize

for For individuals or groups

Given to those who have made outstanding
contributions to the study of TQM or statistical
methods used for TQM, or those who have made

outstanding contributions in the dissemination of

TQM
The Deming
Prize

Application For organizations or divisions of organizations that

manage their business autonomously
Given to organizations or divisions of organizations
that have achieved distinctive performance
improvement through the application of TQM in a
designated year

The Quality Control Award For operations business units of an organization

for Operations Business
Given to operations business units of an
Units
organization that have achieved distinctive
performance improvement through the application
of quality control/management in the pursuit of
TQM in a designated year

Definition of TQM (Total Quality Management) (revised in June 1998)

The Deming Prize Committee defines TQM as follows:
TQM is a set of systematic
effectively and efficiently
products and services with
appropriate

activities carried out by the entire organization to

achieve company objectives so as to provide
a level of quality that satisfies customers, at the
time
and
price.

The Deming Prize and Development of Quality Control / Management

in Japan
The Deming Prize, especially the Deming Application Prize that is given to
companies, has exerted an immeasurable influence directly or indirectly on the
development of quality control / management in Japan.
Applicant companies and divisions of companies sought after new approaches
to quality management that met the needs of their business environment and

challenged for the Deming Prize. Those organizations developed effective

quality management methods, established the structures for implementation
and put the methods into practice.
Commonly, those who have challenged for the Prize share the feeling that they
have had a valuable experience and that the management principle of
achieving a business success through quality improvement has really worked.
Through witnessing the success of these organizations, many other companies
have been inspired to begin their own quest for quality management. Learning
from those who went before them, the new practitioners are convinced that
quality management is an important key to their business success and that the
challenge to attain the Prize can provide an excellent opportunity to learn
useful quality methodologies. Thus, quality management has spread to many
organizations, its methods have evolved over the years and the methods
contributed to the advancement of these organizations improvement
activities.
This mechanism that encourages each organizations self-development comes
from the examination process of the Deming Prize, though the very process has
invited some criticism that the marking criteria for the Deming Application Prize
is unclear. To make the examination process more transparent and to
communicate the intentions of the Deming Prize more clearly, the evaluation
criteria and the judgment criteria for passing are now presented.
However, the Committees basic stance on the examination criteria remains
unchanged. Namely, the criteria should reflect each applicant organizations
circumstance.
The Deming Prize examination does not require applicants to conform to a
model provided by the Deming Prize Committee. Rather, the applicants are
expected to understand their current situation, establish their own themes and
objectives and improve and transform themselves company-wide. Not only the
results achieved and the processes used, but also the effectiveness expected in
the future are subjects for the examination. To the best of their abilities, the
examiners evaluate whether or not the themes established by the applicants
were commensurate to their situation; whether or not their activities were
suitable to their circumstance and whether or not their activities are likely to
achieve their higher objectives in the future.
The Deming Prize Committee views the examination process as an opportunity
for mutual-development, rather than examination. While in realty the
applicants still receive the examination by a third party, the examiners
approach to evaluation and judgment is comprehensive. Every factor such as

the applicants attitude toward executing Total Quality Management (TQM),

their implementation status and the resulting effects are taken into overall
consideration. In other words, the Deming Prize Committee does not specify
what issues the applicants must address, rather the applicants themselves are
responsible for identifying and addressing such issues, thus, this process allows
quality methodologies to be further developed.
Total Quality Control (TQC) that had been developed in Japan as discussed
above was re-imported to the United States in the 1980s and contributed to the
revitalization of its industries. While the term TQC had been used in Japan, it
was translated as TQM in western nations. To follow an internationally-accepted
practice, Japan changed the name from TQC to TQM.
There is no easy success at this time of constant change. No organization can
expect to build excellent quality and management systems just by solving
problems given by others. They need to think on their own, set lofty goals and
drive themselves to challenge for achieving those goals. For these companies
that introduce and implement TQM in this manner, the Deming Application
Prize aims to be used as a tool for improving and transforming their business
management.
Deming Prize for Individuals
The Deming Prize for Individuals is an annual award given to:
-

individuals who have made outstanding contributions to the study of

TQM or statistical methods used for TQM, or

individuals who have

dissemination of TQM.

made

outstanding

contributions

in

the

To apply for the Deming Prize for Individuals, recommendation from the
members of the Deming Prize Committee will be necessary. Any individual who
fulfils the above (1) or (2) may apply for the Prize regardless of nationality.
However, those whose activities are limited to outside Japan are not eligible for
application.
The Deming Prize Committee welcomes candidates to apply or make
recommendations for others for the Deming Prize for Individuals. There is no
difference in the examination process regardless if the candidates have been
recommended by others or self-applied.
Deming Application Prize

The Deming Application Prize is an annual award presented to a company that

has achieved distinctive performance improvements through the application of
TQM. Regardless of the types of industries, any organization can apply for the
Prize, be it public or private, large or small, or domestic or overseas. Provided
that a division of a company manages its business autonomously, the division
may apply for the Prize separately from the company.
There is no limit to the number of potential recipients of the Prize each year. All
organizations that score the passing points or higher upon examination will be
awarded the Deming Application Prize.
Companies Qualified for Receiving the Prize
The Deming Application Prize is given to applicant companies or divisions of
companies (applicant companies hereafter) that effectively practice TQM
suitable to their management principles, industry, business and scope. More
specifically, the following evaluation criteria are used for the examination to
determine whether or not the applicant companies should be awarded the
Prize:
1.

1. Reflecting their management principles, industry, business, scope

and business environment, the applicants have established
challenging and customer-oriented business objectives and strategies
under their clear management leadership.

2.

2. TQM has been implemented properly to achieve business objectives

and strategies as mentioned Item 1) above.
3. As an outcome of Item 2), outstanding results have been obtained for
business objectives and strategies as stated in Item 1).

Quality Control Award for Operations Business Units

The Quality Control Award for Operations Business Units is given to operations
business units of a company that have achieved distinctive performance
improvement through the application of quality control/management in the
pursuit of TQM in a designated year.
While the Deming Application Prize is directed toward an entire company or a
division of a company, the Quality Control Award for Operations Business Units
accommodates an individual business unit, which is not eligible for the Deming
Application Prize challenge. To be eligible for the Quality Control Award for
Operations Business Units, the head of the business unit must possess

management responsibilities for the budget. In addition, the unit must have
clearly established responsibilities and authorities for quality management
within the business unit, with a clearly defined relationship with the head office
or other related departments. The unit does not have to possess all functions
related to quality management and quality assurance.
Effects of the Deming Application Prize
More than 160 companies have been awarded the Deming Application Prize. As
a result, a quantum leap in the quality of their products and services has been
achieved. The Deming Application Prize, which was born in Japan, has earned
an internationally renowned reputation as a coveted quality award. This section
introduces the effects that can be expected from challenging the Prize and also
words from the top management of the Prize winning companies.
1. Quality Stabilization and Improvement
By disseminating the concept of quality and the concept of
controlling/managing business activities throughout the organization,
companies have improved their day-to-day operations. At the same time,
statistical quality control methods have been utilized and a quality
assurance system has been established. These activities, together with
an enhanced quality consciousness, have allowed companies to provide
customers with quality products and services that are matched with
customer requirements and company policies and that have been
properly planned, developed, designed, produced and installed. As a
result, there have been reductions in development and design troubles,
parts defects, production defects, installation defects, service defects
and market claims and complaints. Expected product and service quality
has been achieved, and it has become possible to provide products and
services with attractive quality that positively satisfy customers. Results
also include improved reliability, safety and quality that meet society's
needs. Due in part to these improvements, many companies have
acquired a world-class reputation.
These quality improvements not only please customers but also bring
about positive economic results, as listed in Items (2), (3) and (4) and
improve the company's organizational constitution, as described in Items
(4) through (10).
2. Productivity Improvement/Cost Reduction
Significant effects have been achieved as a result of the following

improvements: reduced development and design troubles during the

new product development stage; decreased parts defects or reduced
process troubles due to the spread of TQM promotion with vendors;
lower manufacturing defects and reduction of rework and adjustment
work at the manufacturing stage; reduced installation defects at
construction companies; and increased customer satisfaction in service
industry companies. Furthermore, through a systematic approach to cost
reduction during new product development, competitive cost targets
have been achieved. Activities to improve production control systems
and reduce man-hour have also enhanced productivity.

3. Expanded Sales
Through a systematic approach to satisfying customers' requirements, or
to developing competitive new products in anticipation of customers'
potential requirements, Deming Prize-winning companies have achieved
improved customer satisfaction and, as a result, have been able to
expand their sales. Furthermore, they have strengthened their
management system for the initial distribution of new products and have
deployed TQM into their sales activities. These efforts have contributed
to capturing new customers or markets and to preventing out-of-stock
problem situations, both of which have resulted in increased sales.
4. Increased Profits
Item (3), expanded sales, and Item (2), improved productivity/reduced
cost, work together to increase profits. To promote TQM, of course, some
expenses are inevitable, such as education and training, payroll for TQM
promotion staff and other activities and events. However, based on the
improved business performance companies have achieved by
implementing TQM, it is clear that TQM is highly cost-effective.
5. Thorough Implementation of Management Plans/Business Plans
To secure profits, it is important to implement management
plans/business plans that center on profit plans. Naturally, quality
control/management must be carried out in concordance with these
plans. To logically establish policies and objectives, it is necessary first to
understand and analyze historical business performance. Then, to
efficiently achieve these policies and objectives, it is necessary to deploy

them, implement them and evaluate the results achieved. As a concrete

means to do this, Policy Management, one of the TQM management
methods, has been widely introduced and promoted. Through systematic
approaches like Policy Management, many companies have been
efficiently achieving their management plans/business plans.
6. Realization of Top Management's Dreams
To a greater or a lesser extent, a company has its traditions,
organizational cultures, customary business practices, the way of
thinking, complex human relations, etc. These factors, quite often, make
it difficult for top management to communicate and carry out what it
intends to implement in the organization. However, by establishing the
high goal of winning the Deming Prize and by promoting TQM with an
examination date in mind, many companies are able to improve their
organizational constitution. Top management at these companies often
pleasantly states, "We were able to achieve at once many things we had
wanted to accomplish for years."
As quality control/management is disseminated throughout the entire
company, and as top management's policies are promptly
communicated to all levels of the company and achieved, plant
managers, department heads, section chiefs as well as supervisors
improve their understanding of business management. Moreover, their
solidarity is strengthened and, thus, it becomes possible to develop the
next generation of executives and managers. Some top managers have
commented, "I have been president for a long time and achieving my
policies has never gone this well."
7. TQM by Total Participation and Improvement of the Organizational
Constitution
Many executives and managers of Deming Prize-winning companies
emphasize the following:
"During the process leading up to the Deming Prize examination, the
company as a whole focused on improving product and service quality,
and the organizational constitution was strengthened. These efforts have
contributed to breaking down sectionalism, improving interdepartmental
communications, removing barriers between departments and instilling a
sense of unity. Every employee has learned to see things from the
viewpoint of the entire company and has become more confident in

his/her

job."

Some presidents say, "Through challenging for the Deming Prize, we

became convinced that it is possible for our company to accomplish
anything when all our employees cooperate. We have become much
better at interdepartmental communications and cross-functional
management."
8. Heightened Motivation to Manage and Improve as Well as to Promote
Standardization
Some companies commented, "Each employee has improved his/her
understanding of scientific management and ability to objectively
understand the work situation. Employees have enhanced their ability to
think on their own and, thus, they have become more capable of coming
up with improvement ideas. For example, the number of suggestions per
employee has dramatically increased." Others are happy to say, "We can
promote standardization that produces good results, not just
standardization for its own sake, an effort that has greatly contributed to
the establishment of standards that are alive and in use throughout the
company."
9. Uniting

Total

Organizational

Power

and

Enhancing

Morale

In recent years, QC Circle activities have captured worldwide attention.

QC Circles are not just for a morale-boosting movement. In companies
that have active QC Circles, first-line supervisors and employees have
acquired simple managerial and analytical skills, have become more
interested in their own work and have acquired the ability to
autonomously manage and improve their day-to-day tasks in a logical
manner. Obviously, when the efforts of each and every employee are
combined, a company can expect to generate enormous powers.
Employees enjoy coming to work and, therefore, attendance rates
improve. The company's further development is accelerated, a
foundation for better labor-management relationships is laid, morale is
improved and a contribution is made to optimizing the competence of
every employee. When this occurs, staff group roles become much
clearer and, thus, staff is able to concentrate its energy on bigger and
more meaningful improvement projects.

10.Establishment
Management

of

Various

Management

Systems

and

the Total
System

As discussed in the preceding sections, when scientific management

activities through TQM penetrate the entire company, the company's
organizational constitution is genuinely improved. Quality assurance and
other management systems for new product development, profit, cost
and vendor relations are established along with many other crossfunctional management systems. All these different systems then
become connected through the total management system. Moreover,
standards for every individual's action in the company become clarified
as are the lines of authority and responsibility. Thus, the organization
improves
its
overall
efficiency
and
effectiveness.
These great results, achieved by the Deming Prize-winning companies,
would have been difficult to achieve without challenging for the prize.
Therefore, we would like to extend our invitation to your company to
apply for the Deming Application Prize with courage, enthusiasm and a
conviction plan as part of your pursuit for organizational constitution
improvement.

Malcolm Baldrige National Quality Award

In 1987, jumpstarting a small, slowly growing U.S. quality movement, Congress
established the Malcolm Baldrige National Quality Award to promote quality
awareness, to recognize quality and business achievements of U.S.
organizations, and to publicize and share these organizations successful
performance strategies. Now Americas highest honor for innovation and
performance excellence, the Baldrige Award is presented annually to U.S.
organizations by the President of the United States. Awards may be given each
year in the manufacturing, service, small business, education, health care, and
nonprofit sectors. In conjunction with the private sector, the National Institute

of Standards and Technology (NIST) manages the Baldrige Award and the
Baldrige Performance Excellence Program.
Application process
To apply for the award, organizations must use the Baldrige Criteria for
Performance Excellence to submit details showing their achievements and
improvements in seven key areas: leadership; strategic planning; customer
focus; measurement, analysis, and knowledge management; workforce focus;
operations focus; and results. Applicants receive approximately 1,000 hours of
review and a detailed report on the organizations strengths and opportunities
for improvement by an independent board of examiners, who complete
individual reviews and consensus reviews; the highest-scoring applicants also
receive site visit reviews. The application and review process for the award is
the best, most cost-effective, and comprehensive business health audit you can
get, said Arnold Weimerskirch, former Baldrige Award judge and vice president
of quality, Honeywell, Inc.
Program impact
Since the first awards were presented in 1988, the Baldrige Performance
Excellence Program has grown in stature and impact. Today, the Baldrige
Program, the Criteria for Performance Excellence, and the Baldrige Award
recipients are imitated and admired worldwide.
In particular, the Baldrige Criteria for Performance Excellence have played a
valuable role in helping U.S. organizations improve. The Criteria are designed
to help organizations improve their performance by focusing on two goals:
delivering ever-improving value to customers and improving the organizations
overall performance. Several million copies of the Criteria have been
distributed since 1988, and wide-scale reproduction by organizations and
electronic access add to that number significantly. Gordon Black, chairman and
chief executive officer of Harris/Black International Ltd., said the publication
containing the Baldrige Criteria for Performance Excellence is probably the
single most influential document in the modern history of American business.

Following are some of the programs highlights:

An October 2001 study of the economic impact of the Baldrige Program,
prepared for NIST by Albert N. Link and John T. Scott, conservatively estimated
the net private benefits associated with the program to the economy as a
whole at $24.65 billion. When compared to the social costs of the program of

$119 million, the Baldrige Programs social benefit-to-cost ratio was 207-to-1. A
December 2011 study by Link and Scott of the Baldrige Program's value to U.S.
organizations found an even greater benefit-to-cost ratio of 820 to 1.
A 2011 report by Thomson Reuters found that health care organizations that
have won Baldrige Awards or been considered for a Baldrige Award site visit
outperform other hospitals in nearly every metric used to determine the 100
Top Hospitals in the nation.
The Alliance for Performance Excellence, a network of 33-plus state, local, and
sector-based quality programs modeled after the Baldrige Program, offer
services to nearly every state of the union and offer tiered approaches to the
national award.
Internationally, nearly 100 quality programs are modeled after the Baldrige
Program, including one established in Japan in 1996. These programs, including
the Global Excellence Model (GEM) Council, look to the Baldrige Program as an
international quality leader.
Between 2005 and 2011, 551 U.S. organizations applied for the Baldrige Award.
The 90 Baldrige Award winners (including 5 two-time winners) serve as national
role models. In 2010 alone, the 83 applicants for the Baldrige Award
represented 277,700 jobs; 1,500 work locations; over $38.5 billion in
revenues/budgets; and an estimated 80 million customers served. The value of
the services volunteered by the 578 Baldrige examiners in 2010 is estimated at
$8.8 million. In addition, 2,270 state Baldrige-based examiners volunteered
about $29.5 million in services to evaluate 1,350 organizations at the state
level in 2010.

ISO14000 SERIES ENVIRONMENTAL MANAGEMENT SYSTEMS

ISO 14000 is a series of international standards on environmental
management. It provides a framework for the development of an
environmental management system and the supporting audit programme.
The main thrust for its development came as a result of the Rio Summit on the
Environment held in 1992.
The History of ISO 14000
As a number of national standards emerged (BS 7750 being the first), the
International Organization for Standardisation (ISO) created a group to
investigate how such standards might benefit business and industry. As a result
this group recommended that an ISO committee be created to create an
international standard.
ISO 14001 is the corner stone standard of the ISO 14000 series. It specifies a
framework of control for an Environmental Management System against which
an organization can be certified by a third party.
Other ISO14000 Series Standards
Other standards in the series are actually guidelines, many to help you achieve
registration to ISO 14001. These include the following:
ISO 14004 provides guidance on the development and implementation of
environmental management systems
ISO 14010 provides general principles of environmental auditing (now
superseded by ISO 19011)
ISO 14011 provides specific guidance on audit an environmental management
system (now superseded by ISO 19011)
ISO 14012 provides guidance on qualification criteria for environmental
auditors and lead auditors (now superseded by ISO 19011)
ISO 14013/5 provides audit program review and assessment material.
ISO 14020+ labeling issues
ISO 14030+ provides guidance on performance targets and monitoring within
an Environmental Management System
ISO 14040+ covers life cycle issues

Of all these, ISO14001 is not only the most well known, but is the only ISO
14000 standard against which it is currently possible to be certified by an
external certification authority.
The Main ISO 14000 Standards
ISO 14001 and ISO 14004: the initial standards. These present a structured
approach to setting environmental targets and objectives. An organization may
apply these broad conceptual tools to their own processes.
ISO 14040 discusses pre-production planning and environment goal setting.
ISO 14020 covers labels and declarations.
ISO 14062 discusses making improvements to environmental impact goals.
ISO 14063 is an addendum to 14020, discussing further communications on
environmental impact.
ISO 14000 is a series of environmental management standards developed and
published by the International Organization for Standardization ( ISO ) for
organizations. The ISO 14000 standards provide a guideline or framework for
organizations that need to systematize and improve their environmental
management efforts. The ISO 14000 standards are not designed to aid the
enforcement of environmental laws and do not regulate the environmental
activities of organizations. Adherence to these standards is voluntary.
The ISO 14001 standard is the most important standard within the ISO 14000
series. ISO 14001 specifies the requirements of an environmental management
system (EMS) for small to large organizations. An EMS is a systemic approach
to handling environmental issues within an organization. The ISO 14001
standard is based on the Plan-Check-Do-Review-Improve cycle.
The Plan cycle deals with the beginning stages of an organization becoming
ISO 14001-compliant. The Check cycle deals with checking and correcting
errors. The Do cycle is the implementation and operation of the ISO 14001
standard within an organization. The Review cycle is a review of the entire
process by the organization's top management. And the Improve cycle is a
cycle that never ends as an organization continually finds ways to improve
their EMS.
The entire process can take several months to several years depending on the
size of the organization. If an organization is already ISO 9000-certified, the
implementation of ISO 14001 does not take as long. When an organization is
compliant, they can either register with a third-party registrar or self-declare

their compliance. The ISO 14001 standard is the only ISO 14000 standard that
allows an organization to be registered or "certified.

Case Questions for TQM:

From the questions below, answer the following and apply quality
management systems or applicable standard that will help to justify the
answer.

How would you work with a subordinate who is underperforming?

Underperformance is an issue that results from the
subordinates insufficient training, lack of motivation and
misalignment of their goals with the company. It would be
beneficial for the subordinate to be informed of the
companys mission, vision & values and align them with
the
formers
goals.
Establishing
key
performance
indicators is also vital. The employee that still
underperforms based on the set standards would be retrained. Involvement of people and encouragement of
continual development are both part of the quality
management principles of ISO 9001.

You're consulting with a large pharmacy with stores in multiple

states. This company has improved sales but experienced a
decrease in revenue. As a result, it is contemplating store closings.
Explain how you'd advise this client?
Good sales but decrease in revenue would suggest large
operating cost. These may have resulted from poor quality
system that is being used. Re-works and inefficient use of
materials that resulted in large quantity of scrap materials
would only lead to more expenses. Adoption of Six Sigma
which aims to produce fewer errors in any process would
be highly suggested.

You are working directly with a company's management team. It is

organizing a project designed to significantly increase revenue. If
you were provided with data and asked to supervise the project,
what steps would you take to ensure it's successful?

First thing to do is to identify the customers needs, wants

and expectations, setting these as initial standards, and
implement a quality system that would ensure that these
standards would be met. At the end of the process, we
need to get the feedback from the target customers,
competitors and employees to identify the things that still
need to be developed. These steps aim to increase the
sales. By strictly implementing complementary programs
that would intend to reduce cost, such as establishing
good relationship with its suppliers and preventing reworks and inefficiency in material usage, the success of the
program would be ensured if done correctly.

You have been assigned to work with a small company that

manufactures a popular product. However, a competitor begins
selling a very similar product which incorporates state of the art
technology. What would you advise your client to do?
It would be wise to cope up with the fast growing
technology and research on the latest innovations on the
process of producing the popular product. The companys
initial investments on their technological upgrade, if done
properly, would be recovered after a certain amount of
time once the faster operation at a better quality is
realized. This is in line with the companys target to
continually improve not only its operations but also the
products quality.

You have been assigned to advise a company with a large Western

European market. Company management wants to open the
Chinese market. What advice do you have for this company?
It is advisable to conduct market analysis first since there
may be certain differences in terms of culture and
tradition. These differences affect customers preferences
& satisfaction and these should be primarily considered.
Good working relationships with the companys suppliers
must also be established since the company would be
dealing with a larger market.

The firm has assigned you to consult a company intending to drop

a product or expand into new markets in order to increase

revenue. What steps would you take to help this company achieve
its objective?
Good and long-term planning laying out the involved
processes should be considered in implementing drastic
actions such as dropping one of companys products or
expanding into new markets, to improve the companys
revenue. This may affect the already established customer
loyalty base and expectations. Relationships with the new
suppliers should also be considered since the company is
already producing a different product for their prospective
new market.

You have been assigned to consult a shoe retailer with stores

throughout the nation. Since its revenue is dropping, the company
has proposed to sell food at its stores. How would you advise this
client?
It would be better for the company to conduct further
market studies and research in presenting a different
product in their stores. Since the retailer is already
involved in the shoe business, improving the quality of
their service and their advertisement would be strongly
suggested.

Why TQM Efforts fail?

Total Quality Management is a long term process that would
require changes in terms of organizational culture & values, that
demands long term planning, time, & management commitment,
that would take a number of years to show results, that needs
financial investments in terms of training, team development
and infrastructural improvement and discourages creativity and
innovation. Impatience and lack of management initiative may
cause the TQM to fail.