The philosophy of W.

Edwards Deming has

been summarized as follows:
– "Dr. W. Edwards Deming taught that by adopting
appropriate principles of management, organizations
can increase quality and simultaneously reduce costs
(by reducing waste, rework, staff attrition and
litigation while increasing customer loyalty). The key
is to practice continual improvement and think of
manufacturing as a system, not as bits and pieces."
• In the 1970s, Dr. Deming's philosophy was summarized by some of his
Japanese proponents with the following 'a'-versus-'b' comparison:

– (a) When people and organizations focus primarily on quality,

defined by the following ratio:

QUALITY =
Results of Work Efforts
Total Costs

– quality tends to increase and costs fall over time.

– (b) However, when people and organizations focus primarily on
costs, costs tend to rise and quality declines over time.
 The Deming System of Profound Knowledge
• "The prevailing style of management must undergo
transformation. A system cannot understand itself. The
transformation requires a view from outside”.

• "The first step is transformation of the individual. This

transformation is discontinuous. It comes from understanding
of the system of profound knowledge. The individual,
transformed, will perceive new meaning to his life, to events,
to numbers, to interactions between people”.

• "Once the individual understands the system of profound

knowledge, he will apply its principles in every kind of
relationship with other people. He will have a basis for
judgment of his own decisions and for transformation of the
organizations that he belongs to”.
 The Deming System of Profound Knowledge
• The individual, once transformed, will:
– Set an example;
– Be a good listener, but will not compromise;
– Continually teach other people; and
– Help people to pull away from their current practices
and beliefs and move into the new philosophy without
a feeling of guilt about the past."
 The Deming System of Profound Knowledge

• Deming advocated that all managers need to have what he

called a System of Profound Knowledge, consisting of four
parts:

1. Appreciation of a system: understanding the overall

processes involving suppliers, producers, and customers (or
recipients) of goods and services (explained below);

2. Knowledge of variation: the range and causes of variation in

quality, and use of statistical sampling in measurements;

3. Theory of knowledge: the concepts explaining knowledge

and the limits of what can be known;

4. Knowledge of psychology: concepts of human nature.

 The Deming System of Profound Knowledge
Deming explained:

• "One need not be eminent in any part nor in all four parts in order
to understand it and to apply it. “

• "The various segments of the system of profound knowledge

proposed here cannot be separated. They interact with each other.
Thus, knowledge of psychology is incomplete without knowledge
of variation.”

• "A manager of people needs to understand that all people are

different. This is not ranking people. He needs to understand that
the performance of anyone is governed largely by the system that
he works in, the responsibility of management."
 The Deming System of Profound Knowledge

The Appreciation of a system:

Involves understanding how interactions (i.e., feedback) between the
elements of a system can result in internal restrictions that force the
system to behave as a single organism that automatically seeks a
steady state. It is this steady state that determines the output of the
system rather than the individual elements.

Thus it is the structure of the organization rather than the

employees, alone, which holds the key to improving the quality of
output.
 The Deming System of Profound Knowledge
The Knowledge of variation:

• Involves understanding that everything measured consists of both

"normal" variation due to the flexibility of the system and of "special
causes" that create defects.

• Quality involves recognizing the difference to eliminate "special causes"

while controlling normal variation.

• Deming taught that making changes in response to "normal" variation

would only make the system perform worse. Understanding variation
includes the mathematical certainty that variation will normally occur
within six standard deviations of the mean.
 Deming’s 14 Key principles
• The System of Profound Knowledge is the basis for
application of Deming's famous 14 Points for
Management.

• Deming offered fourteen key principles for

management for transforming business effectiveness.

• Although Deming does not use the term in his book, it

is credited with launching the Total Quality
Management movement.
 Deming’s 14 Key principles – 1
Constancy of Purpose
Create constancy of purpose for continual improvement
of products and service to society, allocating resources
to provide for long range needs rather than only short
Term profitability, with a plan to become competitive,
to stay in business, and to provide jobs.
Developing the organizations goals and philosophy

– Long term view

– Stating the Organization’s goals and philosophy
– Self examination – where are we
– Developing a Mission Statement
– Making the Mission Statement a “Living” document
 Deming’s 14 Key principles – 2
Adopt the new philosophy
We are in a new economic age, created in Japan.
We can no longer live with commonly accepted
levels of delays, mistakes, defective materials, and
defective workmanship. Transformation of Western
management style is necessary to halt the
continued decline of business and industry.

Understanding the Philosophy of never-Ending Improvement

– Customer satisfaction
– Managing for success instead of failure
– Identify and remove barriers to achieving quality
– Get everyone involved in the quality journey
 Deming’s 14 Key principles – 3
Cease the need for mass inspection
Eliminate the need for mass inspection as the
way of life to achieve quality by building quality
into the product in the first place. Require
statistical evidence of built in quality in both
manufacturing and purchasing functions.

Replacing mass inspection with Never-Ending improvement

– Develop a plan that minimizes the total cost of incoming
materials and final product
– Inspect all or none rule
– Commit to examining the process over time
 Deming’s 14 Key principles – 4
End lowest tender contracts
End the practice of awarding business solely on the basis of
price tag. Instead require meaningful measures of quality
along with price. Reduce the number of suppliers for the
same item by eliminating those that do not qualify with
statistical and other evidence of quality. The aim is to
minimize total cost, not merely initial cost, by minimizing
variation. This may be achieved by moving toward a single
supplier for any one item, on a long term relationship of
loyalty and trust.
Changing the philosophy of purchasing
– Price has no meaning without a measure of quality being
purchased – do not make cost the sole decision factor
– Move from multiple to single source relationships
– Long term relationship between the vendor and buyer
– The lowest price or bidder means poorer quality
 Deming’s 14 Key principles – 5
Improve every process
Improve constantly and forever the system of
production and service, to improve quality and
productivity, and thus constantly decrease costs.

Improving the system

– Management has responsibility for the “system”
– Continual reduction of waste
– Continual improvement in quality in every activity
– Management to define operational definitions/communication
– Use of Control Charts, flow Charts, Check Sheets, Pareto
Diagrams, Brainstorming, Fishbone (cause and Effect),
Histograms, Scatter Diagrams for managing quality
– Shewhart Cycle – “Plan/Do/Check/Act”
 Deming’s 14 Key principles – 6
Institute training on the job
Institute modern methods of training on the job for all,
including management, to make better use of every
employee. New skills are required to keep up with
changes in materials, methods, product and service
design, machinery, techniques, and service.
Instituting Modern Training Methods
– Training in the organizational philosophy
– On-going integrated approach to an employees growth
– Learn how to perform the job
– All employees should learn Dr. Deming’s 14 points
– Realize that training is part of everyone’s job
– Use statistical methods to determine workers capability
– Training that offers employees a share in the overall philosophy and goals
for the organization
 Deming’s 14 Key principles – 7
Institute leadership
Institute leadership - the aim of supervision should be
to help people and machines and gadgets to do a
better job. Supervision of management is in need of
overhaul, as well as supervision of production workers.

Supervising Never-Ending improvement

– People are penalized for things beyond their control
– Management should remove causes for system variation
– Create a positive supportive atmosphere
– Eliminate fear and mistrust
– Encourage coaching
– Extract feedback
– Workers have to give new systems a chance
 Deming’s 14 Key principles – 8
Drive out fear
Encourage effective two way communication and other
means to drive out fear throughout the organization so
that everybody may work effectively and more
productively for the company.
Driving out fear:
– Fear causes stress, emotional problems, and absenteeism
– Caused by feeling powerless and having no control
– Do not use as a motivator get people to work in teams
– Elimination of fear starts at the top
– Open channels of communication
– Interaction with the organization - Training in company goals
– Organize and structure teams
– What is the job, is acceptable, what is not acceptable
– Reward teamwork, quality, and creativity
 Deming’s 14 Key principles – 9
Break down barriers
Break down barriers between departments. People in
research, design, sales, and production must work as a
team, to foresee problems of production and in use that
may be encountered with the product or service.
Breaking down organizational barriers:

– Employees roles become functional

– Problems in competition, communication and fear arise
– Staff areas have to work as an integrated whole
– Customer and employee surveys should be done
– Improve communication upwards and downwards
– Eliminate performance appraisals
– Training to reduce barriers
 Deming’s 14 Key principles – 10
Eliminate exhortations
Eliminate slogans, exhortations, and targets for the work
force asking for zero defects and new levels of productivity.
Such exhortations only create adversarial relationships, as
the bulk of the causes of low quality and low productivity
belong to the system and thus lie beyond the power of the
work force.

Replacing numerical goals, posters and slogans with Never-

Ending improvement
– Change to system to help employees achieve goals
– Identify problems/barriers that are causing goals not to be
met and eliminate them – get rid of management by objectives
– Goals must be focused on the company’s mission in the future
– Goals must have an organizational purpose and aligned with the job
 Deming’s 14 Key principles – 11
Eliminate arbitrary numerical targets
Eliminate work standards (quotas) on the factory floor.
Substitute leadership. Eliminate management by
objective. Eliminate management by numbers,
Numerical goals. Substitute aids and helpful leadership
in order to achieve continual improvement of quality
and productivity.
Replace management by numbers with Never-Ending Improvement
– Quotas and standards focus on quantity not quality
– Replace with statistical methods, leadership and training
– Identify process improvements
– By focusing on quality through the use of statistical methods,
management provides a roadmap for never-ending improvement
 Deming’s 14 Key principles – 12
Permit pride in workmanship
Remove barriers that rob the hourly worker of his right to
pride of workmanship.

Promoting pride of workmanship:

– The responsibility of supervisors must be changed from sheer
numbers to quality.
– This means, inter alia," abolishment of the annual or merit
rating and of management by objectives
– Involve employees at all levels of process improvement
– Operationally define job descriptions
– Meet basic work-related needs of employees
– Supply employees with the proper tools, materials, & methods
 Deming’s 14 Key principles -13
Encourage education
Institute a vigorous program of education and self-
improvement,. What an organization needs is not just
good people; it needs people that are improving with
education.

Educating and retraining everyone:

– Should develop employees for changes in their current jobs

– In the organization’s mission and goals
– Statistical training
– View training as long term for the individual
– In fields related to the employees current job
– The employees personal improvement
– Failure to do this creates loss of resources in the future
 Deming’s 14 Key principles – 14
Top management commitment to action
Put everybody in the company to work to accomplish
the transformation. The transformation is everybody's
job.
Clearly define top management's permanent commitment to
ever improving quality and productivity, and their obligation to
implement all of these principles. Indeed, it is not enough that
top management commit themselves for life to quality and
productivity. They must know what it is that they are
committed to—that is, what they must do. Create a structure
in top management that will push every day on the preceding
13 Points, and take action in order to accomplish the
transformation. Support is not enough: action is required!
 "A Lesser Category of Obstacles" includes
• Neglecting long-range planning
• Relying on technology to solve problems
• Seeking examples to follow rather than developing solutions
• Excuses, such as "our problems are different"
• Obsolescence in school that management skill can be taught
in classes
• Reliance on quality control departments rather than
management, supervisors, managers of purchasing, and
production workers
• Placing blame on workforces who are only responsible for
15% of mistakes where the system desired by management
is responsible for 85% of the unintended consequences
• Relying on quality inspection rather than improving product
 Dr. Deming Famous Quotations
• “There is no substitute for knowledge."
• “In God we trust; all others must bring data.”
• “The most important things cannot be measured."
• "The most important things are unknown or
unknowable."
• "Experience by itself teaches nothing.”
• "You can expect what you inspect."
• The problem is at the top; management is the
problem."
• "A system must be managed. It will not manage
itself. Left to themselves in the Western world,
components become selfish, competitive. We can
not afford the destructive effect of competition."
 7 Deadly Sins & Diseases
1) Lack of consistency of purpose – short
term quality program
2) Emphasis on short term profits-firms
seeking only to increase the quarterly
divided undermine quality
3) Over reliance on performance appraisal
encourage revelry, fear and short term
thinking. It can also undermine teamwork
& mutual respect
4) Mobility of management excessive job
hopping encourages short term thinking and
habits the ability of the manager to understand
the long term implicating of actions
5) Overemphasis on visible figures: due to over
emphasis of easily capture data for evaluating
the performance, managers may be unknown/
or often unknowable such as the effect of a
satisfied customer
6) Excessive medical cost for employee
health care that increases the final cost of
goods and services. The long term effect
has been a determination in
competitiveness.
7) Examining cost of warranty and legal
cost: professional cost - medical, laws
 PDCA-
it is a cycle, never ending improvement
• P:PLAN- the team select a process that
need improvement, documents the
selected processes sets qualitative goals.
After assessing the benefits and the cost
of the alternatives, the team develops a
plan w/ quantifiable measures for
improvement
• D:DO – implement the plan – monitor the
progress. Data are collected continuously
to measure improvement in the process
• C:CHECK- analyze the data collected in
do step, find out how closely the results
cover ponds to the goals in the plan step
• A-ACT- if results is successful, the team
documents the revised process for
standard