Tuesday, 3 December 2013

Edward Deming's Profound Knowledge System

W. Edwards Deming
W. Edwards Deming (Photo credit: Wikipedia)
Describe the four (4) Deming’s Profound Knowledge System.

W. Edwards Deming stated “A product or a service possesses quality if it helps somebody and enjoys a good and sustainable market.” Deming never defined precisely what quality really is, he summarized his philosophy of quality and management in a system which he called “A System of Profound knowledge”. The system demonstrates the foundation of beliefs and values about learning that have guided Japan to rise in its economic recovery and its quality products. 

Profound knowledge, according to Deming, comprises of four components which are inseparable and interrelated among one another:
  1. Appreciation for a system
  2. Theory of variation
  3. Theory of knowledge
  4. Psychology

Appreciation for the system is, according to Deming, a starting point in quality management process which would be the light for the management team to understand their organization better and able to make the right decision for the organization at the right time.

System could be defined as a set of functionally related components or activities within an organization that are interrelated and work together to achieve organizational goals. An example of a system could be seen in a fast food restaurant, for example KFC Restaurant which consists of Order Taker or Cashier Subsystem, Promotion Subsystem, Drive-Through Subsystem and Grill and Food Preparation Subsystem.

The objective of any system in any organization is for the long-term benefit of everyone from the stockholders, employees, customers, community to the environment surround it. For stockholders or shareholders, they would realize the financial benefits earned within a period of time. Employees working in the organization would be given opportunities for training and education as the objective of the organization is to produce quality goods and exceeds the customer expectation, employees would be and should be given adequate education in order to perform better and improve their skills in doing things. While for the customers, a system’s aim is to ensure the customers receive products and services that met their needs and ensure their satisfaction over the services or product provided.

The components of a system must work together for the system to be effective. For example, if the order taker who works as the front liner of a restaurant took the order wrong, without much doubt, the food preparation staff prepared the food as required by the order taker, the customer would not get what he demanded for, hence create dissatisfaction. The objective of the system to achieve quality goods and satisfying customers would ultimately fail.

According to Deming, when every part and element of a system is working in support of another part, ‘optimization’ occurs. Optimization refers to the optimum quality or result. To be able to manage the organization successfully and to achieve optimization, managers must first understand the system, what are the elements or parts within a system and to understand the interrelationships among all subsystems and the people who work in each subsystem. Deming was concerned for the internal competition, ranking and numerical ratings within an organization, which, according to him, should be eliminated to avoid demotivation and suboptimization, to reach the employees who are the main player of the production process in order to understand problems at processing level and also to convey feedback to individuals about their performance.

Refer to the example of the KFC Restaurant mentioned earlier, it is the manager’s responsibility to optimize the system and make the best decisions for all subsystem and everyone in it, not to focus only on a small part of a system. Without careful consideration and responsibility, if the manager sub-optimized the whole system, the organization would not be able to achieve its goal and eventually the whole organization would fail. For example: To improve sales and customers comforts, the manager renovates the restaurant, upgrading the system, and buying new cookware needed to produce food faster, but he neglect the training for the staff on how to operate the new system, how to use the new cookware and etc. As the result, the staff could not prepare the food in a short period of time, and due to lacking of skills and delay in food delivery, it would eventually lead to dissatisfaction of the customers. Hence, from this simple example, it is true to Deming’s saying that “a system requires cooperation”.

To understand and comprehend the interactions and interdependent forces of all elements within the system could benefit the management in controlling the events around them and manage the system to achieve the goals of the organization. The system would work smoothly and hence making quality goal a possibility for everyone involved.

Understanding Process Variation (variasi). What is variation? Why is it necessary to comprehend variation? And how does it affecting the quality goal of the organization? To understand variation, the management would know and understand what to expect in the process of working on achieving the quality goal, hence, prepare and predict future actions to reduce cost and wastage and enable to improve final product to meet the customer’s needs. By understanding variation also helps the manager to make the right decision at the right time.
Deming makes 2 points about variation:
          i.            errors and inconsistencies will always exist in any process or activities
        ii.            people apply the wrong corrective action when something goes wrong

Lack of understand of the process variation, many money were wasted as organization try to understand what has caused a problem in the process as a production process contains many sources of variation. For example, raw material for making a dress is differing in thickness, strength and durability. While tools used for sewing or making the dress are differ in strength, functionality and usability, some could be used for long term and some tools may be worn out in a very short period of time.
There are two types of variation, which are:
                                i.            Common causes of variation which refer to factors that are present as a natural part of a process, such as tool which has worn out or break down. System run by common cause variation is stable and has predicted performance
                              ii.            Special causes of variation or assignable causes are variation appears from external sources that are not integral or natural in the process, such as poorly trained staff, who cannot operate the tools properly. It usually would mess up the predicted pattern and is easy to detect by using statistical method. It is more economical to remove or replace compared to common causes of variation.

According to Deming, Variation is the main factor of poor quality. For example, inconsistencies in service due to lack of knowledge and skills of the employees and the ununiformed standard of procedure failed to meet the customer’s needs, thus frustrates the customers and breaking the brand of the company. Deming also stressed that variation increase the cost of doing business. For instance, defect items at Factory A were adjusted within the factory, this would add cost to the process as the item need to be rework. Even the product was adjusted, but yet it was not close to the expected quality specification, customers would complain and this would then increase the cost on field work such as customer service and more promotion or ads to assure the customers and to convince them to remain royal to the company.

To minimize or reduce, Deming suggested few remedy
·         Special causes variation should be identified by workers, who are the ground workers and the assemblyman of the products, the method work through the use of control chart with the support of the management team and adequate training, should also be given.
·         Common causes variation could be improve by changing the technology of the process. Technology included the machine, people working in it, the materials to produce the goods, methods and system.

Minimizing variation would benefit both the producer and the customer. As for customer, they are assured of all products quality is the same. For instance, the government who usually buy in bulk cannot inspect the purchase once by one, if they are assure of the quality of the goods provided by a certain company, they would buy in confident and perhaps increase the purchasing value. And the producer could increase productivity with less inspection on the production process to be done, and less wastage but more efficient in utilizing resources.

By understanding variation, the members of the organization, the top management to the operating employees would see the trend of the customers’ demands, they would understand past performance and so can predict future performance, they would also be able to learn from past mistakes, hence taking action to correct and improve their future performance.

Knowledge as mentioned in Deming’s system of profound knowledge, is a branch of philosophy concerned with the nature and scope of knowledge, it is the general reliability of claims to knowledge and its bases.

Deming believes that ‘knowledge comes from theory and that without theory, there is no learning’. Experience alone without a theory of knowledge, an organization cannot learn from its own experience or from that of another company. For example, without proper knowledge of human resource, when crisis happened, the management team works on it and get it passed somehow. When the same problem resurface, they tried the same method, but now it failed them, because previously they did not acquired much human resource knowledge to handle crisis, so when it happened again, there is no guideline and theories that help them to analyze the problem and solving it.

Management decisions should be driven by knowledge, which are facts, data and justified theories, not solely on opinions. Good theories supported by data are not only persuasive, but it would also establish a cause-effect relationship and it can be used as prediction for future events.

Likewise, experience without knowledge, theory and justified data is just a myth which no leader would take risk on managing their organization. With knowledge, the managers would know how to plan, and improve learning in order to achieve the quality goals. Improvement and changes were seen as different entity. Problems could be solved with the knowledge learnt.

Psychology, according to Deming, is the most powerful component of the three elements of the system of profound knowledge. Deming believes that everyone wants to learn and to create. By learning, practicing and adapting psychology, it helps to
                                i.            Understand people
·         Interaction between people, employer-employee, producer-supplier and producer-customer, could be comprehend
·         Circumstances that affecting everyone within the organization, and
·         The drivers of behavior, which makes people, behave in certain way.
                              ii.            Nurture and preserve people’s positive characteristic

Management need to understand the above factors and integrating in their decision making process, then quality management would be a success. Deming strongly against rating the employees, as he mentioned that ratings and rankings of employees would rob them from motivation.

Management must know how to motivate the employees, how to build positive relationship with the employee, create positive working environment and also dealing with employees and customers positively.

PDCA (aka the Deming Cycle, Shewhart cycle, or...
PDCA (aka the Deming Cycle, Shewhart cycle, or Deming Wheel) is an iterative four-step quality control strategy. (Photo credit: Wikipedia)
Psychology review shows that people learn in different ways and rates. Training methods and approaches need to increase learning for individuals and for the organization itself. For example, if an employee prefer to learn from doing things himself, then technical training is suitable for him. Training session which requires him to sit in a hall for hours would not only wasted his time to be productive, but would also result in low quality outcome.

Ø  Deming recommends applying Shewhart / Deming Cycle to analyze a problem and use Shewhart’s Control Chart to track activity. As an event occurs, it is plotted at the given juncture on the X and Y axis, each representing a variable such as time and date

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