Out of the Crisis

by Deming

ISBN: 9780262535946 | Copyright 0

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Deming's classic work on management, based on his famous 14 Points for Management.

"Long-term commitment to new learning and new philosophy is required of any management that seeks transformation. The timid and the fainthearted, and the people that expect quick results, are doomed to disappointment."
—from Out of the Crisis

In his classic Out of the Crisis, W. Edwards Deming describes the foundations for a completely new and transformational way to lead and manage people, processes, and resources. Translated into twelve languages and continuously in print since its original publication, it has proved highly influential. Research shows that Deming's approach has high levels of success and sustainability. Readers today will find Deming's insights relevant, significant, and effective in business thinking and practice. This edition includes a foreword by Deming's grandson, Kevin Edwards Cahill, and Kelly Allan, business consultant and Deming expert.

According to Deming, American companies require nothing less than a transformation of management style and of governmental relations with industry. In Out of the Crisis, originally published in 1982, Deming offers a theory of management based on his famous 14 Points for Management. Management's failure to plan for the future, he claims, brings about loss of market, which brings about loss of jobs. Management must be judged not only by the quarterly dividend, but by innovative plans to stay in business, protect investment, ensure future dividends, and provide more jobs through improved product and service. In simple, direct language, Deming explains the principles of management transformation and how to apply them.

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Contents (pg. v)
Foreword (pg. vii)
There Is Timelessness to Genius (pg. vii)
About the Author (pg. xi)
Preface (pg. xiii)
Acknowledgments (pg. xvii)
1 CHAIN REACTION: QUALITY, PRODUCTIVITY, LOWER COSTS, CAPTURE THE MARKET (pg. 1)
Aim of this chapter (pg. 1)
Some folklore (pg. 1)
Awakening in Japan (pg. 2)
Flow diagram (Figure 1) (pg. 4)
Need any country be poor? (pg. 5)
What is the world’s most underdeveloped nation? (pg. 5)
A simple example (pg. 6)
Another example: reduction in cost. (pg. 8)
Innovation to improve the process (pg. 9)
Low quality means high costs (pg. 10)
New machinery and gadgets are not the answer (pg. 11)
Service industries (pg. 12)
Measures of productivity do not lead to improvement in productivity. (pg. 13)
2 PRINCIPLES FOR TRANSFORMATION OF WESTERN MANAGEMENT (pg. 17)
Aim and Preamble (pg. 17)
Purpose of this chapter (pg. 17)
Best efforts not sufficient (pg. 17)
Need for consistency of effort (pg. 18)
Theory of management now exists (pg. 18)
Guidance from questions and pronouncements of Lloyd S. Nelson (pg. 19)
Short-term profits are no index of ability (pg. 19)
Support of top management is not sufficient (pg. 20)
Wrong way (pg. 20)
Condensation of the 14 Points for Management (pg. 21)
Origin of the 14 points (pg. 21)
Elaboration on the 14 Points (pg. 23)
1. Create constancy of purpose for improvement of product and service (pg. 23)
2. Adopt the new philosophy (pg. 24)
3. Cease dependence on mass inspection (pg. 26)
4. End the practice of awarding business on the basis of price tag alone (pg. 29)
Purchasing managers have a new job (pg. 30)
Advantages of a single source and long-term relationship (pg. 32)
Commodities and services (pg. 34)
How does a supplier qualify? (pg. 35)
Single purchase contrasted with continuing delivery of material (pg. 36)
Necessity for mutual confidence and aid between purchaser and vendor (pg. 36)
5. Improve constantly and forever the system of production and service (pg. 43)
6. Institute training (pg. 45)
7. Adopt and institute leadership (pg. 47)
8. Drive out fear7 (pg. 51)
More on fear (pg. 53)
9. Break down barriers between staff areas (pg. 54)
10. Eliminate slogans, exhortations, and targets for the work force (pg. 56)
Stable system of defective items (pg. 58)
11a. Eliminate numerical quotas for the work force (pg. 60)
11b. Eliminate numerical goals for people in management (pg. 64)
12. Remove barriers that rob people of pride of workmanship (pg. 66)
What happens? (pg. 72)
13. Encourage education and self-improvement for everyone (pg. 73)
14. Take action to accomplish the transformation. (pg. 73)
Types of gaps in information about the performance of incoming materials (pg. 78)
One of a Kind (pg. 79)
Everything is one of a kind (pg. 79)
3 DISEASES AND OBSTACLES (pg. 83)
Aim of this chapter (pg. 83)
A. The Deadly Diseases (pg. 83)
1. The crippling disease: lack of constancy of purpose (pg. 84)
2. Emphasis on short-term profits (pg. 84)
3. Evaluation of performance, merit rating, or annual review (pg. 87)
Dangerous precedent (pg. 88)
Degeneration to counting (pg. 90)
Stifling teamwork (pg. 91)
Another Irving Langmuir? (pg. 93)
Fair rating is impossible (pg. 93)
More on leadership (pg. 98)
What about repetition of a pattern? (pg. 98)
“It can’t be all bad.” (pg. 99)
Modern principles of leadership (pg. 99)
The lone worker (pg. 101)
Leadership instead of the annual rating at Ford (pg. 101)
Problems in governmental service (pg. 101)
4. Mobility of management (pg. 103)
Mobility of labor in America (pg. 103)
5. Running a company on visible figures alone (counting the money) (pg. 103)
Another note on management by figures (pg. 105)
How about corporate ratings of divisions? (pg. 106)
B. Obstacles (pg. 107)
Hope for instant pudding (pg. 107)
The supposition that solving problems, automation, gadgets, and new machinery will transform industry (pg. 108)
Search for examples (pg. 109)
“Our problems are different.” (pg. 110)
Obsolescence in schools (pg. 110)
Poor teaching of statistical methods in industry (pg. 111)
Use of Military Standard 105D and other tables for acceptance (pg. 113)
“Our quality control department takes care of all our problems of quality.” (pg. 113)
“Our troubles lie entirely in the work force.” (pg. 114)
False starts (pg. 115)
“We installed quality control.” (pg. 117)
The unmanned computer (pg. 118)
The supposition that it is only necessary to meet specifications (pg. 118)
The fallacy of zero defects8 (pg. 119)
Inadequate testing of prototypes (pg. 120)
“Anyone that comes to try to help us must understand all about our business.” (pg. 121)
4 WHEN? HOW LONG? (pg. 127)
Catch up? (pg. 127)
Rehearsal of some of the problems (pg. 127)
Retardation to transformation (pg. 128)
How long? (pg. 129)
What about inhibiting forces from government? (pg. 129)
When? (pg. 131)
Survival of the fittest (pg. 132)
5 QUESTIONS TO HELP MANAGERS (pg. 133)
Purpose of this chapter (pg. 133)
6 QUALITY AND THE CONSUMER (pg. 143)
Aim of this chapter (pg. 143)
What is quality? (pg. 144)
Quality of medical care (pg. 146)
Remark on quality of teaching (pg. 148)
Latent recognition (too late) (pg. 149)
The consumer, the most important part of the production line (pg. 149)
Who is the consumer? (pg. 150)
Triangle of interaction (pg. 151)
Learning from the consumer (pg. 152)
Quality of service (pg. 152)
Complaints come in too late (pg. 152)
The old way and the new way (pg. 153)
A word about consumer research (pg. 155)
New product and new service (pg. 155)
7 QUALITY AND PRODUCTIVITY IN SERVICE ORGANIZATIONS (pg. 157)
Aim of this chapter (pg. 157)
Remarks on Service Industries (pg. 157)
Who needs improvement? (pg. 157)
Economic importance of employment in service (pg. 158)
Quality of service (continuation from p. 152) (pg. 159)
Problems of salesmen (pg. 160)
Some services contribute to our balance of trade (pg. 160)
Some differences and similarities between service and manufacturing (pg. 161)
Contact with the customer (pg. 164)
Service in motor freight (pg. 165)
How to increase costs of billing in motor freight (pg. 167)
The customer can help (pg. 168)
Administrative Applications in the Ford Motor Company (pg. 168)
Anecdote on construction (pg. 169)
Government service is to be judged on equity as well as on efficiency (pg. 170)
Adaptation of the 14 points to medical service (pg. 170)
Examples and Suggestions (pg. 176)
Application in the Bureau of the Census (pg. 176)
Quality and productivity in the Bureau of Customs (pg. 177)
Problems in a payroll department (pg. 178)
Clerical problems in purchase (pg. 178)
Travel vouchers (pg. 178)
Accounting procedures: present worth of physical plant and inventory (pg. 180)
Reduction of inventory through study of time of transit (pg. 181)
A hotel (pg. 181)
The Postal Service (pg. 183)
Overbooking (pg. 183)
Copying machines (pg. 184)
A restaurant (pg. 185)
A city’s transit system (pg. 186)
More examples in motor freight (pg. 186)
A railway (pg. 187)
Studies in the operation of a telephone company. (pg. 188)
A department store (pg. 190)
Automobiles and the customer (pg. 191)
Reduction of Mistakes in a Bank (pg. 191)
Suggestions for Additional Continual Studies in a Bank (pg. 194)
An Electric Utility (pg. 204)
Improvement of a Municipal Service (pg. 210)
8 SOME NEW PRINCIPLES OF TRAINING AND LEADERSHIP (pg. 213)
Aim of leadership (pg. 213)
Tell a worker about a mistake? (pg. 214)
Importance of training (pg. 214)
A better way (pg. 215)
Example of use of x- and R-charts in training (pg. 216)
Application to administration in a hospital (from Japan) (pg. 216)
Statistical control achieved, but output unsatisfactory (pg. 218)
Warnings and exceptions (pg. 220)
Example in leadership: where are the defects coming from? (pg. 220)
Example of aid to leadership (pg. 222)
Administration of inspection for extra high quality (pg. 224)
Example of faulty inspection (pg. 225)
Faulty inspection caused by fear (pg. 227)
More on fear (pg. 228)
Another example of faulty inspection from fear (pg. 229)
Another example (pg. 230)
Still another example of loss from fear (pg. 230)
Requirement of statistical control of a test method (pg. 230)
Differences between test instruments (pg. 231)
Comparison of two operators on the same machine (pg. 232)
Comparison of interviewers to improve performance (pg. 233)
Fallacies of reward for winning in a lottery (pg. 235)
9 OPERATIONAL DEFINITIONS, CONFORMANCE, PERFORMANCE (pg. 237)
Aim of this chapter (pg. 237)
What is an operational definition? (pg. 237)
Practice is more exacting than pure science; more exacting than teaching (pg. 239)
No exact value; no true value (pg. 239)
No true number of inhabitants in a Census count (pg. 242)
More on operational definitions (pg. 244)
What means a label “50 percent wool”? (pg. 246)
What is a wrinkle? (pg. 248)
Random selection of units (pg. 249)
EXERCISES (pg. 250)
10 STANDARDS AND REGULATIONS (pg. 255)
Aim of this chapter (pg. 255)
Regulations and standards (pg. 255)
Industrial standards (pg. 256)
Voluntary standards, if they exist, may avoid government regulation (pg. 257)
Further advantages of voluntary standards3 (pg. 257)
Links between regulations and standards (pg. 261)
Development of techniques and methods—safety (pg. 261)
Industry lags on standardization (pg. 262)
Contribution from William G. Ouchi (pg. 263)
11 COMMON CAUSES AND SPECIAL CAUSES OF IMPROVEMENT. STABLE SYSTEM (pg. 265)
Purpose of this chapter (pg. 265)
Special Causes; Common Causes; Improvement of the System (pg. 266)
Another run chart (pg. 266)
A first lesson in application of statistical theory (pg. 267)
What characteristic or characteristics are important? (pg. 269)
Special causes and common causes (pg. 269)
Costly confusion (pg. 270)
“We rely on our experience” (pg. 271)
What is the system? (pg. 272)
Two kinds of mistake (pg. 272)
Need for rules (pg. 273)
Note in respect to any rule (pg. 274)
Patterns (pg. 274)
Statistical control (pg. 275)
A typical path of frustration (Figure 33) (pg. 276)
Too many fires? (pg. 277)
Troubles in a spinning mill (pg. 279)
Monte Carlo experiments with the funnel7 (pg. 280)
Statistical control of instruments and gauges (pg. 284)
False signals from measuring instruments (pg. 284)
Control limits are not specification limits (pg. 285)
Control limits do not set probabilities (pg. 286)
More on specifications (pg. 286)
Partial list of common causes of variation and of wrong spread, wrong level: the responsibility of management. (pg. 287)
Some advice about control charts as an ongoing operation (pg. 289)
Capability of the process (pg. 290)
Advantages of stability or statistical control (pg. 291)
Interlaboratory testing (closely allied with the statistical control of instruments and gauges) (pg. 291)
Another example of uses of a control chart as a judgment (pg. 292)
Decrease inventory through improvement of quality (pg. 293)
The most important figures are not on the chart (pg. 294)
Application to sales (pg. 294)
Experiment with Red Beads to Show Total Fault in the System (pg. 295)
Interpretation of the chart (pg. 298)
What did we learn here? (pg. 299)
Prediction of variation (pg. 299)
What are the data of the experiment? (pg. 299)
Cumulated average (pg. 300)
Sampling by use of random numbers (pg. 301)
Mechanical sampling will distort the process average (pg. 302)
Further Remarks on Statistical Control (pg. 302)
Statistical control does not imply absence of defective items (pg. 302)
Study of a mixture may obscure chance to improve (pg. 303)
Examples of Costly Misunderstanding (pg. 304)
What is wrong with the use of the distribution in Figure 40? (pg. 308)
Further Applications (pg. 310)
Use of chart to measure combined faults of the system (pg. 310)
An example of benefit from studying the system and changing it (pg. 311)
People are part of the system; they need help (pg. 312)
Limited Selection of Text Material (pg. 314)
12 MORE EXAMPLES OF IMPROVEMENT DOWNSTREAM (pg. 317)
Aim of this chapter (pg. 317)
13 SOME DISAPPOINTMENTS IN GREAT IDEAS (pg. 331)
Basic principles to be used here (pg. 331)
Example 1. Some people are above average (pg. 332)
Example 2 (pg. 333)
Example 3 (pg. 334)
Restatement of the moral (pg. 336)
Example 4 (pg. 336)
Example 5. Fallacies in cost/benefit analysis (pg. 337)
14 TWO REPORTS TO MANAGEMENT (pg. 339)
Purpose of this chapter (pg. 339)
Recommendations for Changes in Policy at a Factory (pg. 339)
Extracts from Another Report to Management (pg. 342)
15 PLAN FOR MINIMUM AVERAGE TOTAL COST FOR TEST OF INCOMING MATERIALS AND FINAL PRODUCT (pg. 349)
Introduction (pg. 349)
Content of this chapter (pg. 349)
Some Simple Rules of Wide Application (pg. 350)
Suppositions (pg. 350)
All or none (pg. 351)
Binomial straddle (pg. 352)
Other Conditions Met in Practice (pg. 353)
Other straddles in moderate departure from statistical control (pg. 353)
Trend in the fraction defective in the incoming lots (pg. 353)
Problems caused by switching sources of incoming material (pg. 354)
State of chaos (pg. 355)
Joyce Orsini’s rules (pg. 356)
Necessity for simplicity in administration (pg. 357)
Grief from variable work load (pg. 358)
Never be without information (pg. 358)
Mistakes and corrections in a service organization (pg. 358)
Destructive testing (pg. 358)
Examples of Application of the All-or-None Rules (pg. 359)
Modification of the rules for value added to substrate (pg. 362)
Multiple Parts (pg. 364)
Probability of defective assembly in the case of multiple parts (pg. 364)
Conclusion: defective material and workmanship not permissible anywhere on the line (pg. 367)
Exception (pg. 368)
Disposal of Standard Acceptance Plans (pg. 368)
Standard sampling plans (pg. 368)
Pro forma application of standard plans (pg. 369)
Additional Problems with Measurement and with Materials (pg. 370)
Possible economy in intermediate construction of subassemblies (pg. 370)
Difficulties of finding extremely rare defects (pg. 371)
Use of redundancy (pg. 372)
Would a cheaper method of inspection really be cheaper? (pg. 372)
Multiple parts (pg. 373)
Improved 2 × 2 table to retain information—comparison of two certifiers (pg. 374)
Possible use of cheap method for screening (pg. 375)
Advantages in use of a scale for comparison (pg. 377)
Hazards of consensus in inspection (pg. 379)
Comparison of two inspectors (pg. 379)
Further note on graphical presentation (pg. 381)
Exercises (pg. 381)
Appendix to Chapter 15 (pg. 392)
Empirical Demonstration of Zero Correlation between the Number of Defectives in the Sample and the Number of Defectives in the Remainder When the Process Is in the State of Statistical Control (pg. 392)
Abbreviated List of References (pg. 396)
16 ORGANIZATION FOR IMPROVEMENT OF QUALITY AND PRODUCTIVITY (pg. 397)
Aim of this chapter (pg. 397)
Knowledge is a scarce national resource (pg. 398)
Why waste knowledge? (pg. 398)
Suggested plan (pg. 398)
Where may you find the right man? (pg. 400)
On the line (pg. 400)
Examples of other dotted-line relationships (pg. 401)
Achievements at the Bureau of the Census (pg. 402)
Additional remarks on educational needs of industry (pg. 402)
Advice to consultants and to companies (pg. 403)
17 SOME ILLUSTRATIONS FOR IMPROVEMENT OF LIVING (pg. 405)
Aim of this chapter (pg. 405)
Accidents on the highway: faults of road signs in the United States (pg. 409)
Malpractice in medicine (pg. 411)
APPENDIX: TRANSFORMATION IN JAPAN (pg. 415)
Motive for this appendix (pg. 415)
JUSE (pg. 415)
Conferences with top management (pg. 416)
Japan, 1950 (pg. 417)
Expansion of education to management, engineers, foremen (pg. 417)
Further notes in respect to top management in Japan (pg. 418)
Encouragement from further results (pg. 418)
QC-Circles (pg. 419)
Index (pg. 421)

W. Edwards Deming

W. Edwards Deming (1900–1993) was international consultant in management and quality. In 1987, he was awarded the National Medal of Technology and Innovation by President Ronald Reagan.

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