Quality TaguchiBoth Lean and Quality Management systems have similar objectives. Yet, over time, quality improvement time is now subordinate to unit output (flow related) and lowering costs, why, what happened to the significance of quality?

A Lean Management System is a long term and systematic approach seeking incremental improvements in process, resulting in improved flow. It seeks to understand and then integrate what is of value to organizational customers throughout all value streams. This means all workers and all leaders spend most of their time, decisions, and investments improving customer values. But have well intended organizations, for the last several years, started to minimize incremental improvements in quality?

A Quality Management System (QMS) has parallel principles and objectives to Lean.

Starting as far back as the 1920’s we can trace the roots of Total Quality Management (TQM). But it wasn’t until the 1940’s, in Japan, where American’s Deming, Juran, and Feigenbaum developed the concept of TOTAL quality where all employees, workers and leaders alike, must be involved and engaged to reach the high-quality standards demanded by customers.

TQM also had similar objectives and terms as Lean, continuous improvement, customer focus, and employee engagement. It strived to integrate a quality management system throughout the organization to meet customer values. A management system with a focus on quality to achieve customer satisfaction.

The Toyota Production System (TPS) was the precursor to Lean and was originally called “Just in Time Production.” The history of lean suggests a strategy of flow. In this management system of flow improvement, poor quality (Defects) is quantified with time. In a quality management system poor quality is measured as variation from the target value, the cause of excessive societal costs. Does quality have a high enough importance in a lean management system?

As a side note, if you review the Wikipedia pages describing TPS versus the Wikipedia page describing TQM the word quality is mentioned 2 times on the TPS page and 25 times on the TQM page.

“The customer experiences a loss of quality the moment product specifications leave the target value” – Genichi Taguchi. Lets look at the importance of this quote.

So why the reflection, why an implied concern, to this point?

Genichi Taguchi (Applauded by Dr. W. Edwards Deming) defined quality as “quality is the loss a product causes to society after being shipped, other than losses caused by its intrinsic function.” Societal losses coming from failure to meet customer requirements, failure to meet ideal performance, mainly because of variation from the intended condition (target). Simply, as soon as the performance characteristic is measured at something different than the target value, there is a loss. An organization’s focus on flow improvement makes it difficult to create the enthusiasm and the discipline to seek quality target values.

Specifications are of secondary importance when continuous improvement is known as “always seeking the target.” Related to the consumer and society, we might purchase a set of car tires with a stated tread depth of 10/32″ but the manufacturing specifications might have a lower specification of 8/32″ and an upper of 12/32″. So with a goal post mentality, the manufacturer could quality pass and ship tires measured slightly above 8/32″ and, with this culture, try to run the process to obtain a distribution of measurements closer to the lower specification. Even shoddier, there are businesses choosing to falsify data to meet specifications.

A lesser cost  approach would be realized through incremental improvements in lowering the Taguchi Loss Function. The “goal post” and seemingly contemporary approach to quality will end up with the higher losses, Taguchi realized, explained, and warned about this. These societal losses are significant costs for all of us and associated serious injuries are on the rise.

The societal losses are many, our time, downstream customer loss, related and extreme environmental costs because of additional energy to resolve poor quality, inflated downstream Cost of Goods Sold (COGS), and added healthcare costs because of poor quality causing safety risks. We should not be so willing to overlook.

What Are Today’s Examples of These Societal Costs

We are in the 21st century and rapidly waning the importance of quality products and services. Poor quality products and services are now almost the norm, we have all, too frequently, personally experienced this increasing trend. Most businesses today must include a service for refunding defective products, with no direct costs to the consumer. The return process has even become part of an organizations’ strategy.

Quality is not improving and related costs are being overlooked. Medical errors have now become the 3rd cause of death within the United States and automotive recalls continue their increasing trend of errors. The trend is not changing, Fiat Chrysler recalls nearly 500,000 pickup trucks due to fire risk. BMW is recalling more than 1,000,000 vehicles. Kidde fire extinguishers with defective discharge. Can you imagine the associated Societal Costs? You can see a recent recall list at this government site.

An automobile has over 35,000 parts. What is the probability, of a single automobile with all 35,000 parts will work correctly, assuming all processes have a 5-sigma capability (this would-be world class processes)? The reliability of this automobile would be (0.9999995)^35,000 = 98.27%. In other words, the automobile manufacturer should expect 17 defective automobiles for every 1000 shipped. If these defects were safety related, is this an acceptable reliability?

The originators (Toyota) of TPS recalled 5.8 million vehicles to replace potentially deadly Takata air bag inflators (Takata now filing for bankruptcy). Processes focused on flow or quality? You might say this lower level of product quality, in this case, shipped from Toyota, was strictly a supplier issue but when organizations are quality focused, they improve a system, not an isolated operation. System focused organizations also realize quality improvements must extend outside their four walls. What if supply chain data (quality and production) were made transparent upstream where it could be analyzed? What if there was more of an effort in strategic partnerships with key suppliers who believe in the purpose of Real Process Integration?

Walmart has added a process of improving the flow of returning defective product, to compete with a competitor. Is this an example of a disheartened leadership team in achieving target focused quality? In this case, why focus on flow improvement? Does this address the root cause? Have they not added wasteful costs because of focusing on flow instead of quality, where the root causes reside?

One key input in achieving incremental improvements, not only quality but also flow, is effective training and I hesitate to use the word “training,” because we really want to achieve learning. TWI has it correct, “If the learner hasn’t learned, the instructor hasn’t taught.” Recently, in 2017, the almighty US Navy, in two separate incidents, had agile destroyers smash accidently into other ships, unheard of! There were many excuses but people with the requirement to effectively learn had little opportunity, the learning process became subordinate to another objective….it was not quality.

Leaders do know neglecting an everyday emphasis on quality will result in an eventual cost….but probably not today is the common excuse for not seeking root cause. Leaders know this but leadership accepts it and indirectly promotes the wrong culture. They seem to be unaware the costs of seeking a target are comparatively negligible to a goal post approach. But, they are willing to take the unnecessary risks of shipping products with the probability of being outside of the goal posts. Nissan and Subaru (focused in Japan, home of flow improvement) are now very much aware of these huge differential quality costs.  Both Subaru and Nissan overlooked Final Inspection procedures, resulting in Subaru recalling 255,000 cars and Nissan, over 1,000,00! Nissan’s poor quality costs had a significant impact on profitability, “Nissan Motor Co.’s fiscal second-quarter profit slipped 3 percent despite growing sales because of costs related to improper vehicle checks.” In a quality management system Cost of Quality is defined through four categories, Appraisal Costs and Prevention Costs were the main categories overlooked in these two organizations.

I am not promoting an exclusive focus on TQM but we do have to afford more quality improvement time. Today, any improvement time is precious but flow takes most of it. The Intricate technology, required safety, and costs of today’s products and services are all the more reason for organizations to allocate more improvement time towards a quality system that focuses on achieving target measures. To get there Quality improvement inititiatives must respect the importance of striving to meet the exact and expected quality target, it is a long path but it will build the needed momentum. Leaders, in the Gemba (every day), must increase the importance of quality. They should be Supporting, Teaching, and Promoting quality not 2 times a week but 25 times a day.

During the 1950’s Taguchi admonished industrial leaders of resulting societal losses from a short term goal post approach. So far, in the 21st century, many noteworthy leaders have not regarded or learned. If they had, what would be the extent of societal losses today? To achieve such a target condition, is it not an example of a successful 21st century management system? Is it not an example of continuous improvement nourished by supportive leadership?


Lean Teams USA

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