How Companies Have Applied Deming's 14 Points in Manufacturing
In 1982, Dr. W. Edwards Deming published a revolutionary book titled Out of the Crisis promoting the now-familiar improvement cycle, Plan-Do-Study-Act. In his book, Deming presented a philosophy of management he called the “14 points.” These points, some philosophical and some programmatic, became known as Deming’s 14 points, and gradually coalesced into what is known today as Total Quality Management (TQM).
The original 14 points ushered in a landslide of new tools and techniques for improving manufacturing and reducing costs. Most importantly, the shifting productivity landscape brought about new ways of managerial thinking, which emphasized continuous improvement, process redesign, and Smart Factory analytics. This is seen in some of Worximity’s recent success stories: Première Moisson, a premier baker, achieved a 27 percent reduction in equipment downtime, and Amalgamated Dairies Ltd. netted a 14 percent improvement in overall productivity through applying Worximity’s Smart Factory analytics. Deming’s 14 Points
At its simplest, TQM is a management approach focused on building customer-centric characteristics into every product. This concept grew out of Deming's 14 points, which are listed here:
- Create constancy of purpose for improving products and services.
- Adopt the new philosophy.
- Cease dependence on inspection to achieve quality.
- End the practice of awarding business on price alone; instead, minimize total cost by working with a single supplier.
- Improve continually and forever every process for planning, production, and service.
- Adopt and institute leadership.
- Institute training on the job.
- Drive out fear.
- Break down barriers between staff areas.
- Eliminate slogans, exhortations, and targets for the workforce.
- Eliminate numerical quotas for the workforce and numerical goals for management.
- Remove barriers that rob people of pride of workmanship, and eliminate the annual rating or merit system.
- Institute a vigorous program of education and self-improvement for everyone.
- Put everybody in the company to work to accomplish the transformation.
Below are three case studies illustrating successes using Deming's 14 points and/or TQM.
In the late 1990s, Lockheed Martin MFC committed to applying Dr. Deming's 14 management points to increase productivity at its Texas operation. In 2012, the company received the Malcolm Baldrige National Quality Award for performance excellence. According to MFC's president, Mr. James F. Berry, "It [the Baldrige Award] represents the culmination of a 15-year journey focused on performance excellence, which has been ingrained in all we do.”
Lockheed Martin's commitment to excellence reflects the core of Deming's philosophy. The company’s program resulted in annual savings of $225 million. Also, MFC reported customer loyalty rates improved by 18 percent between 2007-2012. Employee retention rates were 95 percent in 2011 and 94 percent in 2012, and 100 percent of customers said they would definitely or probably do business with MFC in the future. These are “best in class” numbers for large manufacturers.
The Honeywell-managed Kansas City National Security Campus (KCNSC) employs more than 4,500 people and is a significant force in manufacturing and supplying critical parts to the Department of Energy National Nuclear Security Administration. In the mid-2010s, the company applied Deming's principles of management by implementing a productivity improvement program. The effort was so successful that in 2009, the company won the Malcolm Baldrige National Quality Award for excellence in quality and performance.
Results placed the facility at the highest levels of business achievement. From 2006-2009, cost savings from improved performance and implemented innovations ranged from $23.5 million to $27 million annually. Customer satisfaction over the same period was at or above 95 percent, much higher than the commercial best-in-class range of 78-85 percent.
Since its founding in 2001, OPCO Construction Ltd. has relied on Deming’s 14 points to optimize its business.. The small, private firm recognized that all companies believed in projects that were on time, on budget, and at acceptable levels of quality. Nevertheless, managing to industry average was not good enough for OPCO. The company implemented a program referred to as OPCO's 14 visions.
The 14 visions expanded on each of Deming’s 14 points in a way that applied directly to OPCO's specific business and goals. The long-term program focused on four critical areas: people, communications, processes, and technology.
Deming’s Lasting Influence
One of the things for which Dr. Deming is best known is directing the rebuilding of Japanese industry during the post-WWII period. Toyota and Sony are high-profile examples of companies that applied Deming's 14 points and helped Japan become a world manufacturing leader.
During that time, Deming not only developed and made his 14 points of excellence famous, but also brought about a new way of thinking about business management. New techniques emerged from his work, including Total Quality Management, continuous improvement, and lean manufacturing. Using Deming’s methodologies, companies around the world have achieved new levels of performance and quality. At Worximity, the 14 points in manufacturing have influenced our Smart Factory analytics that make factories more productive and reliable in the industry.