Systems Approach or Process Approach? Micro level of managing

[systems_thinker]

I think ISO 9000 has perhaps sounded its own death knell with the so-called "process approach." The chief difficulty I see with the process approach, as currently configured, is that it asks us to dive down to the micro level of managing and improving critical-to-quality processes, without asking us to first understand at the macro level how the overall system in which the processes reside works.

Why should we emphasize systems over processes? Simply because organizations evolve as systems, not processes. The success or failure of an organization is dependent upon how well the component processes making up its business system interact with each other. Unfortunately, most continual improvement philosophies, including ISO 9000, focus on improving processes. They hew to the assumption that if the processes making up the system are improved to their maximum, the system itself will exhibit maximum improvement. This assumption is wrong.

A systems approach to improvement holds that an organization should be treated like a system, where the interdependency, or linkage, between the processes making up the system is recognized. A key concept of systems thinking is that by improving individual processes and achieving local optima you do not necessarily improve the system. Because of interdependence and variation, the optimum performance of a system as a whole is not the same as the sum of all the local optima. In fact, if all the component processes of a system are performing at their maximum level, the system as a whole will not be performing at its best.

It is true that ISO 9001:2000 asks us to consider the “sequence and interaction” of processes when undertaking the process approach to quality management. Other than that, however, the standard has little to say about managing and improving processes collectively as a system. The inherent danger with the process approach is that some companies may try to apply it without building up the necessary understanding of how their overall production system works, resulting in sub-optimization of the total system.

Too often, with process improvement efforts, discrete processes are flowcharted in a flurry of activity, and improvement teams hurriedly convened to improve what “everybody knows” needs improving. However, how many of these improvement efforts are likely to be focused where they are really needed to help the system meet its goal? Too often, the effort is wasted and dissipated on improving processes to achieve local optima which have little or no influence on the behavior of the overall system.

Sorry if I offend anyone on this forum and forgive the overly-long post, but I just don't see the value in the ISO 9000 approach. I think it is fundamentally wrong and encourages organizations to adopt a specialist intervention approach to improvement and treat quality in isolation from the total business system. Look at Toyota as a good example of how it could be done: at Toyota, the driving force for quality is not standardization, but rather the philosophy of operating with little or no inventory achieved through Just-In-Time (JIT)/Pull production which is an inherent part of the “lean” Toyota Production System (TPS). There is no Quality Management System at Toyota, only the TPS, where high quality is a necessary attribute of the system since, in a JIT environment, passing on a defect to the next process would halt production. Toyota manages its system and high quality is one of the results.

[Claes Gefvenberg]

Hi systems_thinker, and welcome to the Cove

That, I have to say, was some first post... I'm looking forward to the upcoming discussion on this topic.

To start things off, I'd like to ask you to expand a bit on your statement that "... it asks us to dive down to the micro level of managing and improving critical-to-quality processes, without asking us to first understand at the macro level how the overall system in which the processes reside works." Does it really? I'm not sure I see it that way.

/Claes

[systems_thinker]

In Reply to Parent Post by Claes Gefvenberg

Hi systems_thinker, and welcome to the Cove

That, I have to say, was some first post... I'm looking forward to the upcoming discussion on this topic.

To start things off, I'd like to ask you to expand a bit on your statement that "... it asks us to dive down to the micro level of managing and improving critical-to-quality processes, without asking us to first understand at the macro level how the overall system in which the processes reside works." Does it really? I'm not sure I see it that way.

/Claes

Hi, Claes and thanks for the welcome. Perhaps my choice of language was not the best, but what I meant to say was that the standard appears to be focused on managing and improving the critical-to-quality processes which make up the "quality management system". It is true that clause 0.2 of ISO 9001:2000 makes reference to "the application of a system of processes within an organization, together with the identification and interactions of these processes" as constituting the process approach, but it gives no guidance on how to manage systemically. The use of the term "process approach" gives the game away for me: the term implies that if we set about managing and improving processes, we will improve the system - an idea which, unless it is qualified and placed in context, is anathema to most systems thinkers. However, while the standard talks about "applying" the process approach, I can find little practical guidance on how that can be effectively done.

The notion of process-based improvement as opposed to system-based improvement is further reinforced in clause 0.2, where a definition of the PDCA cycle is given: the whole context of this definition is process-based when it should be system-based. The definition given for "Act", for example, is one, which if followed to the letter by adopting organizations, would result in the pursuit of local optima. Thus, while ISO 9001:2000 talks about "a system of processes", its perspective is at the micro level of the processes themselves, not the macro level of the overall system and how we can acquire an understanding of it to identify the leverage points through which we can influence its behaviour.

A related drawback I find is that the standard looks at managing from the narrow perspective of quality to "enhance customer satisfaction by meeting customer requirements." The problem with this definition is that it seems to assume that customer requirements are for quality and quality alone, and suggests that the sole goal of the system should be to satisfy the customer's need for quality by controlling and ensuring the conformity to requirements of process outputs. However, customer requirements are likely to be much more than just quality alone. Likely, they will be some combination of Quality, Cost and Delivery - a value specification, in other words. How, then, should we manage to meet these other aspects of value besides quality? Through another, separate, system which introduces additional redundancy, complexity and waste?

By compartmentalizing quality as a subset of the overall system (the same clause 0.2 refers to the "process-based quality management system") the standard promotes the notion of the QMS as being something separate and distinct from the overall business or production system. Specializing and compartmentalizing in this way is contrary to the holistic concept of an organization as a system. Does it mean, for example, that we are to consider improving our organization (system) in only one dimension (quality) to eliminate the waste of defects, while ignoring other wastes such as overproduction, long lead times, high WIP and finished goods inventories, etc. - the causes of which may or may not be linked to the causes of poor quality?

My notion of managing for quality is much more holistic than ISO 9000's. Why would we layer the process approach of ISO 9001:2000 onto a production system which is sub-optimized, inherently wasteful and incapable of delivering value to customers? I would argue that the majority of ISO 9000 implementations are undertaken this way, and the less-than-expected results from some of these implementations may partially explain the mounting dissatisfaction with the standard. In such sub-optimized systems, the waste of defects (poor quality) is only one of the many forms of non-value adding waste that may be present (Ohno at Toyota identified seven), meaning that narrowly focused efforts to improve process output quality are likely to have little effect other than achieving local optima within the system.

I believe it would be far better to take a whole-system approach to quality, similar to the Toyota example I cited. At Toyota, quality improvement is part of the never-ending quest to remove non-value adding waste (including, but not restricted to, the waste of defects) from the order-to-cash continuum and move the TPS closer to its goal of increasing profit by adding value from the customers’ perspective. Toyota does not pursue quality improvement in isolation, but rather as an integral part of its philosophy of continually improving the system of production to allow value to flow unimpeded to the customer. Where Western companies tend to treat quality in isolation from the production system in which it resides and focus their improvement efforts locally to improve it, Toyota applies its improvement effort systemically and globally across the three key value dimensions of Quality, Cost and Delivery.

Just my thoughts!

[WALLACE]

Hi Systems thinker,
Your post has certainly struck a nerve with me. My work location is at the Ford Oakville Assembly Plant (OAP).
The good Dr Deming advocated the systems approach and, I'm affraid very few people listened to or took his sound advice regarding systems thinking. Mr. Toyota visited the Ford Rouge plant just before the second world war and discovered that Ford had a natural system in place (Did Ford even know it at that time?).
Toyota developed TPS and Ford in paralel developed FPS. The stage was set many years ago for systems thinking to be part of the main stream yet, It's very clear that organizations such as IOS and BSI had forgotten the basic principles of systems thinking. if this was not the case, we would have many exemplary organizations globaly that would not only be benchmarking the best in class systems, they would actualy be openely sharing the best in class system thinking techniques, tools and practices.
Unfortunately we dont see this, though I do certainly believe that Toyota have forced many to look at their use of "Lean tools" as the very minimum of being an efficient and effective systems thinking organization and, I guess that's why they basicaly open thier doors to observers of their production systems at work.

Of course Ford on the other hand are certainly moving in the right direction. Ford observe and benchmark the best in class systems and, they certainly mirror many of the system characteristics of the TPS. I understand though that Ford have the understanding and accept that systems for want of the word must "evolve". I certainly see this with the implementation of the FPS at my location. FPS IMO, is en excellent bottom up approach that lends itself to advocating the creation and development of system thinkers within a so called "Quality group".
Enough said for now.
Wecome systems thinker, I look forward to more posts such as yours, this is what we need at the Cove.
Wallace.

[systems_thinker]

In Reply to Parent Post by WALLACE

Hi Systems thinker,
Your post has certainly struck a nerve with me. My work location is at the Ford Oakville Assembly Plant (OAP).
The good Dr Deming advocated the systems approach and, I'm affraid very few people listened to or took his sound advice regarding systems thinking. Mr. Toyota visited the Ford Rouge plant just before the second world war and discovered that Ford had a natural system in place (Did Ford even know it at that time?).
Toyota developed TPS and Ford in paralel developed FPS. The stage was set many years ago for systems thinking to be part of the main stream yet, It's very clear that organizations such as IOS and BSI had forgotten the basic principles of systems thinking. if this was not the case, we would have many exemplary organizations globaly that would not only be benchmarking the best in class systems, they would actualy be openely sharing the best in class system thinking techniques, tools and practices.
Unfortunately we dont see this, though I do certainly believe that Toyota have forced many to look at their use of "Lean tools" as the very minimum of being an efficient and effective systems thinking organization and, I guess that's why they basicaly open thier doors to observers of their production systems at work.

Of course Ford on the other hand are certainly moving in the right direction. Ford observe and benchmark the best in class systems and, they certainly mirror many of the system characteristics of the TPS. I understand though that Ford have the understanding and accept that systems for want of the word must "evolve". I certainly see this with the implementation of the FPS at my location. FPS IMO, is en excellent bottom up approach that lends itself to advocating the creation and development of system thinkers within a so called "Quality group".
Enough said for now.
Wecome systems thinker, I look forward to more posts such as yours, this is what we need at the Cove.
Wallace.

Hello, Wallace, and thanks for your reply and welcome. You are certainly correct in saying that Toyota went to school on Mr. Ford's ideas. Henry Ford was truly one of the great visionaries in manufacturing and he was the first to implement continuous flow and other Lean concepts in his operations at Highland Park in 1914. Unfortunately he took a wrong turn towards mass production and its attendant wastes at his Rouge plant in the mid-1920's, so it is heartening to see Ford now returning to Lean concepts with its excellent Ford Production System (FPS) initiative.

The main drawback I see in using Toyota as a model for how a "lean" production system should operate lies with the danger in failing to differentiate tools and techniques from principles and objectives. Our addiction to tools and techniques is probably a result of trying to reverse-engineer world-class systems such as Toyota's. When we go to see Toyota's factories in action in order to discover the reason for their high quality and efficiency, we see well-organized shop floors, team-based improvement and problem-solving, mistake-proofing techniques, rapid setups and changeovers, and other "lean" practices. What is apparent to our eye is a collection of tools and techniques in action, and this is what we try to copy. What we overlook and miss is the underlying philosophy and emphasis in the Toyota Production System that eliminates non-value adding wastes to allow material to flow through the system without interruption or delay. Lacking an understanding of the Toyota Production System's basic philosophy, its principles and objectives, we resort to applying its tools and techniques within our own system in the hopes of achieving the same result. The result is doomed to failure because all we achieve are local optima instead of improvement of the total system.

[WALLACE]

I remember reading a book entitled "Four days with Dr. Deming", the book was extremely motivational and, it certainly challenged me in many areas of my work and personal life.
My papraphrase of a part of the book:
Dr. Deming mentions the parallel of the cabinet maker who decides to make a grand piano, he is capable, he has all of the tools, he has a plan, so he constructs the grand piano.
On completion of the finished masterpiece, the cabinet maker proceeds to play a tune on the grand piano, all that is heard is an out of tune compilation and the grand piano is in reality useless.
The conclusion is that the cabinet maker had absolutely no knowledge of music and therefore had to understand the system of music in order to successfuly assemble a music ready piano. Knowledge of a system is key to the success of systems thinking. I firmly believe that ISO and other standards have IMHO failed from the off-set to even understand or communicate knowledge of a system to any and all potential users of the ISO standard.
What does this say for the Quality registrars and auditors (The grand piano) ?? No offence intended (Just my opinion).
Ford use the S,Q,D,C,M,E measurables, Safety, Quality, Delivery, Cost, Morale and environment to measure the internal functions and capabilities of FPS in-puts and out-puts according to the plant score card. It's developing as it is being used. the continuous improvement functions within FPS are quite different from TPS yet very much the same. I believe that Toyota handle their production as a system and treat and handle it as a natural self sustaining system with all of the constraints managed as a chain system.
Kevin Mader (A moderator at the cove) forwarded to me some time ago a book entitled "Profit beyond measure" by Johnson and Broms, Toyota is discussed and is half of the book contents the other half overviews the other great system benchmark for Sytems thinking "Scania".
Have you read this publication Systems thinker??
Wallace.

[Randy Stewart]

The main drawback I see in using Toyota as a model for how a "lean" production system should operate lies with the danger in failing to differentiate tools and techniques from principles and objectives.

Don't forget to add in culture here also. Toyota does enormous work up front to hire a person. They place more emphasis on expertise than NA companies do. At Toyota you are not just a designer you are a door expert and you may only design inner doors. Another issue is that they design dies for specific press line ups etc. The die is designed to go in press #7 nose first. That is the only press it will be run in and the only way a fender is run in that press. We do not go to that extreme. Another point, Toyota looks at employment as a life time contract. You may be transfered and end up taking tickets at the amusement park, but you will always be a Toyota employee.
Lifetime employment (Japan). People are seen as a “fixed asset” in improvement efforts
Significant “up front” investment made in people - common socialization experience
Hoshin Alignment
Group performance part of individual performance evaluation
How would you like your raise, etc. to be dependant on the guy working next to you?!

Here is the typical career path for a Toyota Stamping Engineer
Stamping Engineering
4 – 6 months general training
Freshman project
2-3 years Die Design
2-3 years Process/Binder
3-4 years Die Tryout (Die shop and home line)

SELECTION

Quarterly reviews
Specific learning objectives
Equally graded on process adherence and results


Now here is the main reason why Toyota can do what they do.
Based on the results of a 25 year study Lieberman (1994) found that “Toyota is superior at transferring productivity enhancing knowledge throughout their network” (Toyota and suppliers)

Dyer and Nobeoka (1998) found that “Toyota is the recognized leader in learning and continuous improvement”

Learning, sharing, and standardizing part of Toyota DNA (Spear &Bowen, 1999).
Critical tacit knowledge underlies TPS.
Toyota explicitly teaches rigorous learning and improving methodology-skeptical questioning of scientific method.
JIT, kanban etc. temporary countermeasures aimed at specific challenges until a better one is found.

You know that for the RAV-4 the chief engineer spent 10 months in California living with a family to understand the american culture, how we treat our vehicles and how this type of vehicle would be driven! I can't see an NA company doing that.
For the Tundra, the chief engineer spent a year driving one back and forth across the country.
There are numerous things that make Toyota stand out, many of them we would never be able to adapt here in the US (i.e. there is no work-life balance program in Toyota, you work until the job is done). That is due to culture. Another example, the worse thing a company can do is to put you aside and not listen to your ideas or have you do a menial job. You keep your pay but you just have to punch the clock, they don't expect anything of you - kind of a Homer Simpson type. Here in the US that would be the job most people line up for. You don't have to do anything just show up and collect a good paycheck.

[systems_thinker]

In Reply to Parent Post by WALLACE

I remember reading a book entitled "Four days with Dr. Deming", the book was extremely motivational and, it certainly challenged me in many areas of my work and personal life.
My papraphrase of a part of the book:
Dr. Deming mentions the parallel of the cabinet maker who decides to make a grand piano, he is capable, he has all of the tools, he has a plan, so he constructs the grand piano.
On completion of the finished masterpiece, the cabinet maker proceeds to play a tune on the grand piano, all that is heard is an out of tune compilation and the grand piano is in reality useless.
The conclusion is that the cabinet maker had absolutely no knowledge of music and therefore had to understand the system of music in order to successfuly assemble a music ready piano. Knowledge of a system is key to the success of systems thinking. I firmly believe that ISO and other standards have IMHO failed from the off-set to even understand or communicate knowledge of a system to any and all potential users of the ISO standard.
What does this say for the Quality registrars and auditors (The grand piano) ?? No offence intended (Just my opinion).
Ford use the S,Q,D,C,M,E measurables, Safety, Quality, Delivery, Cost, Morale and environment to measure the internal functions and capabilities of FPS in-puts and out-puts according to the plant score card. It's developing as it is being used. the continuous improvement functions within FPS are quite different from TPS yet very much the same. I believe that Toyota handle their production as a system and treat and handle it as a natural self sustaining system with all of the constraints managed as a chain system.
Kevin Mader (A moderator at the cove) forwarded to me some time ago a book entitled "Profit beyond measure" by Johnson and Broms, Toyota is discussed and is half of the book contents the other half overviews the other great system benchmark for Sytems thinking "Scania".
Have you read this publication Systems thinker??
Wallace.

No, Wallace, I haven't read Profit Beyond Measure, but it will go on to my reading list. I agree with your assertion that ISO 9000 comes up short in encouraging a systems approach to improvement. The "process approach" is offered up under the guise of systems thinking, but it is not - it is exactly what it says it is, a process-based approach to quality management and improvement. Unless users first acquire an understanding of the system in which the processes reside, it will be difficult to influence or improve the behaviour of the system. This is what Deming meant when he referred to "profound knowledge" and asserted that quality improvement is not possible without acquiring an understanding of the theory of knowledge, a knowledge of variation, an understanding of psychology, and an appreciation for systems.

As Randy Stewart points out in his post, Toyota is one of the few companies that "gets it", i.e., understands how to manage their business as a system.

Most managers do not even know what the ultimate goal of their business system is, let alone know how to influence the behaviour of the system to achieve it. The "process approach" of ISO 9000 further confounds the issue by leading us believe that if we improve processes, we are improving the system.

Cheers,

systems_thinker