Japan Today vs. America today..was Deming Right?

[Don Winton]

This was submitted recently. Most of the replies were pretty short, but I found this interesting. Hope you like it.

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Subject: Japan Today vs. America today..was Deming Right?
Resent-Date: Sat, 30 Jan 1999 01:27:43 -0500 (EST)
Resent-From: den.list@deming.ces.clemson.edu
Date: Wed, 27 Jan 1999 10:31:47 +0100
From: "H Södersved" <info@expira.se>
To: "DEN Disc List" <den.list@deming.ces.clemson.edu>

There are no simple factorial answers to complex dynamic system problems, but I want to emphasize some national factorial and economical facts on this matter, from my perspective.

1. Japan has captured a large world market by focusing on supreme quality on high volume manufactured consumer products. This has been the clear aim of Japanese export industry. Demand for low cost reliable products around the world has increased the sales but also given the Japanese yen a higher and higher value against the dollar.

2. Office automation started late in Japan. It was starting in the middle of the 80:ies. IT-technology has not been helped by TQM methods in the start, innovation has won until now, i.e. US. Communicating with Japanese companies on e-mail and fax is not easy. You get long delays. Communication is key to success.

3. US leading companies have clearly learned the TQM lesson in the 80:ies and 90:ies, now for 20 years. Japan has much less competitive advantage now on quality/reliability. Especially now, since the service life of products is short. Speed of innovation i still much higher in the US. The internal competition is now very tough in US, as it also has been in Japan during 1960 to 1990.

4. National economies prosper or decline in short term. It does not help a nation that it has large investments, if they are not fully filled with running production (carburetor industries).

5. Sweden was a prosperous country in the 60:ies. In 1972 began the decline. We have today roughly 70 % of our employees paid by service related income. How could we compete on personal services on a world market? Well, by being double as wise or skillful, or decreasing the value of our currency? I doubt the wisdom, looking at the quality of the education system and schools. Even so we are close behind US in the TQM movement, so we also - carry a hope.

6. Finland (where I was born and grew up) is doing well now due to mobile phone industry of Nokia and connection to EMU, but a large proportion of it's people (not involved in mobile phones) have been living lean for a long period of time. Especially after the crash of it's export to the East. Also Sweden's export on mobile phone systems exceeded our main export income, forestry products, in 1998.

Any nation may get into this trap after a sustained period of TQM-improvement and increased share of export markets. We are all parts of the same global economic system. We really need Deming's thinking to balance the financial markets for a win-win approach. Look at Brazil now! Who is causing it? Who will win? Who will lose? Any large investment for the future, like production processes, is likely to be a wrong investment in this rapid time of change. Agility is the best investment.

--------------------------------------------------------------------------------

hakan.sodersved@expira.se
Expira AB, Process & Quality Management
Bjornidegrand 3, S-162 46 VALLINGBY
Tel +468-739 10 70, fax +468-739 10 72
Mobile phone +4670-556 33 45
http://www.expira.se

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Thoughts, anyone. I will have a reply here in a little while.

Regards,
Don

[Marc]

Makes sense - do post any significant followings. Gives some 'food for thought' - helps one step out of one's paradigm.

[Don Winton]

Marc,

There have been virtually zero follow-up to this post. It is almost as if the DEN members are afraid of this subject. But, I will keep the Cove informed of any significant developments. No problem.

Some of my response:

US leading companies have clearly learned the TQM lesson in the 80:ies and 90:ies, now for 20 years. Japan has much less competitive advantage now on quality/reliability.

Agreed somewhat, but I disagree that TQM is what American companies have learned. I think that maybe, just maybe, they learned that in order to survive they must be able to supply equivalent goods at a fair market value. American companies are using different methodologies to achieve this (not systems improvement, by and large).

We really need Deming's thinking to balance the financial markets for a win-win approach.

Agreed. Japan’s current economic problems may be more due to short term thinking rather that Deming’s Long Term solution.

I could write an entire paper on the current Japan phenomenon, but that will take more time than I have. Suffice it to say that, regardless of what talking heads will tell us, Deming was right and is right.

Regards,
Don

[Kevin Mader]

Don,

I feel you are right, sadly so, that American companies have not found TQM to remain competitive in world markets. Some have and have done well to maintain, even grow, some market share. Still others have not gotten away from the butchering of companies, lead by the financiers, trying hard to improve the bottom line. This ideology has not gone away. So where are the Customers' interests?

Japan's problems are not unique. I also feel that their problems may be attached to short range plans (the knock out punch?). It is important to remember that not every organization practices Deming/Juran/Taguchi/Imai techniques and even if they had, the World effects would still bare heavy on any economical structure. Japan isn't mistake proofed, but probably further along than given credit for.

[Don Winton]

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Subject: Quality as conformance (Crosby)
Date: Wed, 10 Feb 1999 08:26:25 MST
From: "Anton O. Tolman, Ph.D." <ANTON@wsh.state.wy.us>
Reply-To: den.list@deming.ces.clemson.edu
Organization: Wyoming State Hospital
To: den.list@deming.ces.clemson.edu, atolman@allwest.net

Rip Stauffer recently wrote:

“I had occasion to re-read QIF {Quality is Free, Don} a couple of months ago when I was trying to figure out the origins of Six Sigma (please, let's not get started on THAT.) I think his ideas would have been pretty good back in the 40s, maybe, and I wish we had at least been doing what he suggested when I was at Ford in the '70s. It would have made Ford a much better place to work, and probably would have raised the level of quality we were building at that time.”

“It would not have solved the bigger problem, though--the problem of Japan. Ford management in the '70s did not have a clue as to why Japan was making the dramatic inroads it was making.”

Nice summary, Rip. I wanted to add something here that is of more recent vintage. I am currently finishing up Mary Walton's book "Car" which I recommend to anyone who wants to get a picture of the american auto industry in recent years. The book presents the drama of the creation and production of the 1996 Ford Taurus redesign. I have found it very enjoyable and useful in understanding the complexity of building an automobile. At the same time, there is a link back to what Rip is saying here about a "lesser" definition of quality as conformance to specification.

When Ford began the redesign of the Taurus, they were VERY concerned about the Japanese competition. They had been using Honda as the target for their efforts, but they switched during the early stages of the redesign to trying to meet or beat Toyota, specifically the Camry. Management leaders of the project took rides in competitor automobiles to see what they needed to do to beat them. Here's the subtle and tricky part that as far as I can tell from the book, Ford executives never "caught on" to.

It was about 1992 - 1993 when Ford began the process of redesigning the Taurus with an anticipated production year of 1996. So, when they looked at the Japanese competition, they looked at the 1992 Toyota Camry as the standard. They made many improvements in the design of the Taurus in an attempt to match the Camry's level of quality. The hitch is that nowhere is there an indication that at any time did they realize that by the time the Taurus came out of production, the Camry would have made improvements itself and would STILL be ahead of the game. Rather than use the Camry to learn some basic principles of design and customer satisfaction and then to *project* those ideas into the future to exceed customer requirements, which might have truly represented innovative thinking, they "benchmarked" the Camry ***as it was in 1992*** as their standard for production in 1996!

They were very pleased with the quality of the new Taurus and probably deservedly so. However, as long as we equate quality with meeting some standard, ANY standard, we are falling behind those companies and those organizations who set their mark NOT on the standard, but on exceeding the expectations and delighting the customer. To paraphrase Myron, I believe, using standards or conformance to specification as the paragon of quality is like driving your car by looking only in your rear-view mirror. This is why I believe Deming was so adamant that the system must include the future.

Zero defects is NOT enough. Meeting standards WILL NOT cut it. Those tools are useful as a beginning, perhaps in an elementary learning phase to learn how to perform according to recognized patterns. Once we have learned that lesson, it is time to move forward, to include the future in our systems thinking, and to set the mark on the customer rather than on the competition.

Anton Tolman, PhD, CPHQ, Psychological Services Manager &
Quality Management Coordinator, Wyoming State Hospital
P.O. Box 177, Evanston, WY 82931-0177
Anton@wsh.state.wy.us (307) 789-3464
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Rather than use the Camry to learn some basic principles of design and customer satisfaction and then to *project* those ideas into the future to exceed customer requirements, which might have truly represented innovative thinking, they "benchmarked" the Camry ***as it was in 1992*** as their standard for production in 1996!

This is, IMHO, typical of organizations today. They ‘benchmark’ against what is considered the best current system, but fail to implement future customer concerns.

However, as long as we equate quality with meeting some standard, ANY standard, we are falling behind those companies and those organizations who set their mark NOT on the standard, but on exceeding the expectations and delighting the customer

Agreed. Enough said.

Zero defects is NOT enough. Meeting standards WILL NOT cut it. Those tools are useful as a beginning, perhaps in an elementary learning phase to learn how to perform according to recognized patterns. Once we have learned that lesson, it is time to move forward, to include the future in our systems thinking, and to set the mark on the customer rather than on the competition.

Thoughts, anyone.

Regards,
Don

[Marc]

The Tarus example is excellent. It doesn't surprise me. What about Nissan? Any comments on Nissan's 'downfall'?

[Don Winton]

Any comments on Nissan's 'downfall'?

I do not know about downfall, but personally, I have become somewhat skeptical with Nissan. While the quality of product is still grade A, the service and distribution side has suffered (and in my home state to boot). Switched to Toyota, BTW.

Regards,
Don

[Kevin Mader]

I think this is another case of Western Management still at work. Short-term thinking had improved the Taurus, yet it has not surpassed the quality levels of the Camry. Unfortunately, I think Ford did not listen close enought to what Dr. Deming was saying. long-term thinking with Customer focus. The aim was/is still too low. A question asked Deming during a seminar: "How long before the US catchs up to Japan"? Deming replied to this individual asking him a question. He asked if he thought that Japan was waiting around for the US to catch up. We were nearly 20 years behind the Japanese then. Have we closed the gap?

Some interesting statistics:

Average hours to build a car:

Nissan - 17.07
Toyota - 21.31
Honda - 22.31
Ford - 22.85
GM - 30.32
Chrysler - 32.15

Average pretax profit per car:

Nissan - $301
Toyota - $1,239
Honda - $1,040
Ford - $1,520
GM - $104 (loss)
Chrysler - $1,336

*USA Today, July 16, 1998

It appears to me that the Japanese automobile manufacturers are still producing superior products in less time (to me that spells higher VALUE). Could it be that they are working smarter and not harder? It is worth noting that Nissan is pulling down the least per new vehicle. Might this be because of poorer quality of customer service or is it because of poorer quality of product? How about the effects of annual sales volumes for these organizations? Anyone have the answers?