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Author Topic:   Zero Defects & Taguchi Loss Function
Marc Smith
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posted 20 December 1998 03:30 AM     Click Here to See the Profile for Marc Smith   Click Here to Email Marc Smith     Edit/Delete Message   Reply w/Quote
Subject: Re: REQ: Zero Defects /Bartol/Meron
Date: Fri, 18 Dec 1998 11:40:06 -0600
From: ISO Standards Discussion

From: Emanuel Meron
Subject: Re: REQ: Zero Defects /Bartol/Meron
>
> From: Dave Bartol
>
> List Members:
>
> I have a question regarding ISO 9000 and the Zero Defects Philosophy
> of Crosby . . .

> For example, a part has the spec. of 11.000 +/- 0.005 inches. Anything
> within the specification is zero defect, but does the part at 11.005
> work as well as the part at 11.000? How about the part at 10.995
> inches?

This issue is addressed by Taguchi in his famous loss function which basically does away with the traditional concept of tolerance where all parts within specs are considered identical and "good", and those outside specs are equally "bad".

Using the concept of "loss" the nominal value is the target and every deviation from it entails a cost (loss). The farther away a part is from nominal the higher the loss, the smaller the deviation the lower the loss. This means that you have to strive for minimum variability around the nominal (target value), not just for being "in spec". The beauty of the theory is in that it provides you with a quantitative way to compare the benefits of variability (loss) reduction with the cost of achieving this reduction. There are many books on this subject, just look for Taguchi's loss function.

Emanuel Meron

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Kevin Mader
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posted 21 December 1998 10:17 AM     Click Here to See the Profile for Kevin Mader   Click Here to Email Kevin Mader     Edit/Delete Message   Reply w/Quote
Marc,

Do you have the story on Ford's experience with this topic regarding the Taurus transmissions? It might make a good post for those interested in seeing the benefits of variability reduction.

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Marc Smith
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posted 21 December 1998 11:54 AM     Click Here to See the Profile for Marc Smith   Click Here to Email Marc Smith     Edit/Delete Message   Reply w/Quote
I don't off hand. Are you referring to the old Batavia experiment - 50% US manufactured transmissions and 50% manufactured in Japan where the major issues were shaft surface roughness and concentricity? The one they did the video on that they quickly 'recalled'??

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Don Winton
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posted 21 December 1998 12:50 PM     Click Here to See the Profile for Don Winton   Click Here to Email Don Winton     Edit/Delete Message   Reply w/Quote
Kevin,

This is the Ford story I have. It is from 'Taguchi Techniques for Quality Engineers' by Phillip J. Ross and is attributed to Ford Motor Company, Dearborn, Michigan, 1987.

____________

Another example of the economic impact of excess variation occurred in the automatic transmission business with a major U.S. automobile company. Ford had contracted a Japanese supplier, Mazda, to make a certain portion of their front-wheel-drive automatic transmissions, with the balance of production made at a U.S. plant in Batavia, Ohio. Both sites were making transmissions to the same set of blueprints and the transmissions were being installed only on American cars. Mazda's version, as warranty records showed, had a substantially lower claim rate than the Batavia version. Ford investigated this phenomenon and found that Mazda's transmissions were made much more consistently than their own. On some critical control valve components (valves, valve bores and springs) which make a transmission shift automatically, Mazda was using only 27% of the allowed tolerance range, while Batavia was using 70%. Ford thought its plant was doing well, and by traditional standards it was, but the Mazda plant was superior. Not only were all the parts made to print, as were the U.S. made parts, but they were more nearly like one another.

____________

Regards,
Don

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Kevin Mader
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posted 30 December 1998 12:46 PM     Click Here to See the Profile for Kevin Mader   Click Here to Email Kevin Mader     Edit/Delete Message   Reply w/Quote
Marc and Don,

You got the right story. As I recall, the calibration technicians were called in to evaluate and recalibrate the gages used to check concentricity and surface finish. As a result, the technicians said nothing was wrong with the gaging. "How could this be"?, said the inspector. The gage isn't reading anything (or very little). They went through this process for a second time. As it turned out, the quality level achieved by the folks at Mazda was so much better than the others made by Batavia that the inspectors misdiagnosed the situation as a gage problem.

I wasn't aware of the percentage of "tolerance used" by the two groups, but it goes to show that good enough isn't! When I first read on the Taguchi Loss Function and saw a figure illustrating it, I thought to myself, how simple and yet so profound. Nothing complicated about the message or understanding it. Why didn't I think of it? Simple. I was using the wrong paradigm! Funny how your taught about tolerancing and the acceptance of mediocre results without realizing that this is being done. The loss function challenges organizations to raise the bar and think differently.

As I also remember, the waiting list for Taurus models with the Mazda transmissions were quite long. But also recalling that the Taurus had notorious troubles with their automatic transmissions, the list was quite understandable. Thanks for the feedback gentlemen.

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Don Winton
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posted 31 December 1998 10:06 AM     Click Here to See the Profile for Don Winton   Click Here to Email Don Winton     Edit/Delete Message   Reply w/Quote
Kevin,

Your recollection of the gauging story sounds about right.

Your comments about the percentage of tolerance used are right on target. That is what I like about the loss function. It illustrates Deming's message (reduce variation) into a graphical format that make explanations relatively straightforward. It allows me (or anyone else for that matter) to explain to management, in terms they understand ($$$), the what's and whys of variation reduction.

Regards,
Don

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Marc Smith
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posted 31 December 1998 07:53 PM     Click Here to See the Profile for Marc Smith   Click Here to Email Marc Smith     Edit/Delete Message   Reply w/Quote
I saw the Ford video of the Batavia experiment back around 1985 or 86, as I remember. I couldn't get a copy. I didn't have a VCR back then to copy it and Ford had already 'withdrawn' the video. This 'experiment' has obviously become quite a classic.

But back to the loss function - again we simply have an example of Common Sense if you take a minute to look at it. No more, no less.

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Dawn
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posted 02 January 1999 10:18 PM     Click Here to See the Profile for Dawn   Click Here to Email Dawn     Edit/Delete Message   Reply w/Quote
I think this is a good area for a good question.
The plant manager has asked what a good corrective action would be for 70,000 pieces which ran 6,000 nonconforming throughout 3 shifts within a couple of days. The parts were nonconforming throughout the process-not because of one operator error, not because of a sudden shift in the process. The nonconforming parts were not found until final.
The parts have .007 tolerance and they were using all their tolerance.
My opinion was:
If you do not need .007 tolerance why use it-stabilize the process and hold control charts within .004 or less. The problem is too much variation. Does this work for you?

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Don Winton
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posted 03 January 1999 04:25 PM     Click Here to See the Profile for Don Winton   Click Here to Email Don Winton     Edit/Delete Message   Reply w/Quote
Dawn,

quote:
The problem is too much variation

Absolutely!

For 6000 nonconforming of 70,000 produced, that is 8.6% nonconforming. For 8.6% nonconforming, that is a process capability of 1.00 if Xbar is centered, capability is 0.46 if the process is not centered.

As far as corrective action is concerned, reducing the variation is the first place to start. Methodology is what is best for the specific operation in question. Your proposed solution:

quote:
hold control charts to within 0.004

may be one plausible method, but other avenues may be available. Try to explore them all.

Regards,
Don

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Kevin Mader
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posted 04 January 1999 08:56 AM     Click Here to See the Profile for Kevin Mader   Click Here to Email Kevin Mader     Edit/Delete Message   Reply w/Quote
Just a thought...or two.

Why .004"? Why not as close to nominal as possible?

Thought 1: Use the .004" as a goal to reduce variation. It is a good visual target.

Thought 2 (a warning): Using .004" as a goal may either create an impossible goal to attain (the process will never be capable of better than .005-.007" with existing technology) bringing a let down to the group. Or, setting the target causes you to fall short of the mark (nominal) and the organization drops efforts to improve because it is believed that goal is reached while further improvement may still be attained. Try using .004" as an 'objective' in reaching a 'goal' of .000" (nominal) I think. Understand the process, improve the process, and improve the product (Cpk of .46 is not where you would like to be).

Thanks for the data Dawn. It creates good discussion. Back to the group...

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Don Winton
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posted 08 January 1999 10:00 AM     Click Here to See the Profile for Don Winton   Click Here to Email Don Winton     Edit/Delete Message   Reply w/Quote
I found this a pretty good discussion on the loss function and thought I would share it with the group.

Regards,
Don

Calculating the Loss Function

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

* Subject: Calculating the Loss Function
* From: SOPKrules@aol.com
* Date: Sun, 20 Sep 1998 10:19:04 EDT

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

What follows here is, I believe, an excellent dialogue concerning the relevance of the Taguchi Loss function.

Bob

In our Systems Approach to Process Improvement class, we spend a week learning basic statistical thinking concepts, a couple of control charts, and some simple capability calculations.

Our carrying vehicle for this class (taught to sailors and marines) is a "Naval Gunfire Support" exercise, in which the students slide washers down a cardboard ramp, attempting to hit a "target" line on a table. The target line represents an enemy tank, and the specification limits are bushes on either side of the road behind which friendly marines are hiding. They have to use statistical methods to make the adjustments needed to stabilize their systems, get on target, and reduce variation.

One of the final exercises we do is to calculate Taguchi Loss for their processes. We use the method delineated by Wheeler and Chambers in chapter 6 of "Understanding Statistical Process Control." We preface the exercise by asking them to imagine that we have been shooting at a tank in the middle of the road, and we ask, "What happens if we get a direct hit?"

Everyone agrees, that would be a good thing (for us and the marines hiding in the bush). It would destroy the tank. Then we ask, "what happens if we hit a couple of feet to one side of the tank?

Everyone has an idea, but they usually agree that the damage to the tank will be less. Maybe the machine gun still works, maybe one track still works, and they can spin around and shoot into the bush. The thing is, everyone can see the cost is beginning to go up, and some of the cost can't be counted--for instance, now the tank crew knows they are under observation and will do everything they can to get the observers.

We continue, moving the fall of shot further from the tank at each discussion. Everyone can see the loss mount higher, and the unknown and unknowable loss mounting even higher--what is the cost of re-acquiring a moving target, having the big gun shoot back at the ship, being able to radio for help, etc.

Finally, we ask them to give us a figure for Cscrap, the cost of crossing the spec limit line. In this case, it is huge--we are not only allowing the tank to kill our own troops, we are pouring fire in on them ourselves? No one can ever agree on the cost, but we get estimates from $300,000 to a couple of million.

Then we tell them that, according to actual Pentagon actuarial figures, the cost would be $10.00! Some are shocked and some laugh. We then tell them that we just decided 10 would be an easy number to use, but we emphasize (and ensure that they all agree) that $10.00 is a RIDICULOUSLY low figure.

Then we walk them through the calculations. Even at $10.00, a team that has achieved stability and gotten all their rounds in specs will have lost (in most cases) more than a dollar per round. They are always stunned by this, especially the engineering types who all week have been saying "yeah, but once you get in specs, it's a waste of time and money to continue to try to improve." We remind them that they agreed the figure was ridiculously low, and tell them to think what the loss might have been had they used THEIR estimates.

We finish it off, though, by telling them that one of the biggest lessons we learned from this exercise was that you CAN'T calculate Taguchi loss--you can run the figures, but the cost is much higher (especially the unknown and unknowable cost) than what you can calculate. We point out that it is a useful exercise to run with top management, just to make that point.

It seems to work pretty well--we keep hoping we will someday get a chance to show it to someone at the top, but they have avoided us this long, they will probably continue to be successful.

Rip Stauffer
Naval Leader Training Unit
Ripstaur@vabch.com>

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Marc Smith
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posted 08 January 1999 10:02 PM     Click Here to See the Profile for Marc Smith   Click Here to Email Marc Smith     Edit/Delete Message   Reply w/Quote
Excellent! Thanx, Don!

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Kevin Mader
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posted 11 January 1999 08:45 AM     Click Here to See the Profile for Kevin Mader   Click Here to Email Kevin Mader     Edit/Delete Message   Reply w/Quote
Good posting Don!

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Bryon C Simmons
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posted 11 January 1999 09:44 AM     Click Here to See the Profile for Bryon C Simmons   Click Here to Email Bryon C Simmons     Edit/Delete Message   Reply w/Quote
Interesting dialogue

Get your hands on a copy of Deming's "Out of the Crisis".....it has some fantastic examples of variation, and the devestating effects. In particular, the "Rules" that he spells out, about adjusting processes, etc.

Bryon

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Kevin Mader
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posted 11 January 1999 01:07 PM     Click Here to See the Profile for Kevin Mader   Click Here to Email Kevin Mader     Edit/Delete Message   Reply w/Quote
Is anyone out there a believer in the "Zero Defects" philosophy proposed by Crosby?

Back to the group...

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Bryon C Simmons
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posted 11 January 1999 04:31 PM     Click Here to See the Profile for Bryon C Simmons   Click Here to Email Bryon C Simmons     Edit/Delete Message   Reply w/Quote
Not a particular believer. It is a noble concept, but hardly practical. It still comes down to a definition of defect.

Obviously, Juran's definition of " fitness for use", has far more practical implications, and is a more realistic goal to achieve.

Gee, lets have a "zero defects day", and see how the people react to THAT......

No, not a big Crosby fan....Bing, yes.....Phil. no

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Kevin Mader
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posted 12 January 1999 09:02 AM     Click Here to See the Profile for Kevin Mader   Click Here to Email Kevin Mader     Edit/Delete Message   Reply w/Quote
Bryon,

Agreed! Your point on "zero defects today" is well taken. My predecessor created our existing Quality Policy which is partially based on this concept. As part of our quest for ISO, we of course had to try explaining this concept to the folks here. Not an easy task. Many, many skeptics. It created an air of impossiblity, frustration, and resentment towards management. How could we ask them to believe this concept and live up to it? Some waived a hand in disgust. It took a heavy level of commitment by management to explain this concept as a "direction" and not a "destination". Even with that, we still have some of the skeptics. I would not recommend that this concept be in an organizations policy. A Quality Policy needs to be realistic and exude believability. Back to the topic.

I like Crosby for most of what he offers, mostly in the realm of Quality Management and Leadership. The "Zero Defect" philosophy is really impractical because it lacks the believability for total organizational adoption. For that reason alone, I would not recommend using this concept. An organization may find itself spending more time selling the concept, or trying to get buy in, rather than spending the time to fix the problems. Misspent energy I feel.

Back to the group...

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Batman
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posted 12 January 1999 07:50 PM     Click Here to See the Profile for Batman   Click Here to Email Batman     Edit/Delete Message   Reply w/Quote
I guess in the back of my mind I held the "Zero Defects" approach a little higher than some. As I recall, this was an approach to a business / quality system. I always thought that, as an approach, one took steps to get there, not just announce that one had arrived. Proper planning in new product development, good corrective / preventive actions to the big problems, etc., was to be set up as part of the business operating system. I also never had a problem explaining to the folks that we wanted to save money, provide our customers with 100% good parts, and to do that we were going to (in part) begin to eliminate waste that currently exists, put a good [now APQP] system in for new stuff, and any questions re participation or seriousness could be asked of the president, et. al. We instituted vertically integrated teams within departments, an overview team of dept team leaders, and we all worked under the direction of the business plan, which included "cost" savings plans predicted by those in the teams and the path of the business itself.
I did not think "zero defects" approach was optional. It was just an approach. We did this 10 years ago or so, and were very successful. More recently, QS9000 has "taken over" as the approach. It still mentions zero defects, though.
Comments?

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Kevin Mader
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posted 13 January 1999 08:21 AM     Click Here to See the Profile for Kevin Mader   Click Here to Email Kevin Mader     Edit/Delete Message   Reply w/Quote
Batman,

I am glad to hear that you have had, and continue to have, good success with the zero defect concept. Its all in the presentation and you and your teams have done well. However, I feel that in some circumstances nearly any concept can be taught (a receptive audiance) or sold (one which does not care and accepts it based on authority).

As a personal preference, I guess I would rather sell a concept with a different label, one that isn't as finite even if the direction and the philosophy are similar.

Back to the group...

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Don Winton
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posted 24 January 1999 06:16 PM     Click Here to See the Profile for Don Winton   Click Here to Email Don Winton     Edit/Delete Message   Reply w/Quote
As those who have read my previous posts on this subject well know, I think the Īconceptā of zero defects is seriously flawed. But, that does not mean it is not a noble goal. With the acceptable ideas of Īpoka-yokeā and other methodologies, zero defects can be approached (approached being key).

But...

My particular problem with Crosby was his methodology. He described it as an Īultimate goalā (not necessarily in writing, but in presentation), not rather as a concept. I do not like the idea of 'guruā bashing ( I have some, not many, problems with Deming and Juran as well), so I will leave that to others. Crosby may have better presented this idea as a Īvariationā of established methods. But, that is for history to decide.

Zero defects cannot exist, as it conflicts with the theory of common cause variation.

Just my $0.02 worth.

Regards,
Don

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Marc Smith
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posted 24 January 1999 06:50 PM     Click Here to See the Profile for Marc Smith   Click Here to Email Marc Smith     Edit/Delete Message   Reply w/Quote
Six year old sez: "I want to be President!"
Goal is set.

Works like hell all his life to achieve goal.

At age 60 has not reached goal. May or may not still be trying to reach goal.

------

Company sez: "I want zero defects!"
Goal is set.

Company (if 'smart') chooses 'path' to goal.
(Roadmap & Methodologies, if you will).

Company never achieves goal (Maybe - We, today, believe zero defects is not a possible reality - but, man wasn't meant to fly, either... Not to mention cloning). May or may not still be trying to reach goal.

------- My Comment To All This -------

I see zero defects as a goal. A philosophy maybe. Concept? Ummmmm....

If you embrace Continuous Improvement, your goal (ultimate) is zero defects. I thank Crosby for the thought - the statement, if you will - like ISO9000 it's common sense, really - but I prefer to set my own roadmap, thank you.

I see no problem in using it as a goal but it's in the actions. You don't have to shout out "Our new Program of the Month Is....". To me it is more of an ultimate goal. You know, like "Some day, before I'm 60 years old, I'm going to get to Tahiti and spend 3 years lying with a wahine." As you live your life (design, production, etc.), you do what you can (various Continuous Improvement methodologies) to someday achieve your goal of Tahiti & a wahine (zero defects). Your every day life is impacted by what you do to reach your goal and vice versa (ie: they have inputs and outputs to each other). Same with a company.

Does this make sense to any of you folks??

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Batman
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posted 27 January 1999 07:30 PM     Click Here to See the Profile for Batman   Click Here to Email Batman     Edit/Delete Message   Reply w/Quote
Yes, I think that is what I was trying to say, but said it so much more elequently. I do deal with black/white folks who say "I either plan for no defects" or "I am going to plan for defects."
Yes, much more elequently.

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Don Winton
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posted 30 January 1999 08:58 AM     Click Here to See the Profile for Don Winton   Click Here to Email Don Winton     Edit/Delete Message   Reply w/Quote
Marc,

Well said. I know this thread is getting pretty long, but I saw this and thought I would toss it in:

-------Snip-------
Subject: Re: Crosby vs. Deming
Resent-Date: Sat, 30 Jan 1999 03:07:51 -0500 (EST)
Resent-From: den.list@deming.ces.clemson.edu
Date: Wed, 27 Jan 1999 22:14:10 -0800
From: Rip Stauffer
Organization: Naval Leader Training Unit
To: den.list@deming.ces.clemson.edu

Robert Bacal wrote:

"I suspect that in order to discuss zero defects and it's value or lack thereof, one needs to consider it the way Crosby intended it, and that means understanding his definition of quality."

Thanks again, Robert, for raising the hard questions and making me recheck my references. I don't think Crosby ever minced words. On p. 15 of my copy of "Quality is Free" (New York: Penguin. 1980) he defines Quality:

"...we must define quality as 'conformance to requirements' if we are to manage it...All through this book, whenever you see the word 'quality,' read 'conformance to requirements.'...If a Cadillac conforms to all the requirements of a Cadillac, then it is a quality car. If a Pinto conforms to all the requirements of a Pinto, then it is a quality car." (I know Toyota execs must have been praying that Ford and GM hired Crosby and not Deming if they read this!)

He goes on,"...quality is precisely measurable by the oldest and most respected of measurements--cold hard cash....Quality is measurable by the cost of quality which, as we have said, is the cost of doing things wrong."

I had occasion to re-read QIF 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. We could have made Zero Defects all day long, and would have been ahead of everybody that had not come as far as we had, but we would never have become competitive with an industrial culture whose understanding and definition of quality had shifted for good in 1960. Taguchi redefined world-class quality in 1960 as "on target with minimum variation." Crosby's definition, probably valid and valuable in the earlier part of this century, was woefully obsolete and utterly impotent after 1960 (I am fairly certain that I could make a case for 1931, but that would probably be a full-blown paper).

I can't find anywhere in Crosby's book where he goes beyond conformance to specifications in his idea of what quality is. He talks about putting inspectors at the end of the line--they are not effective anywhere else. He says, "If you don't know what the defect level is, how do you know when to get mad?"

He says a lot...some pretty good, some pretty practical. A Crosby seminar was a kind of fun thing, and DID get everyone revved up about quality for a while. But Zero Defects is just no non-conforming product. If you're doing that in a world where meeting specs is enough, that's good--but we haven't lived in that world since 1960 (or 1950, or 1931, if you prefer).

I'm sorry. I tried, but I just could not find a way to reconcile Crosby's approach with this idea. My hat is off to anyone who can somehow make a case that I am failing to understand what Crosby meant by anything in QIF. If you can establish that there is some way to read an understanding of variation, systems, and the concept of the loss function between the lines in QIF, you are a much greater master of tricky semantics and verbal legerdemain than I.

I hope we can soon leave this discussion behind. I think that if we are eventually to go beyond Deming, we should not waste a great deal of time in dismissing an approach that stopped well short of Deming.

Rip Stauffer
Naval Leader Training Unit
ripstaur@vabch.com
-------End Snip-------

Regards,
Don

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Marc Smith
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posted 30 January 1999 04:31 PM     Click Here to See the Profile for Marc Smith   Click Here to Email Marc Smith     Edit/Delete Message   Reply w/Quote
Damn... Another list I should be reading....

Good posting, Don. I guess I hear stuff from all sides and take my own view which is why I said above that "I'll choose my own roadmap, thank you." As to the definition of 'quailty' - well, we could all write papers on that!

Taguchi's loss function is a bit more concrete to me than Crosby's Zero Defects.

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Kevin Mader
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posted 01 February 1999 09:42 AM     Click Here to See the Profile for Kevin Mader   Click Here to Email Kevin Mader     Edit/Delete Message   Reply w/Quote
Don,

That was a great post. Thanks. Kev

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Don Winton
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posted 01 February 1999 10:33 AM     Click Here to See the Profile for Don Winton   Click Here to Email Don Winton     Edit/Delete Message   Reply w/Quote
quote:
I'll choose my own roadmap, thank you.

I agree Marc. I have never been one to accept any so-called "best" way at face value. I prefer to design hybrids based on a particular organization's wants and needs.

quote:
As to the definition of 'quailty' - well, we could all write papers on that

Wouldn't be a great read!

quote:
Taguchi's loss function is a bit more concrete to me than Crosby's Zero Defects

Agreed. Also easier to explain in terms most can relate to.

Regards,
Don

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Smooth
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I have heard that Taguchi's loss function has certain defects and that a modified loss function is developed. I have yet to find any literature on this matter. How true is this and any idea where I could get literature on it?

Regards,
Smooth

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