The way to break the bottleneck in US productivity

In newspaper and magazine articles, low productivity is often blamed on the lack of tax incentives for capital investment, on government regulations, on employee attitudes, on unions, and on changes in our society. These influences play some part, but they are not the primary reason for declining productivity of the United States relative to Japan.

In my company, thanks to the teachings of Dr. W. Edwards Deming, we realize that increases in productivity can be achieved daily through greater emphasis on quality in all phases of our operations. Dr. Deming has worked with Japanese industry for 30 years. He is credited with major contributions to its gaint strides in quality and productivity. There is a direct correlation between the two: As quality goes up, so does productivity.

Dr. Deming's approach is based on the statistical control of quality to bring about a new way of managing your business. Dr. Deming is the founder of the third wave of the industrial revolution. The Japanese manufacturers utilizing the statistical control of quality are sweeping the world in the second half of the 20th century just as American manufacturers utilizing mass production swept the world in the first half.

Consider the impact on overall levels of productivity if everyone and every machine in your company performed properly the first time, every time. The same number of employees would be handling much larger volumes of work. The high costs of inspection would be directed into productive activities. Rework, downgrading, scrapping would be eliminated. Administrative efficiency would be much higher. Total costs of operation would be 10-50 percent lower.

This description is not imagineering. Unfortunately for many American manufactures, it is a reality in numerous companies in Japan right now. For years the Japanese have been using statistics and charts to measure, evaluate, and improve their operations. They utilize statistical information -- facts, figures, charts -- to help to make the continual improvements that they know will lead directly to higher productivity and low cost with consistent quality suited to the marketplace.

Dr. Deming told me in March 1979 that a total commitment by the top management of our company, starting with me, would be required to achieve broad use of statistical analysis as a better way of managing our business. I know now how important that statement was. Without constant personal involvement of top management in the use of statistics, the Deming quality program will not work.

Every sizable business has engineers, scientists, quality control people, and others who have had training in statistical techniques. In most companies, however, these techniques are used only in a few specialized areas. They are not used effectively in managing product quality and productivity on a daily basis.

The reason for this is that broad-based use of statistics has never had top managment support in the United States.

How are statistics used to improve quality and thus increase productivity? Statistical techniques provide a road map to assist in solving problems. Statistics direct the attention of management to what is wrong. Statistics don't solve problems. They identify where problems are and point managers and workers toward solutions. Statistics will provide the data which will allow managers and workers to make decisions based on facts rather than speculation and hunches.

Unaided by statistical techniques, management's normal reaction to trouble is to blame the worker. This gives rise to the myth that there would be no problems in production or service if only workers would do their jobs correctly. In the vast majority of cases, individual workers are powerless to act because they are faced with problems that are built into the system of operation.

Dr. Deming points out that approximately 85 percent of the problems in any operation can be dirctly traced to the system -- to common causes that affect a whole group of workers and that can only be fixed by management. Only 15 percent of the problems are special causes which are traceable to an individual worker or a machine. Therefore, if management does not exercise its responsibility to find and fix the common causes, other efforts to improve productivity will bring only limited improvement.

You hear a lot these days about "quality circles." Quality circles, or similar groups, can only scratch the surface toward improvements unless they do the following:

* Gather statistics on the process or operation.

* Develope and use charts.

* Identify the special causes and common causes of problems by statistical means.

* Fix the special causes.

* Have management support to fix the common causes by changing the system.

The statistical approach applies externally as well. It is important to understand in specifics what meets the customer's requirements and then to measure continually design and production against these requirements. Little will be accomplished by having low costs and consistent quality for products that customers do not want. Most businesses utilize purchased materials, supplies, parts, and components. It is just as vital to achieve statistical control of quality from your vendors as it is to have it internally. Therefore, until a substantial part of American industry participates on the statistical control of quality, our nation will not be competitive with Japanese in those businesses where the Japanese use these statistical principles.

Remember the bottleneck is located at the top of the bottle!