Top 3 Insights from the Chapter in ‘Out of the Crisis’ by W. Edwards Deming Applied to EAM System Design and Use

Abstract:

When Deming released Out of the Crisis in 1982, he wanted Western style of management, which was adversarial and misunderstood the meaning of quality, to change to the quality management approach of the transformed industries of Japan which he helped to create. Learning from his experiences in over three decades of involvement with Japanese operations, he proposed 14 Points for companies in the West to adopt to make the transformation. The 14 Points gave every organization, be it a product or service enterprise, large or small, a “theory of management for improvement of quality, productivity, and competitive position.” Western enterprise now had a defined theory of management to test and learn how to transform their organisation to get world class quality, productivity, and sales.

Keywords: operating asset life cycle management system, EAM system design, operational excellence results, theory of management, physical asset life cycle methodology

Top 3 EAM system insights this article helps you to appreciate:

    •  Management needs a rational plan explaining how the organization will secure its future.
    • You design and build the quality and productivity you want into a product or service.
    • Focus on doing process improvement that tightens variation around the quality target.

Chapter 2 in Out of the Crisis is, ‘Principles for Transformation of Western Management.’ Here Deming details 14 Points Western management need to do to design and build an outstandingly successful corporate system. A system that delighted customers with innovative, pleasing products and services, which secured the organization’s future, and had satisfying jobs for its people.

From 1950, when Deming, and other quality specialists, provided statistical knowledge and training to Japan’s executives, managers, supervisors, and engineers, Japanese organizations quickly learnt to build unified systems to deliver what consumers wanted and capture their markets. Deming realised the necessity to have a holistic system that integrated every department, every supplier, and every process toward the achievement of the organization’s purpose. It was effective and efficient systems that gave customers what they wanted at an affordable price, which had brought great quality, productivity, and global market success to Japanese companies.

An EAM System Methodology is Available to Design and Build EAM Systems

What Deming did not provide was a ‘vehicle’ or methodology to use to make the transformation he advocated. In the case of transforming an Enterprise Asset Management (EAM) system there is a vehicle available to cascade the 14 Points through an organization and sustain them until they become standard practice—it is the Plant Wellness Way EAM System-of-Reliability operating asset life cycle management methodology (see the www.plant-wellness-way.com website).

Insights from the 14 Points to Transform Industry Applied to EAM System Performance

The list below explores W. Edwards Deming’s 14 Points. In the first paragraph under each heading, I condense the Point’s essence, as I fathom it. In the second paragraph I explain how its insights can improve enterprise asset management system design and performance.

1. Create constancy of purpose for improvement of product and service

The first of the 14 Points is about Management stating its intention for the organization to survive and to thrive in its markets. It requires committing to constantly bringing a better future to customers with innovative, useful, ever-improving products and services. If you keep your customer coming back for more product or service because the quality you provide is valuable to them, you pave the way to the survival and prosperity of your organization.

This advice is also for enterprise asset management systems. Commit to continually find ways to sensibly and securely lower costs in every EAM process. Commit to continually find ways to make every EAM process more effective and more efficient. Commit to continually find ways to make operating plant and equipment evermore dependable and failure-free. Pass the savings and benefits to your customers so they want to keep being your customers.

2. Adopt the new philosophy

This requires promoting throughout the enterprise a new mindset based on the theory of management espoused in the 14 Points. Management needs to be the leaders who build an organization and workforce focused on giving consumers what they want, while eliminating defects, losses, inefficiencies, wastes, and bureaucracy to minimize costs.

Every organization with an EAM system wants more efficiency and productivity from their EAM processes. Establishing a mentality in an organization that gets top EAM system performance needs a quality mindset change to one that will “no longer tolerate commonly accepted levels of mistakes, defects, material not suited for the job, people on the job that do not know what the job is and are afraid to ask, handling damage, antiquated methods of training on the job, inadequate and ineffective supervision, job hopping in management.”

3. Cease dependence on mass inspection

Inspecting an item does not instil it with quality. Assessing the quality of a finished product may find errors and defects, but it does not prevent them. Items that fail are scrap and wasted money or become rework needing more money spent on them— poor quality costs profits. Getting top quality results and satisfying performance from a product or service is inherent by design. The process design and the practices used endow a product or service with its quality characteristics.

It is the EAM system design that makes or breaks its performance. Until your operating asset life cycle management system design is right, and its practises deliver top quality outcomes, you will get high maintenance costs, equipment breakdowns, workforce injuries, poor product quality, missed and late deliveries, along with many operating errors and problems month after month. PWWEAM asset life cycle methodology aims to end all those troubles.

4. End the practice of awarding business on the basis of price tag alone

Buying on least price can produce large losses and wastes in future should the item or service not meet all its performance requirements. An organization needs to protect against that possibility in every purchase. Total lifetime cost (and profits) is the best representative measure of the benefits from using a product or service. You best protect and improve an organization’s quality results and reputation by adopting a single supplier policy for goods and services, and then work together as a team to build a mutually beneficial partnership forevermore.

An excellent Enterprise Asset Management methodology makes Life Cycle Costing (LCC) analysis part of due diligence when deciding the operating plant and equipment to buy. The Plant Wellness Way EAM methodology also requires gauging and showing on a risk matrix the business risk in a decision impacting a physical operating asset, so all can see the best choice.

5. Improve constantly and forever the system of production and service

Out of the Crisis encourages to endlessly strive for less and less variation in every process and in every task used throughout an organization and its suppliers. “With continual improvement, the distributions of the chief quality-characteristics of parts, materials, and services become so narrow that specifications are lost beyond the horizon.” The ever-tighter distribution curves in image below are what Deming means by ‘the distributions of the chief quality-characteristics of parts, materials, and services become so narrow that specifications are lost beyond the horizon.’ You achieve that when the design and practises of a process ensure variation spread hugs the quality target so closely that the outer limits of acceptance are far away and thus the output is always of fantastic quality.

Use-Deming-14-points-to-build-EAM-system-in-control-capable-with-distribution-of-result-tight-around-quality-target

Getting tight distributions around the quality targets as designed-in outcomes is what a Plant Wellness Way EAM system delivers. A PWW EAM system ensures you engineer and build EAM life cycle processes so in-control and capable that the distributions of their results are evermore snug to the quality target. In this way, every EAM process outcome is well inside the specification acceptance limits. Thus, no quality defects, excess wastes, financial losses, or unacceptable operating risks occur. That process assurance philosophy naturally brings an Operational Excellence level of process management success.

6. Institute training

Deming meant this Point to be about doing on-the-job training that teaches people how the processes they work in function, what causes variation in process performance and how to prevent it, and how poor quality impacts the organization, its people, its supply chains, and its customers (both internal and external).

For effective operation of an EAM system, the on-the-job training that everyone working in the system requires, as a minimum, is to understand the construction and operation of the EAM system, be able to prevent problems arising in the parts of the system and the processes they use, and to do their job tasks competently and forever defect-free.

7. Adopt and institute leadership

Deming wrote, “The job of management is not supervision, but leadership. Management must work on sources of improvement, the intent of quality product and of service, and on the translation of the intent into design and actual product (and service).”

Managers of an EAM System also “must work on sources of improvement” of the EAM system and its processes. When a manager or supervisor takes responsibility to improve processes, they lead their organization and workforce toward a better future.

8. Drive out fear

Deming wanted an organization’s management to eliminate fear of asking ‘the hard questions’ about performance—whether they be about organizational processes, the Management paradigms, or the workplace practices in use. Management needs to let their people know their job is secure if they challenge the status quo. Questioning the worthiness of current methods used at all levels in an organization is vital for long-term survival and for the adoption of new knowledge and new ways of productivity improvement.

Surely, the continuous improvement of an organization must also include its management openly asking for input from the people in an EAM system about how the performance of the system and its processes and practices can be improve?

9. Break down barriers between staff areas

The first paragraph describing Point 9 is self-explanatory: “People in research, design, purchase of materials, sales, and receipt of incoming materials must learn about the problems encountered with various materials and specifications in production and assembly. Otherwise, there will be losses in production from necessity for rework caused by attempts to use materials unsuited for the purpose. Everyone in engineering design, purchase of materials, testing materials, and testing performance of a product has a customer, namely, the man (e.g., a plant manager) that must try to make, with the materials purchased, the thing that was designed. Why not get acquainted with the customer? Why not spend time in the factory, to see the problems, and hear about them?”

This Point also applies 100 percent to the use of cross-functional teamwork for EAM process improvement— intentionally help the people in an EAM process to experience and understand how it functions and what parts of it their work, and the work of other roles, affected it. Deming knew that teamwork across departments under management leadership that seeks continual improvement were a formidable combination for maximizing marketplace success.

10. Eliminate slogans, exhortations, and targets for the work force

Having posters, slogans, and appeals to the workforce to stop problems do not change the system that causes the problems which the posters, slogans, and appeals are about. Only by working on practical improvements to the system, such as, “purchase better quality materials, better maintenance, or to provide better training, or statistical aids and better supervision to improve quality and productivity, not by harder work but by smarter work, would (it) be a totally different story.”

Those admonishments from Out of the Crisis about pointless exhortations to the workforce equally apply to the people working in EAM systems too. Only once you fix an EAM system is there a pathway to having no problem with the operating assets.

11. Eliminate numerical quotas for the work force; 11b. Eliminate numerical goals for people in management

11a. About this sub-Point Deming said, “A quota is a fortress against improvement of quality and productivity.” “A quota is totally incompatible with never-ending improvement.” Setting a work quota means those that can do more work will stop at the quota amount, and those that are under the quota do shoddy work hurriedly to try and reach the quota. Both quality and productivity lose out. A quota without a sure method for everyone to achieve it, Out of the Crisis warns, ensures “The result is loss, chaos, dissatisfaction, and turnover.”

11b. In this sub-Point he wrote, “Internal goals set by management of a company, without a method, are a burlesque. Examples: (1) Decrease costs of warranty by 10 percent next year; (2) Increase sales by 10 percent; (3) Improve productivity by 3 percent next year.” None are possible without making suitable changes to the system and processes so there is a method to produce those improvements. “A goal beyond the capability of the system will not be reached.” “Management by numerical goal is an attempt to manage without knowledge of what to do, and in fact is usually management by fear.”

An Enterprise Asset Management System can perform no better than, 1) its design allows, and 2) the excellence of its implementation achieves. Company management wanting greater results from an EAM system that cannot deliver those results show ignorance and foolishness, because its inadequate historic performance already tells them the system is incapable of achieving what they want. If you want great results from an EAM system, it is necessary to first reengineer it and rebuild it, so its operation is sure to deliver the results you want. That is the prime purpose of using Plant Wellness Way EAM asset life cycle management methodology.

12. Remove barriers that rob people of pride of workmanship

Deming rightly says that dignity, satisfaction, and joy in doing your job is every person’s birthright. An organization needs to engineer the workplace with positive means that foster their management, staff, and workers’ “pride of workmanship.” If an organization wants top quality and high productivity results, they need encouraging job designs where its people are happy to go to work and eager to excel at their tasks. This Point is universal to every workplace and job.

With regards to EAM systems, the job design and workplace practices of an enterprise asset management system and its processes need to satisfy, and bring satisfaction to, the people in them to get the best work from its EAM system management, staff, and employees.

13. Encourage education and self-improvement for everyone

Deming wrote, “People require in their careers, more than money, ever-broadening opportunities to add something to society, materially and otherwise.” His advice is to intentionally ‘grow’ your peoples’ capabilities with education that brings them new knowledge so they can put the new knowledge and the new insights it brings back into the work they do.

If an EAM system is to operate most effectively and most efficiently take Deming’s counsel, “what the organization needs is to have not just good people; it needs people that are improving with education.”

14. Take action to accomplish the transformation

In the last Point Deming provides a Plan of Action for senior and middle management to use to bring all the previous Points into the everyday operation and functioning of an organization. It is the Management’s responsibility to make the changes in governing philosophy; bring necessary knowledge and ability to the workforce, supervision, and management; embed the new ways required by the 14 Points into the workplace systems and processes; and build the cross-functional teams that will take the operation into a future of continually improving quality and productivity under leadership knowledgeable in controlling process variation.

A top quality capable, holistic EAM asset life cycle system would completely satisfy Deming’s 14 Points. Corporate management would have planned, partnered, consulted, engineered, built, implemented, and embedded effective mechanisms into the EAM processes to ensure the system promoted world class performance and delivered operational excellence results. A Plant Wellness Way EAM System-of-Reliability gives enterprises a methodology and pathway to do all that.

Out of the Crisis Chapter 2 Top 3 Insights Explained

Insight 1: Management Needs a Rational Plan Explaining How the Organization Will Secure Its Future

Early in Out of the Crisis Deming asks the following questions which ‘strike at the heart’ of what an organization’s senior and middle management are doing in their roles and duties.

    1.  “Where do you want to be in five years from now?”
    2. “How may you reach this goal? By what method?”

Deming counsels, “The consumer is the most important part of the production line. Quality should be aimed at the needs of the consumer, present and future.” It is having customers and providing innovations they want that keep businesses going. Getting ISO 9001 certification or introducing Lean and Six Sigma to make processes efficient will not save an organization if its customers do not like its products or services because they are no good, or they cost too much.

Insight 2: Focus on Doing Process Improvement that Tightens Variation Around the Quality Target

The goal of an organization’s management is to have processes with little variation, with outputs tightly clustered about the quality target. Deming provides the 14 Points for management to use to design, build, and embed a system with processes that naturally deliver top quality, with no waste, and at utmost productivity. The 14 Points equally apply to an organization’s EAM system quality results.

Insight 3: You Design, and Build the Quality and Productivity You Want into a Product or Service

The inputs going into a system’s processes, the equipment used in a process, what the process does and how, are designed-in elements of a system—they are all process design choices. When you design and engineer a system, any system, provide only sure methods to follow that guarantee “less and less variation about the required (target) nominal value.” That is how your product or service gets top quality results and user satisfaction.

 

Mike Sondalini
PWWEAM System-of-Reliability
13 June 2022