In 1982, W. Edward Deming’s Out of the Crisis outlined 14 points companies could learn from his success helping drive the industrial boom of post-WWII Japan.
The idea that quality pays was revolutionary at the time. Today, another revolution is taking place. Industry 4.0 represents a tectonic shift in manufacturing technology focused on automation, data exchange and interconnected cyber-physical systems.
But these massive changes don’t make Deming’s points any less relevant today. In fact, Industry 4.0 reinforces many of Deming’s 14 points—and can help the next generation of quality leaders relate to these foundational concepts.
Realign Your Organization’s Vision
Deming’s first two points relate to long-term vision:
1. Create constancy of purpose towards improvement: Focusing exclusively on quarterly profit is short sighted. Quality-minded organizations take the longer view in terms of innovation, education and continuous improvement.
2. Adopt the new philosophy: When Deming wrote Western management must rise to the challenge of the new economic age, he was referring to Japanese companies outcompeting the U.S. Today, the new economic age is being driven by digital transformation.
In terms of Industry 4.0, leaders need to orient their vision towards the paradigm shift currently underway. According to PricewaterhouseCoopers , 72% of companies will have a high level of digitization by 2020. The rest are at risk of being left behind.
Eliminate Reactive, Rear-Facing Quality Approaches
Deming’s third and fourth points center on avoiding reactive quality methods:
3. Stop depending on inspection to improve quality: “Inspection is too late,” Deming wrote. “The quality, good or bad, is already in the product.”
4. Stop awarding business based on price alone: Deming says to minimize total cost by working with a single supplier whenever possible, focusing on long-term partnerships versus adversarial relationships.
The message is that proactive quality measures are more effective than short-term cost calculations. From an Industry 4.0 perspective, manufacturers have more data than ever for understanding how suppliers impact their processes, which they can share with them to improve long-term performance. Less switching means lower costs overall.
Organizations can also automate preventive approaches that would otherwise require an enormous amount of administrative effort, for example layered process audits (LPAs). These daily checks identify process errors to prevent defects, with mobile LPA platforms allowing manufacturers to complete a higher volume of audits with fewer resources and better results.
Make Continuous Improvement the Goal
In points 5 and 7, Deming reiterates his case for continuous improvement:
5. Improve constantly and forever your production system to boost quality and productivity while reducing costs.
7. Institute true leadership focused on helping people and machines do a better job, seeking not to blame but to remove its causes.
These goals are central drivers of Industry 4.0, which provides an unprecedented level of connectedness and insight for continually refining quality systems. Used correctly, big data enables better leadership, facilitating decisions rooted in fact and strategy rather than opinion and one-off measures.
It can be hard to envision lower costs when investing in internet of things (IoT) or cloud-based quality automation projects. But PricewaterhouseCoopers research shows that more than 1 in 3 companies adopting Industry 4.0 expect revenue gains of more than 20%.
Invest in Your Workforce
In points 6 and 13, Deming focuses on the importance of developing people:
6. Institute training on the job: People should be able to contribute their full talents, but this requires more than just doing your best. You actually have to know what to do.
13. Implement vigorous education and self-improvement: Similar to the previous point, Deming says organizations must provide resources for employees to expand their skills.
Industry 4.0 provides an ideal laboratory for people to learn and develop talents in areas like machine learning, predictive analytics and IoT. These technologies are also helping manufacturing overcome its reputation as out-of-date with Millennials, giving companies a competitive edge in the manufacturing talent shortage.
Instead of Blaming People, Focus on Processes
Several of Deming’s points emphasize the need to stop blaming people:
8. Drive out fear: A culture of blame leads to tainted data.
10. Get rid of slogans: Harping on sayings like “zero defects” puts you at odds with employees, when your results are simply a product of the system.
11. Eliminate quotas and numerical goals: Quotas and production targets are counterproductive to quality.
12. Eliminate annual ratings and merit systems: These systems only create fear and rivalry. When everyone must fight for survival, the organization loses.
Refreshing these points for Industry 4.0, manufacturers need to take a closer look at their data instead of pointing fingers. How can big data show us where processes go wrong? How can we design smart factories to prevent defects at their source? These are the questions companies need to focus on.
Finally, Deming encourages us to engage the entire organization:
9. Break down silos: Breaking down barriers between departments is key to creating a culture of quality.
14. Involve everyone in transformation: Everyone from CEO to front-line operators must be involved in the quality transformation.
Industry 4.0’s focus on interconnectedness and data sharing make these goals more attainable than ever. From mobile tools that boost engagement to automated reporting for better communication, digital transformation is the key to uniting people around your organization’s most important quality goals. It’s also the only way the industry attracts top Millennial talent, creating a foundation for future innovation.