An Underused Lesson From Ohno and Deming

Why quality over quantity is the shortest route to market share

Published: Wednesday, August 10, 2016 - 16:13

Today I’d like to take a look at a lesson from Taiichi Ohno regarding the pursuit of quality. His comment, “The pursuit of quantity cultivates waste, while the pursuit of quality yields value,” struck a chord with me. Among other things, he's referring to the importance of resisting mass-production thinking, and that reminded me of a similar concept, what’s now known as the Deming chain reaction. For both of these quality masters, quality improvement was the key to productivity and market share.

During Ohno’s time with Toyota, he instituted a type of alert called an andon, which means “lantern” in Japanese. On the shop floor andons are used to alert workers—either visually or by sound—about where to direct their attention. Toyota requires operators to pull an andon cord to stop a production line if a defect is found, or if there’s a stock outage. Andons also alert managers about the issue. They are an effective way to keep everyone on the shop floor aware of quality practices.

Taiichi Ohno

Ohno also said, “Correcting defects is necessary to reach our goal of totally eliminating waste.” One obvious waste in Japan during Ohno’s time at Toyota was overproduction. During the early 1970s, many companies there were buying high-volume manufacturing equipment to increase output. They reasoned that they could store any surplus produced and sell it later when the time was right. Toyota, on the other hand, built only what was needed. According to Ohno, the companies that followed mass-production thinking got a rude awakening in the wake of the oil crisis of 1973–1974, because they couldn’t dispose of their high inventory. Meanwhile, Toyota thrived, and its profits increased. After that, other companies began taking notice of the Toyota Production System (TPS).

W. Edwards Deming taught us—and indeed, Japanese manufacturers themselves during the early years following World War II—that “improving quality begets a natural and inevitable improvement of productivity.” The Deming chain-reaction model is shown below. It’s from his book, Out of the Crisis (MIT Press, 2000 reprint).

Figure 1: Deming’s chain reaction

“Management in some companies in Japan observed in 1948 and 1949 that improvement of quality begets naturally and inevitably an improvement of productivity,” wrote Deming in Out of the Crisis. “This observation came from the work of a number of Japanese engineers who studied literature on quality control supplied by engineers from the Bell Laboratories, then working on General MacArthur’s staff [in Japan]. The literature included Walter A. Shewhart’s book, Economic Control of Quality of Manufactured Product [Van Nostrand, 1931; reprint Martino Fine Books, 2015]. The results were exciting, showing that productivity does indeed improve as variation is reduced, just as prophesied by the methods and logic of Shewhart’s book. As a result of a foreign expert’s visit in the summer of 1950, the chain reaction became engraved in Japan as a way of life.”

Steve Jobs’ story
I’ll finish with a story I heard from Tony Fadell, who worked as a consultant for Apple and helped create the iPod. Fadell said that Steve Jobs didn’t like the “Charge Before Use” sticker on all the electronic gadgets that were available at that time. Jobs argued that the customer had paid money anticipating using the gadget immediately, and that the delay from charging reduced customer satisfaction.

The normal burn-in period used to be 30 minutes for the iPod. The burn-in is part of the quality and reliability inspection, where electronic equipment runs certain cycles for a period of time with the intent of stressing the components to weed out any defective or “weak” parts. Jobs changed the burn-in time to two hours so that when the customer got an iPod, it was fully charged for use right away. This caused a 300-percent increase in the inspection time and affected the lead time as well.

Traditional thinking would argue that this wasn’t a good decision. However, this counterintuitive approach was welcomed by the customers, and now it’s the norm that electronic devices come charged so end users can start using them immediately. In this instance, a focus on quality improved customer satisfaction and, ultimately, market share.

Always keep on learning.

About The Author

Harish Jose

Harish Jose has more than seven years experience in the medical device field. He is a graduate of the University of Missouri-Rolla, where he obtained a master’s degree in manufacturing engineering and published two articles. Harish is an ASQ member with multiple ASQ certifications, including Quality Engineer, Six Sigma Black Belt, and Reliability Engineer. He is a subject-matter expert in lean, data science, database programming, and industrial experiments, and publishes frequently on his blog Harish’s Notebook.