9. From “Quality is Free” to “Six Sigma”

From Quality is Free to Six Sigma.
>> What can we do to work smarter, not harder? >> Japan needed to do this for survival. >> Japan did it, we can do it. >> We make steel at a lower cost than any steel company in the world, including the Japanese. [SOUND] >> During the 1970s and 1980s, there was a lot of change in the United States in terms of manufacturing. American manufacturers were losing to their Japanese competitors. And most of it was based around the fact that Japanese products had superior quality, whereas in the US up until that point, the thinking was that cost dominated all other considerations. And quality was just adding costs. In 1980, there was a documentary entitled, If Japan Can, Why Can’t We? And that really is credited with starting the quality movement in the United States. Just a year earlier, Phil Crosby published his book, Quality is Free, in which he outlined that adding quality to your production system does not add cost. In fact, it’s free, because you don’t produce defective products and therefore, you don’t need to spend money weeding them out either. And building in quality is equally costly to throwing out defective products.
A few years after these books and documentaries, new approaches to quality management emerged. And it also marked the time of rediscovering old forgotten quality gurus such as Edward Deming, Joseph Juran, and Kaoru Ishikawa.
In fact, Deming had been instrumental in teaching Japanese manufacturers about quality in the 1950s, when they started to rebuild their manufacturing prowess. Let me discuss three different approaches to quality management. The first one is total quality management.
And TQM, as it’s known, has four steps. First, quality as defined by the customers’ requirements. So whatever the customers are expecting, the company is supposed to deliver. Second, quality is part of the top management’s responsibility. And they’re supposed to spread it throughout the organization.
Third, you improve quality through a systematic analysis of the products and the work processes. And fourth, quality improvement is a continuous effort that spreads throughout the entire organization. Another quality control system is the ISO 9000 Family of Standards. And what that does is, it certifies to the outside world that you have achieved a minimum level of quality within your production systems and throughout your organization.
That standard is evaluated by third parties that are objective, and you cannot just make up that certification. In addition, you’re required to have your entire supply base be certified in order to gain the certification yourself. It’s one of these international standards that is broadcasted throughout the world, and that many companies are proud to display on their communication materials and even their outside buildings. And finally, there is the Six Sigma philosophy for quality improvement.
It was first developed in 1986 by engineer Bill Smith, who worked at Motorola, and was quickly adopted throughout the entire organization. And then, other organizations started picking up on it, such as General Electric, under Jack Welsh.
What Six Sigma refers to is the error free rate.
So in any process, you’re going to aim for six standard deviations of defect free products. That translates to 99.999966% error free rate, or 3.4 defects in every million products produced.
The Six Sigma methodology relies on a five step method to improve a process.
It starts with defining the problem, measuring it, analyzing it, improving and controlling the process. Every company says they believe in quality, but it really depends on the industry. Take for example this latte Brett just bought.
It’s pretty good. But I wish it had more foam.
Now in this industry, it doesn’t matter, because they’ll just remake the drink. But in other industries, for example, if you buy a defibrillator, it’s really a matter of life and death. You cannot afford for a product to fail. [SOUND]

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