Summary by Maria Du
Master of Accountancy Program
University of South Florida, Summer 2002
The authors use a real life example – Grand Rapids Spring & Wire Products Inc. to illustrate how to become a world-class competitor by blending the quality initiatives of W. Edwards Deming, Eliyahu M. Goldratt, and Kiyoshi Suzaki. Although the philosophies of passion and customer satisfaction under Deming, Goldratt, and Suzaki are the same, their approaches are quite different and it is difficult for management to choose which approach to follow.
Grand Rapids Spring & Wire Products Inc. (GRSW) is a company that manufactures compression, extension, and torsion springs; stampings from progressive dies and four-slide stampings; roll forming; wire and grommet molding; and various assembly processes. The company believes that flexibility, continuous improvement and responsiveness in meeting customers needs transform the company into a learning organization.
In 1987, GRSW used Goldratt’s theory to identify constraints that they felt were keeping GRSW from becoming a world-class manufacturer. Employees were also involved in the process of identifying constraints and finding solutions. As a result of these efforts, GRSW was able to gain employees’ trust and a quality culture began to flourish at GRSW. However, the company continued to search for new ideas.
After Suzaki’s book, The New Manufacturing Challenge was published, the company hired him as a consultant to form 11 mini-companies in an attempt to create cross-functional, self-directed units.1 Each employee assumed his/her ownership of the work. He/she was both a supplier and customer internal or external and he/she is responsible for providing solutions to problems in a mini-company. This new organization has created a much flatter structure and has improved communications.
In Suzaki’s theory, the letters Q, C, D, S, M represent quality, cost, delivery, safety and morale. He believes that if you can satisfy your customers continuously with high quality (Q) products or services, at less cost (C), and with shorter and more time delivery (D) than competitors, you should do well. Also, since all employees in the organization can be viewed as customers from the total company’s point of view, their needs must be satisfied. Therefore, safety (S) and morale (M) are needs to address employee concerns.
Continuous improvement towards customer satisfaction is the heart of the mini-company’s vision and mission. Business plans with some very specific actions are developed as to how the vision and mission will be accomplished. The following is an example of a mini-company business plan:
Mini-company Business Plan
Vision: To be competitive in the value-added area of manufacturing by continuously upgrading and automating machines and processes.
Mission: Boosting our attendance and participation while maintaining/increasing quality and delivery levels will lead to the continuous improvement of Quality (Q), Cost (C), Delivery (D), Safety (S), Morale (M), and ultimate customer satisfaction.
1. What: Integrate weld information into computer system
Who: Rose, Barb, and Randy
How: Jeff Dennis to teach us
Comments: Data have been collected.
We need to know how to interpret them before we work with Jeff.
Status: Ahead of schedule
2. What: Utilize weld monitor fully
How: Eliminate data entry by adding a printer and connecting to system.
This particular action has a strong relationship to quality, a medium relationship to both cost and morale, a weak relationship to delivery, and no relationship to safety.
The following table is an example of key performance indicators for each mini-factory process:
|Table 1: Key Performance Indicators (GRS&W Report Card)|
|Finished goods inventory as % of sales||.15||.18||.16||.14||.11|
|Outside medical req’d||0||0||0||0||0|
|Tardy, leave early, absences||11||14||5||16||12|
200 defective parts per million (PPM) is the goal. The 38,701 figure in January indicates that it has exceeded the limit and has a major problem. The mini-company employees meet with their support people to review the progress, and management meets once a month to review the overall performance and make requests for additional funding for things like training and equipment.
GRSW has blended various quality experts’ ideas in a number of ways. While using Suzaki’s mini-company concepts, GRSW also used Goldratt’s "theory of constraints" to identify constraints and prevent them from achieving their mission and vision. For example: "integrate weld information into computer" arose because customer demanded some assurance as to the pushout strength of welds and it was impossible to accomplish the analysis to the customer’s satisfaction without a computer. The mini-company also used an expanded version of Deming’s Cycle of Plan, Do, Check, and Act to minimize returns and allowance problems.
GRSW has successfully integrated key elements of the quality philosophies from Deming, Goldratt and Suzaki. As a result of its efforts to create a quality culture, it has achieved the reputation of being a globally competitive world-class manufacturer and transformed into a learning organization.
Reference and note:
1 Suzaki, K. 1987. The New Manufacturing Challenge: Techniques for Continuous Improvement. The Free Press.
Note: This article includes a considerable amount of detail that is beyond the scope of this summary. For example there are four additional parts to the business plan, two process flow diagrams, a story board, and a figure showing the goal in terms of the various performance categories.
Deming, W. E. 1993. The New Economics For Industry, Government & Education. Cambridge: Massachusetts Institute of Technology Center for Advanced Engineering Study. See Chapter 9. (Summary).
Goldratt, E. M. 1990. What is this thing called Theory of Constraints. New York: North River Press. (Summary).
Goldratt, E. M. and J. Cox. 1986. The Goal: A Process of Ongoing Improvement. North River Press. (Summary).
Hammer, M. 1990. Reengineering work: Don't automate, obliterate. Harvard Business Review (July-August): 104-112. (Summary).
Imai, M. 1986. Kaizen: The Key To Japan's Competitive Success. New York: McGraw-Hill Publishing Company. (Summary).
Martin, J. R. Not dated. Constrained optimization techniques. Management And Accounting Web. http://maaw.info/ConstrainoptTechs.htm
Martin, J. R. Not dated. Summary of the 1992 PBS Program Quality or Else. Management And Accounting Web. http://maaw.info/QualityOrElse.htm
Womack, J. P. and D. T. Jones. 1994. From lean production to the lean enterprise. Harvard Business Review (March-April): 93-103. (Summary).
Womack, J. P. and D. T. Jones. 1996. Beyond Toyota: How to root out waste and pursue perfection. Harvard Business Review (September-October): 140-144, 146, 148-152, 154, 156, 158. (Summary).