a The Comseirison OF thie Delmiins Pirirzs and) thie Baldrige AwareThe Deming Prize The Deming Prize is Japan’s national quality award for industry. It was established in 1951 by the Japanese Union of Scientists and engineers (JUSE) and it was named after W. Edwards Deming. He brought statistical quality control methodology to Japan after W.W.II. The Deming Prize is the world’s oldest and most prestigious of such ds. Its principles are a national competition to seek out and ose organizations making the greatest strides each year in d ation s, and the i ward for facto The Deming Application prizes ar i r public izations and are subdivided ini , divisionsofilarge mamma. mpanies who won the prize. Among them, only once has rize been awarded to a non-Japanese company: Florida Power and Light in 1989.Baldrige Award#” The Baldrige Award was established in 1987 to promote quality awareness, understand the requirements for quality excellence, and share information about successful quality strategies and benefits. There are three eligibility categories: manufactur’ servi II firms. Unlike the Deming Prize, public o qualified. Also, there is no category in which all applicants that satisfy a given level of performance receive a quality prize. Since its foundation, there are only five companies who received this prize. According to its principles, the role of quality data collection and analysis as the basis for managerial decisions is paramount. Furthermore, quality efforts should not concentrate only on the elimination of defects but also encompass creative activities that will influence customer satisfaction. Among Baldrige winners, there are no service companies.. Justifiability and consistency of Polig®™ : Utilization ofs Policie e management quality, ai Method of establishing policiés™a list of application for Deming — - Organization and its Management delegations of authority cada orate Committees and their activities 0 Utilization of staff “Qp Utilization rie ay) ee een BetEN ck list of application for Deming Awar Education and Dissemination Education programs ane Quality- and control-consciousness, degrees of understanding of quality control Teaching of MBIEP os nceots and methods, and the extent of their dissemination Grasp of the effectiveness Education of related company (particularly gos in the same group, sub-contractors, consi, distributers) QC circle activities System 0eck list of application for Deming Award - Collection, Dissemination and Use of Information of Quality 1. Collection of external information 2. Transmission of informationsbetweemdivisions 3. Speed of inforfation*transmission (use of computers) 4. 4. Data processing Statistical analysis of information and utilization of the resultsCheck list of application for Deming Award - Analysis Selection of k f oroblemsy d themes Propriety of the analytical approach 1 2 3. Utilization 4. Linkage wit 5. 6 q Quality analysis, process analysis analytical results improvement suggestions. Systematization of standard: 2. Method of establishing, Fevisigh andal hing standards 3. Outcome of the establishment, revision, or abolition of standard: Utilization of standardsCheck list of application for Deming Award - Control 1. Systems for the control of quality and such related matters as cost and quantity 2. Control items and control points 3. Utilization of such statistical control methods as control charts and other statistical concepts 4. Contribution to performance of QC circle activities 5. Actual conditions of control activities 6. State of maters under controlck list of application for Deming Awar uality Assurance Procedure for the development of new products and services (analysis and upgrading of quality, checking of design, reliability, and other properties) Safety and immunity from product liability Customer satisfaction Process design, process analysis, and process control and improvement Process capability Instrumentation, gauging, testing, and inspecting Bai pmene maintenance, and control of subcontracting, purchasing, and services Quality assurance system and its audit Utilization of statistical methods. Evaluation and audit of quality Actual state of quality assuranceCheck list of application for Deming Award - Results 1. Measurements of results 2. Substantive results in quality, services, delivery time, cost, profits, safety, environments, etc. 3. Intangible results 4. Measures for overcoming defectsa list of application for Deming — - anning for the Future 1. Grasp of the present state of affairs and the concreteness of the plan 2. Measures for overcoming defects o Plans for further advances 4. Linkage with the long-term plansity Award Maximum score | Percentage of sub-total 1.0 Leadership 15% 1.1 Leadership of top-ranking managers 50 12 Policy 30 1.3. Management control system and quality improvement process 30 1.4 Allocation and utilization of resources 20 1.5 Responsibility to society 10 1.6 Unique and creative leadership technique 10 2.0 Information and analysis 7.50% 2.1 Utilization of analysis technique or system Is 2.2 utilization of information about product quality and servicing quality 10 2.3. Customer data and analysis 20 2.4 — Analysis of quality and data of subcontractor 10 2.5 Analysis of quality and data of distributor or sales agent 10 2.6 Employee-related data and analysis, 5 2.7 Unique and innovative analysis of information 5ck list of application for Malcom Ba Quality Award, 2 rige National 3.0 Quality of strategy planning 7.50% 3.1 Operation target and strategy target 20 3.2 Funetion of planning 20 3.3. Quality improvement plan 30 3.4 Unique and innovative planning for strategy 5 4.0 Utilization of human resources 15% 4.1 Control and operation 30 4.2 Quality-consciousness and participation of employees 50 43 Training and education concerning quality 30 4.4 Personnel assessment, motivation, award system 30 4.5 Unique and innovative strategy concerning utilization of human resource 10ck list of application for Malcom Quality Award, 3 rige National 5.0 Quality assurance of product and servicing 5.1 52) 53 54 55 5.6 5.7 58 5.9 5.10 Reflection of customer’s opinion on product and servicing Development of new product and new servicing Design of new product and new servicing measurement, standardization, data system Engineering Audit Recording Safety, health and sanitation, environment Assurance/effectiveness 20 20 30 10 10 15 10 10 15 Unique and innovative approach to quality assurance of product and servicing 10 15%ational Quality Award, 4 6.0 Result of quality assurance of product and servicing 10% 6.1 Reliability and achievement of product and servicing 25 6.2 Reduction of scrap, rework, rejection concerning product and servicing 20 63 Reduction of complaint and claim suit concerning quality 25 64 — Reduction of assurance- or site-related assistance operation 20 65 Innovative index and economic gain for quality improvement 10 7.0 Customer satisfaction 30% 7.1 Quality of product and servicing from customer's viewpoint 100 7.2 Comparison of competitiveness of product and servicing 50 7.3. Customer servicing and countermeasure for complaint 78 74 Assurance from customer’s viewpoint 50 7.5 Unique (or innovative) technique to grasp customer satisfaction 25 Total 1000 100%Eight Critical Factors © Aplan to keep improving all operations continuously ° Asystem for measuring these improvements accurately ° A strategic plan based on benchmarks that compare the company’s performance with the world’s best © Aclose partnership with suppliers and customers that feeds improvements back into operations ° A deep understanding of the customers so that their wants can be translated into products ° A long-lasting relationship with customers, going beyond the delivery of the product to include sales, service, and ease of maintenance - a focus on preventing mistakes rather than merely correcting them © Acommitment to improving quality that runs from the top of the organization to the bottomBaldrige Award Deming Prize Definition of | “customer-driven quality it views quality — | “conformance fo specifications” Quality as defined by the customer as defined by the producers Primary Focus | customer satisfaction and quality Statistical quality control Overall ‘quality of management management of quality Approach Purpose ‘promote competitiveness through total romote quality assurance through statistical Quality management cchniques Types of ‘manufacturing, service and small business | essentially private or public manufacturing Organization Orientation | 60% result, 40% process 60% process, 40% results Scoring Weight | different weight for each eriteria ‘equal weight in 10 eriteria Consideration | Tess concern concem in productivity, delivery, safety, and environment Tnformation | heavily concern Tess concer Management Continuous of | N/A Japan Quality Control Medal the award Winners Maximum of two per category All firms meeting standard Scope US. firms only Firms for any country ‘Applications | $2500 and 75 pages packet T000 pages and one year working with consultant from the inion of Japanese Scientist & Engineers Grading time | six months one year First Award | 1987 1951 Sponsor National Institutes Standards and Union of Japanese Scientists and Engineers TechnologyTopic Baldrige Award Deming Prize Grading Criteria 1. Leadership ' of top-ranking managers = policy . management control system & quality improvement process . allocation and utilization of resources . responsibility to society * unique and creative leadership technique 1. Policy and Objectives . pursued for management quality & QC . method of establishing quality = justifiability and consistency of policies . review of policies and the result achieved . relationship between policies and long term & short term planning| Topic Baldrige Award Deming Prize Grading Criteria 2. _ Information and Analysis . utilization of analysis technique or system . utilization of information about product quality and servicing quality = customer data and analysis . analysis of quality and data of subcontractor and distributor or sales agent 2. Organization and its Management . explicitness of the scopes of authority and responsibility . interdivisional cooperation . committees and their activities . utilization of staff . utilization of QC Circle activities . QC diagnosisTopic Baldrige Award Deming Prize Grading Criteria 3. Quality of Strategy Planning = operation target and strategy target . function of planning = quality improvement plan . unique and innovative planning for strategy 3. Education and dissemination * education program and results . degrees of understanding of Qc . teaching of statistical concepts and methods . grasp of the effectiveness of Qc . QC circle activities . system of suggesting ways of improvements and its actual conditionsTopic Baldrige Award Deming Prize Grading Criteria 4. Utilization of Human Resource . control and operation = quality consciousness and participation of employees = training and education concerning quality " personnel assessment, motivation, award system . innovative strategy concerning utilization of human resource 4. Collection, Dissemination and Use of Information on Quality s collection of external information . transmission of information between divisions D speed of information transmission . data processing, statistical analysis of information and utilization of the resultsDeming Prize Grading Criteria 5. Quality Assurance of Product and Servicing . reflection of customer’s opinion on product and servicing * design and development of new product and new servicing . measurement, standardization, data system = engineering, audit, recording . safety, health and sanitation, environment = approach to quality assurance of product and servicing 5. Analysis . selection of key problems and themes. "propriety of the analytical approach . utilization of statistical methods = linkage with proper technology . quality analysis, process analysis . utilization of analytical results * assertiveness of improvement suggestionsTopic Baldrige Award Deming Prize Grading Criteria 6. Result of Quality Assurance of Product and Servicing * reliability and achievement of product and servicing . reduction of scrap, rework, rejection, concerning product and servicing . reduction of complaint and claim suit concerning quality innovative index and economic gain for quality improvement 6. — Standardization = systematization of standards . method of establishing, revising, and abolishing standards and their outcome . utilization of statistical methods . contents of the standards . accumulation of technology . utilization of standardsTopic Baldrige Award Deming Prize Grading 7. Customer Satisfaction 7. Control Criteria . quality of product and servicing from customer’s viewpoint = comparison of competitiveness of product and servicing * customer servicing and countermeasure for complaint ' assurance from customer’s viewpoint = technique to grasp customer satisfaction . system for the control of quality and related matters . control items and control points . utilization of such statistical control methods as control charts and other statistical concepts . contribution to performance of QC circle . actual conditions of control activitiesDeming Prize Deming Prize 8. Quality Assurance 9. Results = procedure for the development . measurement of results of new products and services . safety and immunity from product liability . customer satisfaction . process design, analysis, control and improvement = process capability . instrumentation, gauging, testing and inspecting = equipment maintenance and control of subcontracting, purchasing, and services . substantive results in quality, services, delivery time, cost, profits, safety environments . intangible results . measures for overcoming defects 10. Planning for the Future . grasp of the present state of affairs and the concreteness of the plan = measures for overcoming defects . plans for further advances = linkage with the long term plansa 2001 MALCOLM BALDRIGE NATIONAL QUALITY AWARD REGIONAL CONFERENCES Executives from many of the Award recipient organizations will share their knowledge and insights to help you improve your organization’s quality efforts The 2000 Award Recipients: Award Recipients will be announced in mid- November 2000, and the recipients will participate in the 2001 Regional Conferences. The recipients could include, for the first time, education and health care organizations.To | BY Service T99S_] Rimes Rubber Corporation | Small Business: ‘The Ritz-CarltonHotel Service Eastman Chemical Company | Manufacturing Company, LLC Inc. | Manufscturing | 1992 | AT&T Network Systems Manufecturing, ns Amencas Group Transmission ‘Sunny Fresh Foods ‘Small Business Systems Business Unit (now pat of Lucent 1998 | Boing AiR & Tanker | Manufacturing Fecteolpie, Ie: Optical rogram et rOup) Solar Turbines Ine ‘Manufacturing AT&T Universal Card Service Texas Nameplate Company, | Small Business Services (now part of Ine. Citigroup) Granite Rock Company Small Business 1997 | 3M Dental Products ‘Manufacturing ‘The Ritz-Carlton Hotel Service vision Company ‘Merill Lynch Credit Comp. | Service Texas Instruments Ine. Com. ‘Manufacturing Defense Systems & Manufecturing, ‘Xerox Buss. Services Service Electronics Group (now part of Raytheon Systems 1996 | ADAC Leboratories ‘Manufacturing Company) Custom Research Ine ‘Small Business Dana Coramercial Credit | Service 1991 | Marlow Industries, Inc ‘Small Business Corporation ‘Corporation Manufacturing, Trident Precision ‘Small Business corporation (now pant | Manufacturing ‘Manufacturing, Inc of Aztesyn Technologies) 1995 | Aaetrong World Industries, 1990 | Cadillac Motor Car Company | Manufacturing Ine Federal Express Corporation | Service Building Products ‘Manufacturing IBM Rochester Manufacturing Comialne 1989. | Milliken & Cor Manuf comung Inc. n & Compan facturing, Telecommmunications Manufacturing ‘XeroxCorporation Business| Manufacturing Products Division roducts & Systems 1994 | AT&T Corsumer Sexivee. 1988 | Globe metallurgical Inc Small Business Corumunications ‘Motorola, Inc. Manufacturing, Services (now the ‘Westinghouse Electric Manufacturing Consuroer Markets Corporation Commercial Division of AT&T) Nuclear Fuel Division GTE Directories Corporation Service (now part of Yerizon Communciations) ‘Wainwmght Industnes, Inc. | Small BusinessMotorola (1998) ‘. In the past five years, Motorola has reduced its defect rate in manufacturing 99.5%, generating cost savings estimated at about $900 million this year, and $3.1 billion cumulatively. 2. Motorola’s prices fall an average of 8-12 percent a year; it’s cellular phone prices 25% a year. 3. “Minority report program”. Employees can file a report if they feel that their ideas are not being supported. An example is the concept behind the microprocessor 68000 series which later became the brains of Apple’s Macintosh line. 4. In 1987, Motorola announced two productivity goals: to reduce manufacturing defects by 90% every two years, and reduce cycle (new product development) time by 90% every five years.Eastman Chemical Company Eastman is well accepted by its surrounding communities and has a strong environmental record. Safety serves as a driving force. The company earned inclusion in OSHA's voluntary Star Program. Eastman averaged 22 % of sales from new products commercialized within the last five years, compared to an average of 11% for 13 leading chemical companies, twice the average in a recent study. 5. Eastman has adopted a no-fault return policy on its plastic products and states a customer may return any product for any reason. This policy is believed to be the only one of its kin chemical industry. Over the past four years, more than 70% of Eastman’s worldwide customers rated Eastman their number one supplier, For the last seven year, Eastman has been rated outstanding in five important customer factors-product quality, product uniformity, supplier integrity, correct livery, and reliability. Shipping reliability consistently has been near 100% for the last four years. 5. oe 's new product development practices are ranked second among a group of 13 leading chemical companies. ©. Eastman uses multiple approaches to drive continuous process improvement through an “interlocking team’ structure that involves virtually every employee in the teaming and quality improvement process. Data use is deployed widely, with virtually all employees using data to track their individual and/or their team’s performance. 8. Eastman hasa fully integrated planning process that systematically deploys the key business priorities to all employees and all work groups throughout Eastman’s innovative four-dimensional organizational structure. in thea Quality AchievementsF Ames Every teammate at Ames is a member of at least one “involvement group” dedicated to quality improvement. The company currently has 40 of these groups. The percentage of defective parts reaching customers is among the lowest in the industry. For Ames’ largest customer, the defect rate has been reduced since 1989 from more than 30,000 parts per million to n. Productivity, as measured by sales per employee, increased by 48% from 1987 to 1992. Over the past five years, teammate ideas have saved the company and its customers more than $3 million and will average over $2,700 per teammate in 1993. Ames product warranties are among the best in the industry and include a comprehensive warranty ion prototypes, which refunds development costs if specifications are not achieved. ‘Ames has developed a consolidated supplier base be selecting suppliers who share the company’s quality values and are responsive to its established “continuous improvement” goals. Down from 42 key suppliers in 1989, Ames Rubber Corp. now relies on 19 suppliers whose quality performance is about 99%.mpro' Performance Indicators No.of Direction of Indicator ‘Average annual Responding tive negative ‘no chan ae comme | ee | ae = | poms improvement a. Operating Measures 2 2 0 0 3 Reliability 9 8 1 o 47 ‘Timeliness of delivery 6 6 0 0 120 Order processing time 8 7 ° 1 103 Errors or defects 7 6 0 1 58 Product lead time 9 6 1 2 72 Inventory tumover s 5 0 0 90 Costs of quality a.Employee-related measures 9 8 1 0 14 Employee satisfaction Mm 8 0 3 ou Attendance " 7 3 1 60 ‘Tumover 4 u 3 o 18 Safety/heatth fl 5 2 0 166 Suggestions received a.Customer Satisfaction 4 2 0 2 25 Overall customer satisfaction 6 5 1 o 116 Customer complaints 10 4 2 4 10 Customer retention ‘8, Financial Performance W 9 2 0 1B7 Market share 2 2 0 0 86 Sales per employee 9 7 2 0 13 Return on assets 8 6 a 0 04 Return on sales ‘SourGe: Adapted from U.S. General Accounting Offee, ‘Management Practices: U.S. Companies Improve Performance Through Quality Efforts, Washington, 1991, pp. 18-28. SPRING 1993,Result Increased Customer Satisfaction Lower Costs Reduced Product Development Time Increased Employee Satisfaction Higher Quality Products Innovation et ee eae oe ee Increased Productivity1 Percent 00 90 80 70 60 50 40 30 20 10 Average Category Scores Sue Rohan, David Luthy Categories Education Pilot Program Overview —-— SVC - EDAverage Category Scores 100 90 5 80 5 705 60 + 50 4 40 5 30 4 205 10 Percent Categories ‘Sue Rohan, David Luthy Education Pilot Program Overview