3.4 From Quality’s Beginning through TQM to Six Sigma

We have talked about how Toyota and other Japanese companies have used quality to gain a competitive advantage in the world marketplace. But the question remains, how did they do it? What was the path that allowed them to get ahead of other companies? To understand why the adoption of TQM in conjunction with lean manufacturing worked so well, we have to understand the history, determination, world events, and luck that helped create the environment that allowed the Japanese industry to reinvent itself and change worldwide business practices.

Part 1—A Brief History

Japan’s path to becoming an industry leader started back in World War II; in fact, much of today’s business structure was shaped by the changes created directly and indirectly from the war. For example, the United States found itself supplying soldiers, materials, and equipment across the entire globe during the conflict. While it wasn’t the first example of global logistics and supply chain management, it demonstrated to post-war American industry the potential markets and supply sources in the worldwide community.

There were different impacts from the war for Japan, which helped them begin the quality movement. Japan had been an isolated nation until the mid-1800s. After recognizing that their country was well behind most Western nations in terms of industrialization, the Japanese government joined the rush to colonize other nations in an attempt to get needed materials for its fledgling industries. Unfortunately, the worldwide race to grow national power resulted in the Second World War. The outcome for Japan’s culture and industry was devastating.

Towards the end of the conflict, Allied forces concentrated vast resources to destroy Japanese industry. The belief was that the destruction of the industrial base of Japan would reduce the amount of material and armaments available to Japanese fighting forces. The result was that the vast majority of Japanese industry was heavily damaged or destroyed by 1945. In addition, the end of the war brought an occupation of Japan by primarily American forces. Two of the primary long-term goals of the occupation were to bring political stability to the country and rebuild the economy. In addition, the American influence on industry and culture helped shape an environment where Japan’s industry could regrow and see Western nations as potential markets for export.

In summary, by the end of the war, you would find Japan with a devasted industrial base, restricted access to the latest technology, minimal resources of all types, and, so, the imperative to avoid waste at all costs.

Part 2—The Rise and Definition of TQM

As Japan started to rebuild, its industry realized competing directly with American companies would be a monumental task. By 1950, the U.S. economy was dominating world markets. Not only had American industry avoided widespread destruction during the war, but it had also expanded throughout the conflict. Furthermore, the return of millions of service members and pent-up demand from wartime shortages had created an industrial powerhouse in the United States. Japan recognized it could not compete following the American model.

However, the American successes also created a blind spot in American industrial leadership. They were too busy taking advantage of the near-term opportunities to improve their future positions. There was an “it’s working, why should we change?” mentality. As a result, they were unreceptive to quality teachings advocated by founding leaders such as Dr. W. Edwards Deming.

Japanese business leaders recognized that they were in a position from which they were almost starting from scratch; there would be no better opportunity to rebuild. One of the ironies is that the lack of interest in improving processes in the United States, coupled with the desire to help Japan rebuild, meant that Deming found a willing audience to implement his quality management concepts.

Deming and other quality leaders worked with hundreds of managers, engineers, and academics in Japan. They taught the concepts of using statistical process control (SPC) and other quality ideas to improve quality and productivity to existing manufacturing processes without replacing machinery or personnel.

These concepts became the foundations of Total Quality Management (TQM) as we know it today. Though Deming was one of many people that helped develop the concept of TQM, his work was the foundational basis that created TQM. We will look at some of the other quality gurus that were instrumental in growing the quality movement in a later section.

ASQ, the American Society for Quality, defines TQM as “a management approach to long-term success through customer satisfaction. In a TQM effort, all members of an organization participate in improving processes, products, services, and the culture in which they work.”1 The key goal is to satisfy the customer. Everything that TQM does is aimed at making the customer happy. While customer satisfaction is—in theory—easy, the challenge is in the implementation.

TQM is a philosophy that the entire organization must fully support. It is not simply a set of tools that can be implemented into an existing business culture or process. TQM is driven by the idea of continuous improvement. Every process must strive to get better.

The mechanics and tools of TQM include several items to support the philosophy: Deming’s fourteen points, the Plan-Do-Check-Act (PDCA) loop, SPC, Quality Function Deployment (QFD), and others. The result was a revolution in business processes worldwide.

While TQM started in post-war Japan, it grew into almost an obsession by American companies throughout the 1980s and into the 1990s. By the end of the century, most large manufacturing companies had adopted some form of TQM in their processes.

Part 3—The Evolution to Six Sigma (6σ)

During TQM’s adoption throughout the United States, some American companies were taking a similar approach focused more on Deming’s statistical methods. In the late 1980s and early 1990s, companies such as Motorola and General Electric created another system of gaining quality in their processes.

The result was the development of Six Sigma (6σ).

Six Sigma is similar to TQM in many ways. It, too, uses statistical measures to apply standards to improve quality in a process. It has also evolved to be a philosophy and a set of tools to drive improvement throughout an organization like TQM. Just as TQM has its 14 principles, PDCA, SPC, and QFD, Six Sigma has evolved into several guiding principles, tools, measures, and techniques.

Although TQM and Six Sigma are similar, there are key differences. First, Six Sigma tends to focus on creating new measures rather than simply improving existing ones. Next, TQM tends to be more of a company philosophy, where Six Sigma is more team or project-oriented. Finally, Six Sigma is a team-by-team approach that will often have multiple projects running simultaneously, each managed by different people.

The following topics in your book will detail some of the Six Sigma concepts to include the DMAIC Process. DMAIC is unique to Six Sigma and stands for Define, Measure, Analyze, Improve, and Control.

One of the interesting points about Six Sigma is its name. It comes from the underlying statistics used to measure if a process is in control. From your introductory statistics course, you may remember the concept of a normal distribution curve or “bell curve.” A single standard deviation of the curve’s shape and size would account for about 68% of values, two standard deviations would account for about 95%, and three standard deviations would account for 99.7%.

As you see from Figure 3.2, if you go three deviations in each direction, you cover most items except for a few outliers. The three deviations in each direction from the center point are a total of six standard deviations. The symbol for a standard deviation is the Greek letter sigma or “σ.” The very name of Six Sigma highlights the goal to measure processes.

In conclusion, TQM and Six Sigma are similar and have many areas of overlap. However, they are different approaches to the quality improvement process. Each can be applied separately or in conjunction in a lean setting to augment the lean tools and techniques to create a higher quality process focused on creating customer value.