Deming Chain Reactionby John Hunter
From page 3 of Out of the Crisis
Improve Quality —>
Costs decrease because of less rework, fewer mistakes, fewer delays, snags, better use of machine-time and materials —>
Productivity Improves —>
Capture the market with better quality and lower price —>
Stay in Business —>
Provide jobs and more jobs
The prevailing action during the crisis Dr. Deming alluded to in the title of his books was to cut costs to improve profits. Massive layoffs of employees would get executives big bonuses and send stock prices up. Sadly focusing on cost cutting and layoffs is too often still the way some executives think.
There has been more acceptance though of the idea that to improve the focus should be on continual improvement not cost cutting. But focusing on continual improvement you are able to remove waste, reduce errors and remove delays. Reducing costs through process improvement, and at the same time improving productivity and product effectiveness allows a company to benefit from the positive chain reaction Dr. Deming explained.
The chain reaction lets you reward workers as the company prospers, instead of seeking to prosper on the backs of workers. Flipping the means and the ends does not work. Reducing costs as the result of process improvement is effective management. Reducing costs based on a spreadsheet sent down by executives and then hoping that the cuts don’t damage the value provide to the customer too much is a recipe for disaster.