The Comparison of the Deming Prize and the Baldrige Award - Handouts The Deming Prize The Deming

Prize is Japans 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 worlds oldest and most prestigious of such awards. Its principles are a national competition to seek out and commend those organizations making the greatest strides each year in quality, or more specifically, TQC. The prize has three award categories. They are Individual person, the Deming Application Prizes, and the Quality Control Award for factory. The Deming Application prizes are awarded to private or public organizations and are subdivided into small enterprises, divisions of large corporations, and overseas companies. There are 143 companies who won the prize. Among them, only once has the Deming Prize 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: manufacturing, services, and small firms. Unlike the Deming Prize, public or not-forprofit organizations are not 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.

Check list of application for Deming Award

Item 1. Policy Particulars 1. Policies pursued for management quality, and quality control 2. Method of establishing policies 3. Justifiability and consistency of policies 4. Utilization of statistical methods 5. Transmission and diffusion of policies 6. Review of policies and the results achieved 7. Relationship between policies and long- and short-term planning 1. Explicitness of the scopes of authority and responsibility 2. Appropriateness of delegations of authority 3. Interdivisional cooperation 4. Committees and their activities 5. Utilization of staff 6. Utilization of QC Circle activities 7. Quality control diagnosis 1. 2. 3. 4. 5. Education programs and results Quality- and controlconsciousness, degrees of understanding of quality control Teaching of statistical concepts and methods, and the extent of their dissemination Grasp of the effectiveness of quality control Education of related company (particularly those in the same group, sub-contractors, consigness, and distributers) QC circle activities System of suggesting ways of improvements and its actual conditions Item 6. Standardization Particulars 1. Systematization of standards 2. Method of establishing, revising, and abolishing standards 3. Outcome of the establishment, revision, or abolition of standards 4. Contents of the standards 5. Utilization of statistical methods 6. Accumulation of technology 7. Utilization of standards

2. Organization and its Management

7. Control

1.

3. Education and Dissemination

8. Quality Assurance

6. 7.

4. Collection, Dissemination and Use of Information of Quality

Collection of external information 9. Results Transmission of information between divisions 3. Speed of information transmission (use of computers) 4. 4. Data processing statistical analysis of information and utilization of the results 5. Analysis 1. Selection of key problems and 10. Planning for themes the Future 2. Propriety of the analytical approach 3. Utilization of statistical methods 4. Linkage with proper technology 5. Quality analysis, process analysis 6. Utilization of analytical results 7. Assertiveness of improvement suggestions Edited by Subcommittee of Implementation Award for Deming Prize, 1992 Revision.

1. 2.

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 1. Procedure for the development of new products and services (analysis and upgrading of quality, checking of design, reliability, and other properties) 2. Safety and immunity from product liability 3. Customer satisfaction 4. Process design, process analysis, and process control and improvement 5. Process capability 6. Instrumentation, gauging, testing, and inspecting 7. Equipment maintenance, and control of subcontracting, purchasing, and services 8. Quality assurance system and its audit 9. Utilization of statistical methods 10. Evaluation and audit of quality 11. Actual state of quality assurance 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 1. Grasp of the present state of affairs and the concreteness of the plan 2. Measures for overcoming defects 3. Plans for further advances 4. Linkage with the long-term plans

Check list of application for Malcom Baldrige National Quality Award

Maximum score 1.0 Leadership 1.1 Leadership of top-ranking managers 1.2 Policy 1.3 Management control system and quality improvement process 30 1.4 Allocation and utilization of resources 1.5 Responsibility to society 10 1.6 Unique and creative leadership technique 2.0 Information and analysis 2.1 Utilization of analysis technique or system 2.2 utilization of information about product quality and servicing quality 2.3 Customer data and analysis 2.4 Analysis of quality and data of subcontractor 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 3.0 Quality of strategy planning 3.1 Operation target and strategy target 3.2 Function of planning 3.3 Quality improvement plan 3.4 Unique and innovative planning for strategy 4.0 Utilization of human resources 4.1 Control and operation 4.2 Quality-consciousness and participation of employees 4.3 Training and education concerning quality 4.4 Personnel assessment, motivation, award system 4.5 Unique and innovative strategy concerning utilization of human resource 5.0 Quality assurance of product and servicing 5.1 Reflection of customers opinion on product and servicing 20 5.2 Development of new product and new servicing 20 5.3 Design of new product and new servicing 30 5.4 measurement, standardization, data system 10 5.5 Engineering 10 5.6 Audit 15 5.7 Recording 10 5.8 Safety, health and sanitation, environment 10 5.9 Assurance/effectiveness 15 150 50 30 20 10 75 15 10 20 10 Percentage of subtotal 15%

7.5%

75 20 20 30 5 150 30 50 30 30 10 150

7.5%

15%

15%

Unique and innovative approach to quality assurance of product and servicing 10 6.0 Result of quality assurance of product and servicing 100 6.1 Reliability and achievement of product and servicing 25 6.2 Reduction of scrap, rework, rejection concerning product and servicing 20 6.3 Reduction of complaint and claim suit concerning quality 25 6.4 Reduction of assurance- or site-related assistance operation 20 6.5 Innovative index and economic gain for quality improvement 10 7.0 Customer satisfaction 300 7.1 Quality of product and servicing from customers viewpoint 100 7.2 Comparison of competitiveness of product and servicing 50 7.3 Customer servicing and countermeasure for complaint 75 7.4 Assurance from customers viewpoint 50 7.5 Unique (or innovative) technique to grasp customer satisfaction 25 Total 1000

5.10

10%

30%

100%

Eight Critical Factors

A plan to keep improving all operations continuously A system for measuring these improvements accurately A strategic plan based on benchmarks that compare the companys performance with the worlds best A close 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 A commitment to improving quality that runs from the top of the organization to the bottom

Comparison of the Deming Prize and Baldrige Award Topic Definition of Quality Primary Focus Overall Approach Purpose Types of Organization Orientation Scoring Weight Consideration Information Management Continuous of the award Winners Scope Applications Grading time First Award Sponsor Grading Criteria Baldrige Award customer-driven quality it views quality as defined by the customer customer satisfaction and quality quality of management promote competitiveness through total quality management manufacturing, service and small business 60% result, 40% process different weight for each criteria less concern heavily concern N/A Maximum of two per category U.S. firms only $2500 and 75 pages packet six months 1987 National Institutes Standards and Technology 1. Leadership of top-ranking managers policy management control system & quality improvement process Deming Prize conformance to specifications it views quality as defined by the producers statistical quality control management of quality promote quality assurance through statistical techniques essentially private or public manufacturing 60% process, 40% results equal weight in 10 criteria concern in productivity, delivery, safety, and environment less concern Japan Quality Control Medal All firms meeting standard Firms for any country 1000 pages and one year working with consultant from the union of Japanese Scientist & Engineers one year 1951 Union of Japanese Scientists and Engineers 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

Topic

Baldrige Award allocation and utilization of resources responsibility to society unique and creative leadership technique 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 3. Quality of Strategy Planning operation target and strategy target function of planning quality improvement plan unique and innovative planning for strategy

Deming Prize relationship between policies and long term & short term planning 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 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

4. Utilization of Human Resource control and operation quality consciousness and participation of employees 4. Collection, Dissemination and Use of Information on training and education concerning quality Quality personnel assessment, motivation, award system collection of external information innovative strategy concerning utilization of transmission of information between divisions human resource speed of information transmission 5. Quality Assurance of Product and Servicing data processing, statistical analysis of information and

Topic

Baldrige Award reflection of customers 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 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 7. Customer Satisfaction quality of product and servicing from customers viewpoint comparison of competitiveness of product and servicing customer servicing and countermeasure for complaint assurance from customers viewpoint

Deming Prize utilization of the results 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

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 7. Control 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

Topic

Baldrige Award technique to grasp customer satisfaction

Deming Prize 8. Quality Assurance procedure for the development 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 9. Results measurement of results 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

THE 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 organizations 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. Previous Baldrige Award Recipients:
1999 BI The Ritz-Carlton Hotel Company, LLC STMicroelectronics, Inc. Regions Americas Sunny Fresh Foods Boeing Airlift & Tanker Programs Solar Turbines Inc. Texas Nameplate Company, Inc. 3M Dental Products Division Merrill Lynch Credit Corp. Solectron Corp. Xerox Buss. Services ADAC Laboratories Custom Research Inc. Dana Commercial Credit Corporation Trident Precision Manufacturing, Inc. Amstrong World Industries, Inc. Building Products Operations Corning Inc. Telecommunications Products Division AT&T Consumer Communications Services (now the Consumer Markets Division of AT&T) GTE Directories Corporation Service (now part of Verizon Communciations) Wainwright Industries, Inc. Service Service Manufacturing Small Business Manufacturing Manufacturing Small Business Manufacturing Service Manufacturing Service Manufacturing Small Business Service Small Business 1990 Manufacturing 1989 Manufacturing Serivce 1988 1993 1992 Ames Rubber Corporation Eastman Chemical Company AT&T Network Systems Group Transmission Systems Business Unit (now part of Lucent Technologies, Inc. Optical Networking Group) AT&T Universal Card Services (now part of Citigroup) Granite Rock Company The Ritz-Carlton Hotel Company Texas Instruments Inc. Defense Systems & Electronics Group (now part of Raytheon Systems Company) Marlow Industries, Inc. Solectron Corporation Zytec Corporation (now part of Artesyn Technologies) Cadillac Motor Car Company Federal Express Corporation IBM Rochester Milliken & Company Xerox Corporation Business Products & Systems Globe metallurgical Inc. Motorola, Inc. Westinghouse Electric Corporation Commercial Nuclear Fuel Division Small Business Manufacturing Manufacturing

1998

Service Small Business Service Manufacturing

1997

1996

1991

Small Business Manufacturing Manufacturing Manufacturing Service Manufacturing Manufacturing Manufacturing Small Business Manufacturing Manufacturing

1995

1994

Small Business

Motorola (1998) 1. 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. Motorolas prices fall an average of 8-12 percent a year; its 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 Apples 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 1. 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 OSHAs voluntary Star Program. 2. 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. 3. 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 kind in the chemical industry. 4. Over the past four years, more than 70% of Eastmans worldwide customers rated Eastman their number one supplier. For the last seven years, Eastman has been rated outstanding in five important customer factors-product quality, product uniformity, supplier integrity, correct delivery, and reliability. Shipping reliability consistently has been near 100% for the last four years. 5. Eastmans new product development practices are ranked second among a group of 13 leading chemical companies. 6. 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. 7. Data use is deployed widely, with virtually all employees using data to track their individual and/or their teams performance. 8. Eastman has a fully integrated planning process that systematically deploys the key business priorities to all employees and all work groups throughout Eastmans innovative four-dimensional organizational structure.

Quality Achievements Ames 1. 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. 2. 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 11. 3. Productivity, as measured by sales per employee, increased by 48% from 1987 to 1992. 4. 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. 5. Ames product warranties are among the best in the industry and include a comprehensive warranty for prototypes, which refunds development costs if specifications are not achieved. 6. Ames has developed a consolidated supplier base be selecting suppliers who share the companys 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%.

Table 1 Impact of Quality Improvement on Business Performance

Performance Indicators No. of Responding companies 12 9 6 8 7 9 5 9 11 11 14 7 14 6 10 11 12 9 8 Direction of Indicator positive negative no change (favorable) (unfavorable) 12 8 6 7 6 6 5 8 8 7 11 5 12 5 4 9 12 7 6 0 1 0 0 0 1 0 1 0 3 3 2 0 1 2 2 0 2 2 0 0 0 1 1 2 0 0 3 1 0 0 2 0 4 0 0 0 0 Average annual positive performance improvement 11.3 4.7 12.0 10.3 5.8 7.2 9.0 1.4 0.1 6.0 1.8 16.6 2.5 11.6 1.0 13.7 8.6 1.3 0.4

a.

Operating Measures Reliability Timeliness of delivery Order processing time Errors or defects Product lead time Inventory turnover Costs of quality b. Employee-related measures Employee satisfaction Attendance Turnover Safety/health Suggestions received c. Customer Satisfaction Overall customer satisfaction Customer complaints Customer retention d. Financial Performance Market share Sales per employee Return on assets Return on sales

Source: Adapted from U.S. General Accounting Office, Management Practices: U.S. Companies Improve Performance Through Quality Efforts, Washington, 1991, pp. 18-28. SPRING 1993

Result 1. Increased Customer Satisfaction 2. Lower Costs 3. Reduced Product Development Time 4. Increased Employee Satisfaction 5. Higher Quality Products 6. Innovation 7. Increased Productivity

Average Category Scores

100 90 80 70 60 50 40 30 20 10 0 0
Sue Rohan, David Luthy Education Pilot Program Overview

Percent

SVC ED

Categories

Average Category Scores

100 90 80 70 60 50 40 30 20 10 0 0 1 2 3 4 5 6 7

Percent

HE K-12

Categories
Note: Categories 5.0 and 7.0 show significant differences. Sue Rohan, David Luthy Education Pilot Program Overview