A quality policy for America

Contemporary Economic Policy, April, 1995 by David I. Levine, Susan Helper

I. INTRODUCTION

On March 4, 1993, Bill Clinton became the latest in a series of presidents to declare war on waste in the federal government. Use of Total Quality Management (TQM), he said, would be one of the features separating this attempt from its fairly inglorious predecessors.

TQM combines a set of problem solving tools with a management philosophy of training, motivating, and empowering all levels of an organization to focus on customers' needs. In both the public and private sectors, TQM has shown potential for cutting costs while improving customer and employee satisfaction. When TQM succeeds in the sense of producing sustained decreases in costs and defect rates, the improvements result from employees' higher skills, not lower living standards. Unfortunately, most TQM efforts in the United States are too poorly designed and implemented to lead to sustained success (Lawler et al., 1992; Fuchsberg, 1992). To make future efforts effective, one must learn from both the successes and the failures.

Quality management is particularly important for the government, because of the government's duty to serve the public. Many observers note the irony that profit-oriented companies such as Hewlett-Packard routinely provide higher levels of service than do so-called "public servants." Most government employees begin their jobs intent on serving the public. Unfortunately, they often find themselves frustrated when management within government does not provide them the tools and opportunities necessary to meet their customers' needs.

This paper describes total quality management programs and provides evidence of their effectiveness (when implemented properly), then outlines a three-point policy for using TQM to increase the quality of goods and services provided throughout the economy.

II. WHAT IS TOTAL QUALITY MANAGEMENT?

Under pressure from the Japanese (whose defect rates may be a tenth of their American competitors'), hundreds of the largest U.S. manufacturing and service companies have adopted total quality programs (Lawler et al., 1992). Companies as different as Ford, Xerox, and Florida Power and Light have dramatically improved quality and productivity with TQM while increasing worker participation and satisfaction (GAO, 1991). Many types of quality-assurance programs exist. One example will clarify how successful TQM can operate (Honda interviews, 1992).

In 1989, Honda of America's East Liberty auto-assembly plant became the first in North America to introduce water-based paint, which has significant environmental advantages but is much more subject to contamination than are conventional paints. Initially, over half of the cars required rework, disrupting the plant's just-in-time production system. However, by June 1992, continuous improvement by managers, workers, and suppliers led to a 99.2 percent first-pass yield - better than most traditional automotive paint shops.

When the new system was installed, Honda formed a team of line employees and engineers to study the resulting problems, using TQM tools at each stage of the problem-solving process. They used statistical process control to track the number and timing of defects, brainstorming and cause-effect diagrams to analyze sources of errors, and Deming's "Plan-Do-Check-Act" cycle to ensure that proposed solutions solved the problems.

Team members did experiments to pin-point the complicated factors that created the problems. For example, someone implicated the paint stirrer as a source of contamination, but this idea was discounted after workers tested a batch of paint and observed that it remained uncontaminated in the stirrer for several hours. Then one morning a team member came in and observed contaminated paint in the stirrer. The team redid the experiment, gradually increasing the time the paint stayed in the stirrer. Sure enough, when left overnight, the paint began to form globs. The countermeasure was simple: avoid leaving paint overnight in the stirrer.

People involved in all parts of the production process contributed ideas for incremental improvement. The paint supplier suggested ways to prepare the car's surface. Honda made many suggestions (1,188 in all) to the paint supplier, including ways to improve housekeeping and operator training. All sides learned from the experience, particularly as the paint supplier's chemists and engineers came to understand that Honda line workers had technical knowledge worth listening to. As always in TQM, success did not depend solely on the quality tools but turned on management's philosophy of pushing authority down to employees at the lowest levels and giving them the tools and incentives to solve problems.

TQM has been effective in U.S.-owned companies as well. A General Accounting Office analysis of U.S. companies that won the Baldrige award for their quality efforts concluded (GAO, 1991, p. 2):

Companies that adopted quality management practices experienced an overall improvement in corporate performance. In nearly all cases, companies that used total quality management practices achieved better employee relations, higher productivity, greater customer satisfaction, increased market share, and improved profitability.