Wednesday, May 31, 2023

Part II- China textile and apparel 2023: The Party’s Over and China needs to invite a Deming to the next party

 II. Who is W. Edwards Deming and what did he tell the Japanese in 1950?

(For more details about Deming and the development of his legacy, watch the video here.

After teaching wartime courses to US forces on quality control during WWII, Deming was invited to lecture on Statistical Quality Control in Japan by the Union of Japanese Scientists and Engineers (JUSE). His lectures gave rise to development of effective statistically-based quality process systems in Japan and the framework for innovation now known as PDCA (Plan- Do- Check- Act).

Deming gave a six-part lecture series which contains many of the concepts and understandings that changed Japan and are still followed today. The same JUSE started awarding a “Deming Prize” to the outstanding firms in 1951.

Here are some highlights of the series:

 His opening- "We are in a new industrial age created largely by statistical principles and techniques. I shall try to explain how these principles and techniques are helping Japan to increase her export trade.” 

Super important and super simple: “Quality had to happen at all stages in the "chain

of production.””  This means, quite simply, that basing quality control on final inspections after the damage has already been done and value added to an unacceptable product is a waste of time and money.

What later became part of Deming’s famous 14 points was “improved competition position,” giving the customer a key role in quality management and improvement. 

Deming changed the old way of Design it-Make It-Try to sell it to what is known as PDCA:

1. Design the product (with appropriate tests).

2. Make it, test it in the production line and in the laboratory.

3. Put it on the market

4. Test it in service through market research. Find out what the user thinks of it, and why the nonuser has not bought it.

5. Redesign the product, in light of consumer reactions to quality and price.

6. Continue around and around the cycle.

I would refer to this concept as “make what you can sell, don’t try to sell what you make.” This has been and is Amazon’s paradigm and is a big contributor to their success.

Two illustrations from Koiesar’s article are material here:


Note that the quality process here is process-based not result-based. What this means is that by the time the product is finished and ready for shipping, it has already been tested- materials, and at various times during the manufacturing process. So final inspection is, for the most part, a formality.

Why is this better? Because problems can be identified before more material and labor is put into them, and problem processes or workers isolated. (Note that the overwhelming majority of apparel suppliers and buyers use AQL, which is a statistically-based FINAL inspection process that takes place when 80% of the product is ready for shipment).

I tried to implement Deming’s style of control when I was importing car alarms from China in the early 90’s, and in every factory that I worked with as the VP of Sourcing for GoldToe Moretz, a socks company. It was like trying to teach a chicken to dance ballet. Finally, I visited one factory in India that was conducting a full inspection after knitting. The way socks are made, 90% of the production is focused on knitting; all there is after that is closing the toe, boarding (shaping) and packing. Of course! Why spend money, time and labor to process the sock and only inspect after the entire process is finished? This is the essence of Deming’s quality philosophy.

Next is graphic representation of the PDCA cycle or “Design Cycle”:

This is the essence of the difference I mentioned before, making what you can sell as opposed to selling what you can make (or have made).

Also note that this is a continuous loop, so for this process to be successful, it must be something that is committed to for the long term.

So why doesn’t everyone do this? It’s so simple and makes great sense. The main reasons are because a. it takes more time, b. it costs more, and c. It requires patience and commitment to this process. Most factories, not just in China, and buyers are not willing to follow this process, or management won’t facilitate it, opting for throwing shit against the wall and shipping what sticks.

Deming’s first lecture in 1950 stated that there should be: “The integration of the suppliers into the production system and the need to take a shared responsibility for their quality, instead of treating them as outsiders and antagonists.”   This is a big issue that is not relegated to China, but is a prevalent attitude of buyers who refer to “the factory” as if it were an inanimate object. 

When this stops is when the factory produces something whose quality is undeniable and unimpeachable and where they don’t compromise anything for an order. 

Deming continues to be studied because his system is logical and it works. Those who never heard of Deming and heard the words “Statistical Quality Control” and “Total Quality Management” without knowledge of Deming himself and his principles will mistake it for a statistics-dependent methodology; that would be very wrong. Yes, Deming believed that statistics play and important role in Quality and Improvement management, but he by no means was a blind follower of numbers; conversely, he emphasized that “the control chart is no substitute for the brain”  and that "The best protection is afforded by acceptance sampling

done in conjunction with quality control at the manufacturing plant. It is not economical to try to get a good product by inspecting a lot and taking up only the best ones." 

I was lucky enough to have Deming as a professor for a course at NYU Stern in the mid-1970’s. While I now regret not absorbing more of what he said, it is clear to me that the striking aspect of his teaching and his message is that you didn’t really need to take notes because it all made such common sense.

The result of Japanese manufacturers absorbing and incorporating Deming’s lessons is history. Today, rather than representing cheap product, Japanese products justifiably compete for the title of “world’s best” in many areas. Material and manufactured product are unquestionably superior, and command a superior price. Customers pay for quality, which builds value, and are passionately loyal to brands that provide it for them. I could make a list from my own experience, but I believe you know what I mean..

Is that the case for China? Should it be? Can it ever be? If it should and can, what changes need to be made for it to be successful?

(Questions to be answered in next part)

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