(deming vs. baldrige)

The Comparison of the Deming Prize and the Baldrige Award

- Handouts -

The Deming Prize The Deming Prize is Japan’s 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 world’s 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-for-profit 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 - Policy

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

Check list of application for Deming Award - Organization and its Management

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

Check list of application for Deming Award - Education and Dissemination

1. Education programs and results 2. Quality- and control-consciousness, degrees of

understanding of quality control3. Teaching of statistical concepts and methods, and the

extent of their dissemination4. Grasp of the effectiveness of quality control5. Education of related company (particularly those in the

same group, sub-contractors, consigness, and distributers)

6. QC circle activities7. System of suggesting ways of improvements and its

actual conditions

Check list of application for Deming Award - Collection, Dissemination and Use of Information

of Quality

1. Collection of external information

2. 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

Check list of application for Deming Award - Analysis

1. Selection of key problems and themes2. Propriety of the analytical approach3. Utilization of statistical methods4. Linkage with proper technology5. Quality analysis, process analysis6. Utilization of analytical results7. Assertiveness of improvement

suggestions

Check list of application for Deming Award - Standardization

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

Check list of application for Deming Award - Control

1. 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

Check list of application for Deming Award - Quality Assurance

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 liability3. Customer satisfaction4. Process design, process analysis, and process control and

improvement5. Process capability6. Instrumentation, gauging, testing, and inspecting7. Equipment maintenance, and control of subcontracting,

purchasing, and services8. Quality assurance system and its audit9. Utilization of statistical methods10. Evaluation and audit of quality11. Actual state of quality assurance

Check list of application for Deming Award - Results

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

Check list of application for Deming Award - Planning for the Future

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 Percentage of sub-total

1.0 Leadership 15%

1.1 Leadership of top-ranking managers 50

1.2 Policy 30

1.3 Management control system and quality improvement process 30

1.4 Allocation and utilization of resources 20

1.5 Responsibility to society 10

1.6 Unique and creative leadership technique 10

2.0 Information and analysis 7.50%

2.1 Utilization of analysis technique or system 15

2.2 utilization of information about product quality and servicing quality 10

2.3 Customer data and analysis 20

2.4 Analysis of quality and data of subcontractor 10

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

Check list of application for Malcom Baldrige National Quality Award, 2

3.0 Quality of strategy planning 7.50%

3.1 Operation target and strategy target 20

3.2 Function of planning 20

3.3 Quality improvement plan 30

3.4 Unique and innovative planning for strategy 5

4.0 Utilization of human resources 15%

4.1 Control and operation 30

4.2 Quality-consciousness and participation of employees 50

4.3 Training and education concerning quality 30

4.4 Personnel assessment, motivation, award system 30

4.5 Unique and innovative strategy concerning utilization of human resource 10


5.0 Quality assurance of product and servicing 15%

5.1 Reflection of customer’s 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

5.10 Unique and innovative approach to quality assurance of product and servicing 10


6.0 Result of quality assurance of product and servicing 10%

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 30%

7.1 Quality of product and servicing from customer’s 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 customer’s viewpoint 50

7.5 Unique (or innovative) technique to grasp customer satisfaction 25

Total 1000 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

company’s performance with the world’s 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 Baldrige Award Deming Prize

Definition of Quality

“customer-driven quality” it views quality as defined by the customer

“conformance to specifications” it views quality as defined by the producers

Primary Focus customer satisfaction and quality statistical quality control

Overall Approach

quality of management management of quality

Purpose promote competitiveness through total quality management

promote quality assurance through statistical techniques

Types of Organization

manufacturing, service and small business essentially private or public manufacturing

Orientation 60% result, 40% process 60% process, 40% results

Scoring Weight different weight for each criteria equal weight in 10 criteria

Consideration less concern concern in productivity, delivery, safety, and environment

Information Management

heavily concern less concern

Continuous of the award

N/A Japan Quality Control Medal

Winners Maximum of two per category All firms meeting standard

Scope U.S. firms only Firms for any country

Applications $2500 and 75 pages packet 1000 pages and one year working with consultant from the union of Japanese Scientist & Engineers

Grading time six months one year

First Award 1987 1951

Sponsor National Institutes Standards and Technology

Union of Japanese Scientists and Engineers

Comparison of the Deming Prize and Baldrige Award, 2

Topic Baldrige Award Deming Prize

Grading Criteria

1. Leadership 1. Policy and Objectives

of top-ranking managers pursued for management quality & QC

policy method of establishing quality

management control system & quality improvement process

justifiability and consistency of policies

allocation and utilization of resources

review of policies and the result achieved

responsibility to society relationship between policies and long term & short term planning

unique and creative leadership technique



Grading Criteria

2. Information and Analysis 2. Organization and its Management

utilization of analysis technique or system

explicitness of the scopes of authority and responsibility

utilization of information about product quality and servicing quality

interdivisional cooperation

customer data and analysis committees and their activities

analysis of quality and data of subcontractor and distributor or sales agent

utilization of staff

utilization of QC Circle activities

QC diagnosis



Grading Criteria

3. Quality of Strategy Planning 3. Education and dissemination

operation target and strategy target

education program and results

function of planning degrees of understanding of QC

quality improvement plan teaching of statistical concepts and methods

unique and innovative planning for strategy

grasp of the effectiveness of QC

QC circle activities

system of suggesting ways of improvements and its actual conditions



Grading Criteria

4. Utilization of Human Resource

4. Collection, Dissemination and Use of Information on Quality

control and operation collection of external information

quality consciousness and participation of employees

transmission of information between divisions

training and education concerning quality

speed of information transmission

personnel assessment, motivation, award system

data processing, statistical analysis of information and utilization of the results

innovative strategy concerning utilization of human resource



Grading Criteria

5. Quality Assurance of Product and Servicing

5. Analysis

reflection of customer’s opinion on product and servicing

selection of key problems and themes

design and development of new product and new servicing

propriety of the analytical approach

measurement, standardization, data system

utilization of statistical methods

engineering, audit, recording linkage with proper technology

safety, health and sanitation, ,environment

quality analysis, process analysis

approach to quality assurance of product and servicing

utilization of analytical results

assertiveness of improvement suggestions



Grading Criteria

6. Result of Quality Assurance of Product and Servicing

6. Standardization

reliability and achievement of product and servicing

systematization of standards

reduction of scrap, rework, rejection, concerning product and servicing

method of establishing, revising, and abolishing standards and their outcome

reduction of complaint and claim suit concerning quality

utilization of statistical methods

innovative index and economic gain for quality improvement

contents of the standards

accumulation of technology

utilization of standards



Grading Criteria

7. Customer Satisfaction 7. Control

quality of product and servicing from customer’s viewpoint

system for the control of quality and related matters

comparison of competitiveness of product and servicing

control items and control points

customer servicing and countermeasure for complaint

utilization of such statistical control methods as control charts and other statistical concepts

assurance from customer’s viewpoint

contribution to performance of QC circle

technique to grasp customer satisfaction

actual conditions of control activities


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

Deming Prize

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 organization’s quality effortsThe 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.

THE 2001 MALCOLM BALDRIGE NATIONAL QUALITY AWARD REGIONAL CONFERENCES, 2

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. Motorola’s prices fall an average of 8-12 percent a year; it’s 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 Apple’s 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 OSHA’s 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 Eastman’s 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. Eastman’s 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 team’s performance.

8. Eastman has a fully integrated planning process that systematically deploys the key business priorities to all employees and all work groups throughout Eastman’s 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 company’s 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%.

Impact of Quality Improvement on Business Performance

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

Performance Indicators No. of Responding companies

Direction of Indicator Average annual positive

performance improvement

positive (favorable)

negative (unfavorable)

no change

a.Operating MeasuresReliabilityTimeliness of deliveryOrder processing timeErrors or defectsProduct lead timeInventory turnoverCosts of quality

12968795

12867665

0100010

0001120

11.34.7

12.010.35.87.29.0

a.Employee-related measuresEmployee satisfactionAttendanceTurnoverSafety/healthSuggestions received

91111147

887

115

10332

03100

1.40.16.01.8

16.6

a.Customer SatisfactionOverall customer satisfactionCustomer complaintsCustomer retention

14610

1254

012

204

2.511.61.0

a.Financial PerformanceMarket shareSales per employeeReturn on assetsReturn on sales

111298

91276

2022

0000

13.78.61.30.4

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

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Sue Rohan, David LuthyEducation Pilot ProgramOverview

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Sue Rohan, David LuthyEducation Pilot ProgramOverview

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(deming vs. baldrige)