Out of the Crisis.Org

[Louis Altazan]

In the 1980's Dr. Deming predicted the collapse of huge industries we see today. How was this possible, so far in advance and why didn’t others seem to see it coming? I feel the answer to both questions is the same. Dr. Deming was looking from a different perspective, a new philosophy.

In point two, Deming says to adopt the new philosophy. The businesses around the globe that have implemented the new philosophy, now enjoy far lower cost. In a competitive environment, lower cost properly implemented, mean profit and market share.

The old philosophy has always been one of Do, Inspect, Rework and Deliver. It has become so much a part of business that it is almost impossible to see. Instead the symptoms are seen; ever-rising cost, increased complexity and loss of market share. The cost are staggering and rather than change, business continues to concoct ever more complex ways of dealing with the symptoms.

In order to cut cost, cheaper material is used. The cheaper material causes more variation and problems. More inspection is needed, more rework and more problems get out to clients. The clients begin to react by purchasing other products. The company responds by adding more inspectors, and reworking more problems. This increases cost further and drives off even more clients.

With less revenue, cost must be cut so cheaper materials are sought. In the end, a recession is declared and slick marketers are brought in with creative financing, rebates and all sorts of promises in an attempt to regain sales.

The new philosophy realizes this is insane. Instead, companies work to reduce variation, improve processes and prevent mistakes. Inspection is largely eliminated along with rework. Quality increases, cost come down and since the process is continual, it begins again. Better materials are seen to lower cost and are sought. Clients are attracted by the increased value and lower cost.

With better quality these products represent higher value. Gimmicks are not needed to produce sales and profits are good. In the best of times such companies do well. In the worst of times they dominate.

Point Two of the fourteen points: Adopt the new philosophy.

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Louis Altazan
Owner/Manager AGCO Automotive Corporation
Baton Rouge, LA