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Eliminating Waste in Business Processes

As published in the June 2012 issue of The Greater Lansing Business Monthly.

The benefit of eliminating waste in business processes by focusing on quality has been apparent since Dr. W. Edward Demings taught the Japanese a way of doing it in the 1950s.

Deming’s message: Improving quality will reduce expenses and increase both productivity and market share. The term “Made in Japan” changed from meaning “shoddy imitation” to “desirable, high quality.” Thirty years later, the rest of the world started to pay attention to Deming’s ideas. Why did it take that long?

One reason is that an existing system, scientific management, already reduced production waste and made the United States the world’s productivity leader. We already “knew” how to do what we thought Demings was teaching the Japanese.

Scientific management’s leading proponent, Frederick W. Taylor, formally developed the theory circa 1890. In fact, “Taylorism” is synonymous with scientific management. Others, including Henry Ford, independently developed and applied similar principles.

Taylorism pushed division of labor to extremes, specifically separating the planning of work from the performance of work. One consequence of this approach was a focus on improving procedures to an extent that dehumanized workers. Taylor’s own words foster the impression that those not sharing his expertise were not up to the task of improving their own condition:

“[O]ne of the very first requirements for a man who is fit to handle pig iron as a regular occupation is that he shall be so stupid and so phlegmatic that he more nearly resembles in his mental make-up the ox than any other type … Therefore, the workman who is best suited to handling pig iron is unable to understand the real science of doing this class of work.”

So much for valuing an educated workforce. However, my purpose is not to bash Taylor. He probably does not deserve the criticism he receives today. The idea that only experts could identify problems and prescribe perfect fixes was commonly held in the Progressive Era. In 1900 an educated workforce was a different concept than it is today.

Why did Taylor’s theories reach their limit of usefulness even before the 1950s? His approach optimized production procedures at the expense of improving business processes, especially as more sophisticated products and systems demanded an educated workforce. The fact that Toyota understood this before Chrysler, Ford and GM illuminates some painful truths. One example: Work rules are—first and only—procedures.

Deming’s view, in which U.S. automakers solicited instruction—including a GM/Toyota joint venture1 in 1984—was that business processes were what needed improvement:

“In my experience, most troubles and most possibilities for improvement add up to proportions something like this:

- 94 percent belong to the system (the responsibility of management)

- 6 percent are attributable to special causes

No amount of care or skill in workmanship can overcome fundamental faults in the system.” (Deming, The New Economics, 1994, p. 33)

Why is the difference between procedure and process an important one? Procedures focus on obeying the rules, processes focus on satisfying the customer. Procedures are steps completed by different people in different departments with different objectives. Regardless of department, and though they share the same objectives, process stages are completed by different people.

One can ask of a process, were the desired results obtained? Of a procedure, one can only ask if all the steps were followed correctly.

“If you can’t describe what you are doing as a process, you don’t know what you’re doing.” – W. Edwards Deming

Deming recognized that the whole business is a system, and that the system must be continually evaluated, and improved, using the PDSA cycle.

  • Plan: Design or revise business process components to improve results
  • Do: Implement the plan and measure its performance
  • Study: Assess the measurements and report the results to decision makers
  • Act: Implement changes needed to improve the process, and repeat the cycle

The objective of an organization should be the optimization of the total system—not the optimization of individual subsystems. This means developing a business process centric culture based on continuous improvement. How does your business measure up?

1. It is instructive to read about the joint venture GM and Toyota undertook at the NUMMI plant. http://www.popularmechanics.com/cars/news/industry/4350856

Duane Hershberger, CRISC is a manager with Andrews Hooper Pavlik, PLC and is a board member of Capital Quality and Innovation. He has over 40 years’ experience in information technology. His career has been focused on the collaborative examination of complex business processes, developing business cases for identified improvements, and managing the resulting projects.