Demings Red Bead Experiment AICE Quality Conference Tuesday

The White Bead Factory Established 1906 “Our Empowered Workers Make the Best White Beads

10 Vacancies 1 Recorder 1 Chief Inspector 2 Junior Inspectors 6 Willing Workers • able to write neatly and to perform simple arithmetic • able to compare figures and speak in a loud, clear voice • Able to count and to write clearly • no education needed, willing to obey orders without question © 2007 Breakthrough Systems 3

Foreman Position • Only position already filled • Only person who knows job • Has years of management experience and training

Production Requirements • 50 White beads person per day • 90% quality level - no more than 5 nonwhite beads • Good performance is rewarded • Poor performance is not tolerated • Detailed training is provided • ISO 9000 Work Instructions © 2007 Breakthrough Systems 5

Red Beads - Part 2 © 2007 Breakthrough Systems 6

Discussion Points • • Debriefing the experiment Lessons learned Looking for applications Looking for

Group Activity - I • As individuals, consider your reactions to the experiment • Team up, discuss all of your individual examples • Choose the 3 from the team • Chose spokesperson to report out © 2007 Breakthrough Systems 8

Debriefing Participants • Personal reactions • Sound familiar? • What would you do? Observers:

Group Activity - II • As individuals, think of 2 -3 examples of red beads or red bead workers • Team up, discuss all of your individual examples • Choose the 3 worst, toughest… of the team • Chose spokesperson to report out © 2007 Breakthrough Systems 10

Group Activity - III • Take the 3 top “beads” your team found and discuss potential countermeasures or solutions • Are they policy changes? • Are they process changes? • Are they people changes? • Are they… ? © 2007 Breakthrough Systems 11

Group Activity – Optional • As teams, take the level of the red bead

Lessons Learned • • Deming in OOC Deming in TNE Mary Walton Video ©

Deming in OOC • The cause of the low yield was the red beads in the incoming material. · The willing workers are helpless to improve quality. · Lot to lot variation was system based, not individual performance based. · The performance of an individual on any one day is useless as a basis for prediction. · Mechanical sampling is not the same as random sampling. © 2007 Breakthrough Systems 14

Deming in TNE-I: • The system was stable. Output and costs were predictable. • Only process driven variation… • The workers put all they had into the process - to no avail. • Ranking, merit pay, pay for performance, appraisal systems. . . reward/punish the process, not the workers. (performance is a lottery) • The system was rigid, management would not listen. © 2007 Breakthrough Systems 15

Deming in TNE- II: • Only by improving the system, can one improve performance. • The management set price of white beads ignored the costs associated with the red beads. • Mechanical -vs- random again. • Knowing the proportion of red beads did not aid in prediction. • There was no basis for choosing the workers to be kept. • The supervisor is also a worker in the system. © 2007 Breakthrough Systems 16

Mary Walton • Variation is part of any process • Planning require prediction of how things and people will perform. • Past performance may be useful, but misleading. • Workers work within a system that - try as they may - is beyond their control. • Performance is based on the system, not the individual. • Only Management can change the system. • Some workers will always be above average, some below. © 2007 Breakthrough Systems 17