Basic Business Cents
Realistic Job Creation
“Improve quality of work processes » costs decrease because of less waste
and rework » productivity increases
» capture the market with better quality and lower price » stay in
business » provide jobs and more jobs”
Chain
reaction theory by Dr. W. Edwards Deming
Much is being debated today on
how to best put more people to work and decrease our unemployment rate.
Politicians argue about decreasing business taxes so the companies are better
able to compete in the world market. Others argue that we should put up trade
barriers to protect our industries from cheap foreign labor. Still others say
the consumers should only buy American. To all these arguments, Deming would
say, “Wrong! All wrong!”
Dr. Deming was an American
physicist who was a leader in the application of statistical methods to improve
work processes. He applied these methods to help the United States quickly ramp
up production of war goods during World War II and later was credited with
helping the Japanese turn around their economy after the war. He taught that
work is made up of a series of processes, no process is perfect, and waste and
rework is prevalent in all organizations because of defective processes. No
process can ever be perfect but they can all be improved.
To those who say the answer to
our high unemployment rate is to tax business less, it would just reduce
incentive to improve their processes. It
should be noted that there is much more opportunity to reduce waste and rework
in administrative and management processes than in production areas. Firms have
long used industrial engineers to improve production processes but seldom in
finance, marketing, service, sales, and personnel areas. Usually only
management has the authority to change processes so this drive to improve
processes must be led from the top. As Deming said, those who are relentless in
their efforts to make their processes more efficient and effective will be
better able to compete and be increase their business. With success will come
growth in payroll and more people hired.
To those who say we should put
up trade barriers to keep out foreign goods will only serve to deprive American
consumers from good products that will make their life easier and even put some
of our producers at a disadvantage because they have to pay more for products
needed in their business. We say we believe in free enterprise, so we need to
practice it and learn to be competitive. Besides, it would lead to an
escalation of barriers that would in time haunt us. The cheap foreign labor is
less of a factor because of robotics and automation that make the labor content
of production less of a factor. More of a factor than labor content is the cost
of administration, shipping, travel, communication, warranty, and service. I am
aware of a company who, after they focused on process improvement throughout
their organization, shut down their Mexican production plant and moved the jobs
back to Minnesota. I do not know of any company who improved productivity by process
improvement in which any employees lost their jobs. The companies simply
increased market share and created more and better jobs.
And for those who argue that
patriotic Americans should only “buy American”, we must ask what is American
made. Some reports say that some foreign named automobiles with production
plants in the United States actually have more American made parts than
American named autos. The reason for that is the foreign named producers have a
manufacturing concept of maintaining a close relationship with suppliers and
demand that they be located in close proximity to the auto assembly plant.
Therefore the components are of necessity American made.
It is reasonable to assume that
our product and service companies should stop looking to the outside for help,
whether it be from government or consumers, and improve their own in-house
processes to eliminate waste, rework, and redundancy so they can better compete
in the world market. From this we see the promise of the improvement in unemployment
is revealed in Deming’s chain reaction:
Improve quality of work processes > quality increases and costs
decrease > higher customer satisfaction > increased market share >
jobs and more jobs.
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