Background
There is an entire cottage industry built around taking manufacturing concepts perfected by the Japanese and applying them to the US. Its very easy to find these books on Amazon by searching for “Lean,” or “Kaizen,” or “Toyota.” The central concept behind these books and the philosophy is that the difference between the quality levels of Japanese manufacturing products and US manufactured products can be reduced to the methods used by Japanese companies versus US companies. This viewpoint was presented in the by George Plossl in Production and Inventory Control 2nd Edition:
“Production growth slowed to a stop in the late 1970′s. Also during this period many U.S. manufacturers lost their dominant position in their domestic markets as well as internationally. The list of products for which foreign suppliers, principally the Japanese, set the pace was staggering — from automobiles through wristwatches, with almost every letter of the alphabet in between represented at least once. Many irrelevant reasons were advanced for this situation, including lower wages, cultural differences, cartels, cooperative unions, paternalistic governments and trade restrictions but professionals in production and inventory control knew better. We had certainly developed our ability to plan better and we could replan at blinding speeds. But we failed to execute the plans as well as competitors did.” – George Plossl
(I should say, I am a huge fan of George Plossl and consider his books in inventory management and production planning some of the best, but he is mistaken with the assertion above. However we was aware of the mistaken consulting advice that was offered and based in the Japanese manufacturing concepts as is described in this post. http://www.scmfocus.com/failedsupplychainconcepts/2011/10/george-plossl-on-the-trends-in-supply-and-production-planning/)
Actually, this quote could have been more accurate if it stated that those whose knowledge was limited to production scheduling though that everything boiled down to planning. This quote and many others leave out the fact that there were and are many differences between the US and Japan, and just a few that come to mind are listed below.
- Differences in the Type and Sophistication of Software Implemented by Japanese Versus US Companies
- The Culture of the Two Countries
- The Preference Given to Sales, Marketing and Finance Versus Engineering and Manufacturing
- That the Japanese Implemented Quality Management Primarily as Independent Companies
- The Unionization Levels in Japan Versus the US
Broader Analysis
Interestingly none of these topics is analyzed when discussing Japanese manufacturing excellence. The abilities of Japanese in manufacturing are certainly true. In fact, in automobiles the Japanese defeat all the German manufacturers in quality very easily (actually presently, the German auto manufacturers are roughly equivalent in quality to the US manufacturers.) However, the Japanese attain higher quality the German, and they do so at lower cost levels.
1. US Manufacturing Software Implementation Versus Japanese
The US has the best and largest software industry in the world (although increasingly amounts of technical work are actually performed in India). Secondly, the US leads the world in software implementation, implementing more software, more expensive software and more complex software than any other country. On a per person basis the enterprise software spend is larger than any other country. An interesting question is how the Japanese can surpass the US in manufacturing, with a much lower spend on systems than the US on a per company basis.
2. Japanese Culture Versus US Culture
Japan is not the US and vice versa. The Japanese have a higher attention to detail built into their culture than does the US. This is historically proven by the fact that the Japanese were known for luxury goods during the colonial periods including very finely woven tapestries, silk and clothing. In fact, many Japanese stories are centered around protagonists who spend enormous effort on getting to a state of perfection. When Deming first taught in Japan, what is left out is that US industry had largely rejected Deming up until that point, and only accepted him after his verified successes overseas. However, when he consulting and taught in Japan his ideas were accepted very readily. But, the question of why they were accepted so readily is left out the story. The answer, The most plausible explanation is that the Japanese had a quality culture pre-existing, and that Deming’s statistical quality techniques were adopted so widely and quickly because they fit with Japan’s natural cultural traditions.
3. The Preference Given to Sales, Marketing and Finance Versus Engineering and Manufacturing
It is no secret that sales, marketing and finance are much more esteemed and compensated than engineering and manufacturing in the US. In fact, during the financial bubble many pundits thought that the US could get completely out of the business of making things and simply sell financial “products” to other countries. We see how that worked out. The US neither esteems manufacturing or engineering nor pays competitive rates or accords status to these fields. Japan does, and that should be considered in the evaluation of the performance of our manufacturing operations.
4. Did Japanese Companies Implement Quality Management Independently?
This assumption is incorrect. It was not that individual companies independently focused on statistical quality control and adopted the work of Walter A. Shewhart and W. Edward Deming, but it was part of a policy promoted by the Japanese government. Does anyone know this? The reason that companies initially brought in W. Edward Deming and other like him is that the Japanese have an industrial policy. (the US has an industrial policy as well, but its unlike the Japanese who focus on manufacturing as a critical industry most of the US industrial policy is directed towards the public funding of R&D through the Pentagon system, and of course in bailing out the financial industry). Most Americans think the US is some type of free market, however, the fact is that quality management was pushed first by Japan’s Ministry of International Trade and Industry.
5. Unionization in Japan Versus the US
Japan has a higher percentage of its population as part of a union than the US. Unions tend to be quite prevalent in manufacturing companies. Could the higher union participation in Japan be part of the reason for the quality difference? Actually, I am not even allowed to write this statement in a blog. Unions are “bad” in the US, and there is no contrary view allowed within US companies. Therefore the investigation of this question is simply impossible in such a doctrinally controlled country like the US where the questioning as the optimality of any part of our system is not tolerated (however individual tactical changes may be recommended). The rule is very simple, companies have a right to form co-operatives in the form of corporations, but employees have no rights to form co-operatives.
Deming
W. Edward Deming, with a PhD. in Statistics is presented as a person who simply brought narrow manufacturing techniques to companies. However, that is not true. When Deming was hired by Ford, in part to replicate his success with Japanese manufacturers, Deming immediately questioned Ford’s culture.
“To Ford’s surprise, Deming talked not about quality but about management. He told Ford that management actions were responsible for 85% of all the problems in developing better cars.” - Wikipedia
However, management incompetence or changes to management’s structure are not part of the narrative of Japanese success, so it should be no surprise that this is not an area of focus when people and consultants discuss Deming. Deming said some other things about management that probably did not make him very popular:
“Management must be judged not only by the quarterly dividend, but by innovative plans to say in business, protect investment, ensure future dividends and provide more jobs through improved products and services.” - Wikipedia
Well companies are definitely not going to want to talk up this aspect of Deming’s views. Actually Deming opposed a number of philosophies and attributes of quality management that would be surprising to people including the Malcolm Baldridge Award and ISO 9000 certification. Deming also opposed performance reviews:
He argued that they lead to short-term solutions and under-performance. Inevitably, appraisal has to be based on measurable outcomes and often these provide a misleading view of what is important in the process. He did not believe that the quality of an employee’s contribution could be reduced to measurable results. He also believed that, rather than improving performance, appraisal often has the opposite effect, with staff concentrating on what was important for gaining a good performance rating rather than developing a pride in their work. He believed that performance appraisal had the effect of putting staff in competition with each other rather than welding them into teams. – Total Quality Management in Education
I happen to agree with all of Deming’s statement above. As an independent consultant I have been finally able to escape the waste of time and control mechanism called the performance evaluation. Not having performance reviews is one of the main bedrock assumptions of Deming’s approach to quality management. But consulting firms which work in quality do not focus on this adjustment. However, the vast majority of companies still have extensive performance reviews. The reason for this is fairly easy to understand, companies prefer control over improved performance or improved product quality.
Conclusion
The presumption that the clear advantage attained by Japanese manufacturing is due to specific methods used in manufacturing misses out on many other important components. Secondly, the Japanese follow a number of manufacturing approaches which span from keeping very low inventory to employing kaizen (improvement) teams to statistical process control, and it is impossible for anyone to say which one or which ones of these methods are the keys to Japanese manufacturing quality. These methods have been adopted willy-nilly by US companies for decades. However, several that have been tried, such as JIT, have performed very badly, so badly in fact that they needed to be renamed “Lean,” in order to allow that the constant flow of consulting dollars not be reduced by the lack of effectiveness of the methods preached. Secondly, the promoters of these methods attempt ignore all cultural, economic, public policy and company incentives differences between Japanese firms and US firms. This of course controls their “solutions.” However, many alternative solutions are equally possible. For instance, US firms could elevate engineering and manufacturing to the same level, or even superior to finance, sales and marketing. This would certainly have a positive effect on quality, however, no one seems interested in it. Japanese executives also make a lot less money and US executives. The average Japanese executive makes 1/10th what a US executive takes home in compensation. Japanese manufacturing companies also provide much more stable employment to manufacturing workers. As noted, there are many features to how manufacturing is practiced in Japan, however, a big part of the system is that the shop floor workers take the initiative to make continual adjustments, and therefore the motivation level of the shop floor workers is a critical component of the overall process. Could shop floor motivation have something to do with the persistent quality differences between the US and Japan? No one seems interested in finding out. If it were determined to be true, would we be willing to adjust downward the pay levels of US executives to Japanese levels, or to provide more steady employment? The question requires no answer.
How Commerce Undermines History
Many of these books that are written about Japanese manufacturing prowess clearly have more to do with consultants trying to get paid, than any adherence to a thorough and comprehensive analysis on the topic. I am very disappointed in the lack of scholarship that has been applied by people that have written books, and those I have heard lecture in this area. Secondly, even the teachings of W. Edward Deming have been cherry picked in order to present an approach which degrades what W. Edward Deming had to say, and greatly reduces the success ratio of this method (have you ever tried to make a recipe while leaving 1/2 the ingredients out?). However it certainly has worked. We have several generation of people who think that the traditionally offered explanations, which can be sold in bite size consulting projects are the main area to focus on, and the broader policy difference between Japan and the US and their implications are unseen and unobserved. There is obviously a particular narrative that has been developed, and it is impervious to explanations that may better explain Japanese manufacturing excellence, but aren’t considered pertinent because they break with the narrative.
References
http://en.wikipedia.org/wiki/Quality_management
“Total Quality Management in Education 3rd Edition,” Edward Sallis, Stylus Publishing, 2002
