Presented By:
ALVIN PEREZ ABALOS, CE
Master in Management Engineering
Pangasinan State University
Urdaneta Campus
What is the Deming Cycle
The Deming Cycle or PDSA Cycle or Shewhart Cycle
(named after Walter Shewhart) is a four stage change
management model used by companies for
continuous improvement and incremental problem
solving.
This change management model benefits companies by
providing a systematic approach to achieving
continuous improvement. The objective is to
continually progress through each stage while aiming
to achieve a better quality output of products or
services or information as defined by our customers.
Because of its repeated cyclical nature of continuous
improvement, the Deming cycle is often phrased
in the change management process and in
business improvement fields as the PDSA cycle. It
is often graphically presented as a circle or wheel
because it requires repeating the same stages
over and over in the continuous effort to improve
processes and outputs. The circle is represented
in four quadrants of PLAN, DO, STUDY and ACT
How To Use The Deming Cycle
•Below is the outlined details of each of the 5 stages of the Deming
Cycle. By following these I hope it will benefit those who wish to
implement this change management model. This process can be
particularly useful for continuous improvement initiates.
PLAN an improvement
•The goal at this stage is decide what needs to be done and how it best
can be done. Achieve this goal by reviewing and studying the current
work process and available data. This stage really involves examining
the current method or the problem area.
DO the planned activity
•Implement the improvement or problem-solving plan by actually
doing it. This is the implementation stage during which the plan is
actually tried out in the operation. The people responsible need to be
trained and equipped with the resources necessary to complete the
task. This stage itself may involve a mini PDCA cycle as the problems
of implementation are discovered and resolved and we begin to see if
the implementation of the plan is providing results.
CHECK the results
•The new implemented solution is evaluated to see whether it has
resulted in the expected performance improvement. Analyze the new
data available and measure the results to see if the implementation of
the plan is giving the results that it should.
ACT on the results
•If the implementation was successful standardize and documented
the work and new processes. If the change were not successful, learn
what we can from the trial, adjust where necessary to overcome
problems, and formalize the new knowledge before starting the PDSA
cycle over again. In starting over again we take any corrective action
that is required; we lock in the positive and good outcomes and then
we return to the planning stage and repeat again as necessary.
Repeat the Deming Cycle
•Continue the cycle again. Plan and implement further improvements.
Even better though, as we continue with the Deming Cycle we have
the benefit of having new data and learned experiences from the
previous cycles.
It was devised by Dr. W
Edwards Deming.
An effective Theory of
Management. It is a
framework of thought and
guide for action that any
leader wishing to transform
their organization into one
that will thrive and survive
through the current century.
1.Appreciation for a System
–Deming wrote that “A System
is a network of
interdependent components
that work together to try to
accomplish the aim of the
system.” An essential part of
improvement is that the aim
must be clear to everyone in
the system, and the secret is
to develop cooperation
between components
towards achieving that aim.
2. Knowledge of variation
–Effective managerial
action also demands
a knowledge of
variation. Deming
said: “Variation
there will always be,
between people, in
output, in service, in
product.
3. Theory of knowledge
–Deming said that
management’s job is
prediction. Rational
prediction requires theory,
and builds knowledge
through systematic revision
of theory based on
comparison of prediction
with observation.
4. Knowledge of psychology
–The fourth element of the
System of Profound
Knowledge is those aspects of
Psychology relating to what
motivates people. In
particular understanding the
respective roles of intrinsic
and extrinsic motivation, and
respecting the rights of
people to obtain joy in work
and joy in learning.
STRATEGIC THINKING
Focuses on finding and developing unique
opportunities to create value by enabling a provocative and
creative dialogue among people who can affect a
company’s direction. It is the input to strategic planning —
good strategic thinking uncovers potential opportunities for
creating value and challenges assumptions about a
company’s value proposition.
1.Competencies and Skills
–What are the company’s strengths?
–How can these be used to create a unique
competitive advantage?
–What are the company’s weaknesses that might
leave it vulnerable?
1.Products and Offerings
•What is the portfolio of offerings(product, service, price and
image bundles) that the company provides to the market?
•What are the overlaps or white spaces among the offerings?
•What is the rationale or logic for these offerings?
•What makes them unique?
•What are the brands associated with these offerings?
•How do these brands fit with the company’s image?
3. Environment and Industry
•What is the overall economic context in which the company
competes?
•What is the regulatory or governmental environment, and how
does this impact the company?
•Where is this industry headed, and where do we want it to be?
•What is our position in the industry, and what do we want it to
be?
•How does this industry connect with others, and what are the
implications of that for our positioning?
1.Markets and Customers
•Who are the target customers for the offerings?
•What are their needs?
•How is the company uniquely suited to meet
these particular needs?
1.Competitors and Substitutes
•What is the nature of competition in our industry?
•What other companies have offerings that could meet the
same needs?
•What are their unique strengths and strategies?
•How might they respond to our strategies?
•Are there companies not yet in the market who might choose
to enter it?
•What are their strengths and strategies?
•What market conditions might lead to action on their part?
6. Suppliers and Buyers
•What other companies do we need to work with in
order to make and sell our offerings?
•What is their relative power compared with us?
•What are their strategies and strengths, and are these
aligned with ours?
•What’s in it for them?
•Aligned: A company’s strategies must fit with its
mission, vision, competitive situation and
operating strengths.
•Goal-oriented: Strategies are the means by which
a company sets out to achieve its goals. Effective
strategies, then, set clear expected outcomes
and make explicit links between these outcomes
and the company’s goals.
•Fact-based: The best strategies are based on and
supported by real data. While strategic thinking by its
very nature requires assumptions about the future,
these assumptions must be educated guesses, based
on facts—for example, actual performance data or
results of some kind of pilot test or experiment. The
logic behind the strategy must be clear. Effective
strategies tell believable stories.
•Based on Broad Thinking: Companies that are
strategically nimble are able to consider multiple
alternatives at once and to consider a range of scenarios
in making strategic choices.
•Focused: No company can do everything or be all things
to all people. Strategy setting involves making choices
about what a company will do and—as important—
what it will not do. Strategies provide clear guidance
about how a company’s activities will be prioritized, and
how its limited resources will be deployed.
•Agreed upon: Especially in large, complex organizations,
successful strategies must gain the support of multiple
stakeholders. This often requires a process of
developing strategies that is interactive in gathering
multiple points of view and in sharing the thinking
behind the strategy as it evolves.
•Engaging: Strategies that will need to mobilize broad
resources must be easily articulated so that they can
capture the attention of the people who will be asked to
carry them out.
•Adaptable: Strategies need to be able to be adjusted
to build on learning from experimentation, errors and
new information. At the same time, there needs to be
some thoughtfulness in these adjustments so that they
are responsive without being overly reactive or “knee
jerk.”
•Implementable: Because effective strategies draw on
the particular strengths and skills of an organization,
they include explicit considerations of how they will be
implemented. Implementable strategies provide clear
guidance for decision making in order to shape
behavior throughout the company.
Strategic Analysis is:
“… the process of conducting research on the
business environment within which an
organization operates and on the organization
itself, in order to formulate strategy”.
BNET Business Dictionary
Definitions of strategic analysis often differ, but the
following attributes are commonly associated with
it:
1.Identification and evaluation of data relevant to
strategy formulation.
3.Definition of the external and internal environment
to be analyzed.
4.A range of analytical methods that can be employed
in the analysis.
1.SWOT analysis (Strength Weakness
Opportunities Threats)
2.PEST analysis (Political Environmental Social
Technological)
3.Porter’s five forces analysis
4.Four corner’s analysis
5.Value chain analysis
6.Early warning system
A SWOT analysis is a simple but widely used tool that
helps in understanding the strengths, weaknesses,
opportunities and threats involved in a project or
business activity. The origins of the SWOT analysis
technique is credited by Albert Humphrey, who led a
research project at Stanford University in the 1960s and
1970s using data from many top companies.
SWOT ANALYSIS DIAGRAM
PEST analysis is a scan of the external macro-environment in
which an organization exists. It is a useful tool for understanding
the political, economic, socio-cultural and technological
environment that an organization operates in.
FACTORS:
1.Political factors - These include government regulations
2.Economic factors - These affect the cost of capital and purchasing
power of an organization.
3.Social factors - Impact on the consumer’s need and the potential
market
4.Technological factors - Barriers to entry, make or buy decisions
Porter's five forces of competitive position analysis was
developed in 1979 by Michael E. Porter of Harvard Business
School as a simple framework for assessing and evaluating
the competitive strength and position of a business
organization
FIVE FORCES
Supplier power
Buyer power
Competitive rivalry
Threat of substitution
Threat of new entry
Value chain analysis is based on the principle that
organizations exist to create value for their customers.
In the analysis, the organization's activities are divided
into separate sets of activities that add value.
The three steps for conducting a value chain analysis
are:
1.Separate the organization's operations into primary
and support activities.
2.Allocate cost to each activity
3.Identify the activities that are critical to customer’s
satisfaction and market success.
The purpose of strategic early warning systems is to
detect or predict strategically important events as early
as possible.
SEVEN COMPONENTS
1.Market definition
2.Open systems
3.Filtering
4.Predictive intelligence
5.Communicating intelligence
6.Contingency planning
7.A cyclical process
•CFAR Center for Applied Research copyright 2001 RES7: 010116
•Barclay M. Hudson. 1979. Comparison of Current Planning Theories:
Counterparts and Contradictions
•W. E. Deming (1986) Out of the Crisis
•http://www.scribd.com/doc/71798708/What-Are-Deming-s-14-Points
•http://www.mindtools.com/pages/article/newSTR_75.htm
•http://www.scribd.com/doc/59766617/Japanese-Management-Overview