The Comparison of the Deming Prize and the Baldrige Award

- Handouts -

The Deming Prize

The Deming Prize is Japan’s national quality award for industry. It was
established in 1951 by the Japanese Union of Scientists and engineers (JUSE) and it was
named after W. Edwards Deming. He brought statistical quality control methodology to
Japan after W.W.II. The Deming Prize is the world’s oldest and most prestigious of such
awards. Its principles are a national competition to seek out and commend those
organizations making the greatest strides each year in quality, or more specifically, TQC.
The prize has three award categories. They are Individual person, the Deming
Application Prizes, and the Quality Control Award for factory. The Deming Application
prizes are awarded to private or public organizations and are subdivided into small
enterprises, divisions of large corporations, and overseas companies. There are 143
companies who won the prize. Among them, only once has the Deming Prize been
awarded to a non-Japanese company: Florida Power and Light in 1989.

Baldrige Award
The Baldrige Award was established in 1987 to promote quality awareness,
understand the requirements for quality excellence, and share information about
successful quality strategies and benefits. There are three eligibility categories:
manufacturing, services, and small firms. Unlike the Deming Prize, public or not-for-
profit organizations are not qualified. Also, there is no category in which all applicants
that satisfy a given level of performance receive a quality prize. Since its foundation,
there are only five companies who received this prize. According to its principles, the
role of quality data collection and analysis as the basis for managerial decisions is
paramount. Furthermore, quality efforts should not concentrate only on the elimination of
defects but also encompass creative activities that will influence customer satisfaction.
Among Baldrige winners, there are no service companies.
Check list of application for Deming Award
Item Particulars
1. Policy 1. Policies pursued for management
quality, and quality control
2. Method of establishing policies
3. Justifiability and consistency of
policies
4. Utilization of statistical methods
5. Transmission and diffusion of
policies
6. Review of policies and the results
achieved
7. Relationship between policies and
long- and short-term planning
2. Organization and 1. Explicitness of the scopes of
its Management authority and responsibility
2. Appropriateness of delegations of
authority
3. Interdivisional cooperation
4. Committees and their activities
5. Utilization of staff
6. Utilization of QC Circle activities
7. Quality control diagnosis
3. Education and 1. Education programs and results
Dissemination 2. Quality- and control-consciousness,
degrees of understanding of quality
control
3. Teaching of statistical concepts and
methods, and the extent of their
dissemination
4. Grasp of the effectiveness of quality
control
5. Education of related company
(particularly those in the same group,
sub-contractors, consigness, and
distributers)
6. QC circle activities
7. System of suggesting ways of
improvements and its actual
conditions
4. Collection, 1. Collection of external information
Dissemination 2. Transmission of information between
and Use of divisions
Information of 3. Speed of information transmission
Quality (use of computers)
4. 4. Data processing statistical analysis
of information and utilization of the
results
5. Analysis 1. Selection of key problems and themes 10. Planning for
2. Propriety of the analytical approach
3. Utilization of statistical methods
4. Linkage with proper technology
5. Quality analysis, process analysis
6. Utilization of analytical results
7. Assertiveness of improvement
suggestions
Edited by Subcommittee of Implementation Award for Deming Prize, 1992 Revision.
Item Particulars
6. Standardization 1. Systematization of standards
2. Method of establishing, revising, and
abolishing standards
3. Outcome of the establishment, revision,
or abolition of standards
4. Contents of the standards
5. Utilization of statistical methods
6. Accumulation of technology
7. Utilization of standards
7. Control 1. Systems for the control of quality and
such related matters as cost and quantity
2. Control items and control points
3. Utilization of such statistical control
methods as control charts and other
statistical concepts
4. Contribution to performance of QC circle
activities
5. Actual conditions of control activities
6. State of maters under control
8. Quality 1. Procedure for the development of new
Assurance products and services (analysis and
upgrading of quality, checking of design,
reliability, and other properties)
2. Safety and immunity from product
liability
3. Customer satisfaction
4. Process design, process analysis, and
process control and improvement
5. Process capability
6. Instrumentation, gauging, testing, and
inspecting
7. Equipment maintenance, and control
of subcontracting, purchasing, and
services
8. Quality assurance system and its audit
9. Utilization of statistical methods
10. Evaluation and audit of quality
11. Actual state of quality assurance
9. Results 1. Measurements of results
2. Substantive results in quality, services,
delivery time, cost, profits, safety,
environments, etc.
3. Intangible results
4. Measures for overcoming defects
1. Grasp of the present state of affairs
the Future and the concreteness of the plan
2. Measures for overcoming defects
3. Plans for further advances
4. Linkage with the long-term plans
Check list of application for Malcom Baldrige National Quality Award

Maximum score Percentag

e of sub-
total
1.0 Leadership 150 15%
1.1 Leadership of top-ranking managers 50
1.2 Policy 30
1.3 Management control system and quality improvement process 30
1.4 Allocation and utilization of resources 20
1.5 Responsibility to society 10
1.6 Unique and creative leadership technique 10
2.0 Information and analysis 75 7.5%
2.1 Utilization of analysis technique or system 15
2.2 utilization of information about product quality and servicing quality 10
2.3 Customer data and analysis 20
2.4 Analysis of quality and data of subcontractor 10
2.5 Analysis of quality and data of distributor or sales agent 10
2.6 Employee-related data and analysis 5
2.7 Unique and innovative analysis of information 5
3.0 Quality of strategy planning 75 7.5%
3.1 Operation target and strategy target 20
3.2 Function of planning 20
3.3 Quality improvement plan 30
3.4 Unique and innovative planning for strategy 5
4.0 Utilization of human resources 150 15%
4.1 Control and operation 30
4.2 Quality-consciousness and participation of employees 50
4.3 Training and education concerning quality 30
4.4 Personnel assessment, motivation, award system 30
4.5 Unique and innovative strategy concerning utilization of human resource 10
5.0 Quality assurance of product and servicing 150 15%
5.1 Reflection of customer’s opinion on product and servicing 20
5.2 Development of new product and new servicing 20
5.3 Design of new product and new servicing 30
5.4 measurement, standardization, data system 10
5.5 Engineering 10
5.6 Audit 15
5.7 Recording 10
5.8 Safety, health and sanitation, environment 10
5.9 Assurance/effectiveness 15
5.10 Unique and innovative approach to quality assurance of product and servicing 10
6.0 Result of quality assurance of product and servicing 100 10%
6.1 Reliability and achievement of product and servicing 25
6.2 Reduction of scrap, rework, rejection concerning product and servicing 20
6.3 Reduction of complaint and claim suit concerning quality 25
6.4 Reduction of assurance- or site-related assistance operation 20
6.5 Innovative index and economic gain for quality improvement 10
7.0 Customer satisfaction 30 0 30%
7.1 Quality of product and servicing from customer’s viewpoint 100
7.2 Comparison of competitiveness of product and servicing 50
7.3 Customer servicing and countermeasure for complaint 75
7.4 Assurance from customer’s viewpoint 50
7.5 Unique (or innovative) technique to grasp customer satisfaction 25
Total 1000 100%
 Eight Critical Factors

 A plan to keep improving all operations continuously

 A system for measuring these improvements accurately
 A strategic plan based on benchmarks that compare the company’s performance with
the world’s best
 A close partnership with suppliers and customers that feeds improvements back into
operations
 A deep understanding of the customers so that their wants can be translated into
products
 A long-lasting relationship with customers, going beyond the delivery of the product
to include sales, service, and ease of maintenance
 A focus on preventing mistakes rather than merely correcting them
 A commitment to improving quality that runs from the top of the organization to the
bottom
Comparison of the Deming Prize and Baldrige Award
Topic Baldrige Award Deming Prize
Definition of “customer-driven quality” it views quality as “conformance to specifications” it views quality as
Quality defined by the customer defined by the producers
Primary Focus customer satisfaction and quality statistical quality control
Overall Approach quality of management management of quality
Purpose promote competitiveness through total quality promote quality assurance through statistical techniques
management
Types of manufacturing, service and small business essentially private or public manufacturing
Organization
Orientation 60% result, 40% process 60% process, 40% results
Scoring Weight different weight for each criteria equal weight in 10 criteria
Consideration less concern concern in productivity, delivery, safety, and environment
Information heavily concern less concern
Management
Continuous of the N/A Japan Quality Control Medal
award
Winners Maximum of two per category All firms meeting standard
Scope U.S. firms only Firms for any country
Applications $2500 and 75 pages packet 1000 pages and one year working with consultant from
the union of Japanese Scientist & Engineers
Grading time six months one year
First Award 1987 1951
Sponsor National Institutes Standards and Technology Union of Japanese Scientists and Engineers
Grading Criteria 1. Leadership 1. Policy and Objectives
 of top-ranking managers  pursued for management quality & QC
 policy  method of establishing quality
 management control system & quality  justifiability and consistency of policies
improvement process  review of policies and the result achieved
Topic Baldrige Award
 allocation and utilization of resources
 responsibility to society
 unique and creative leadership technique
2. Information and Analysis
 utilization of analysis technique or system
 utilization of information about product quality
and servicing quality
 customer data and analysis
 analysis of quality and data of subcontractor and
distributor or sales agent
3. Quality of Strategy Planning
 operation target and strategy target
 function of planning
 quality improvement plan
 unique and innovative planning for strategy
4. Utilization of Human Resource
 control and operation
 quality consciousness and participation of
employees
 training and education concerning quality
 personnel assessment, motivation, award system
 innovative strategy concerning utilization of
human resource
5. Quality Assurance of Product and Servicing
 reflection of customer’s opinion on product and
Deming Prize
 relationship between policies and long term & short
term planning
2. Organization and its Management
 explicitness of the scopes of authority and
responsibility
 interdivisional cooperation
 committees and their activities
 utilization of staff
 utilization of QC Circle activities
 QC diagnosis
3. Education and dissemination
 education program and results
 degrees of understanding of QC
 teaching of statistical concepts and methods
 grasp of the effectiveness of QC
 QC circle activities
 system of suggesting ways of improvements and its
actual conditions
4. Collection, Dissemination and Use of Information on
Quality
 collection of external information
 transmission of information between divisions
 speed of information transmission
 data processing, statistical analysis of information and
utilization of the results
Topic Baldrige Award
servicing
 design and development of new product and
new servicing
 measurement, standardization, data system
 engineering, audit, recording
 safety, health and sanitation, ,environment
 approach to quality assurance of product and
servicing
6. Result of Quality Assurance of Product and
Servicing
 reliability and achievement of product and
servicing
 reduction of scrap, rework, rejection,
concerning product and servicing
 reduction of complaint and claim suit
concerning quality
 innovative index and economic gain for quality
improvement
7. Customer Satisfaction
 quality of product and servicing from
customer’s viewpoint
 comparison of competitiveness of product and
servicing
 customer servicing and countermeasure for
complaint
 assurance from customer’s viewpoint
 technique to grasp customer satisfaction
Deming Prize
5. Analysis
 selection of key problems and themes
 propriety of the analytical approach
 utilization of statistical methods
 linkage with proper technology
 quality analysis, process analysis
 utilization of analytical results
 assertiveness of improvement suggestions
6. Standardization
 systematization of standards
 method of establishing, revising, and abolishing
standards and their outcome
 utilization of statistical methods
 contents of the standards
 accumulation of technology
 utilization of standards
7. Control
 system for the control of quality and related matters
 control items and control points
 utilization of such statistical control methods as
control charts and other statistical concepts
 contribution to performance of QC circle
 actual conditions of control activities
8. Quality Assurance
 procedure for the development of new products and
Topic Baldrige Award Deming Prize
services
 safety and immunity from product liability
 customer satisfaction
 process design, analysis, control and improvement
 process capability
 instrumentation, gauging, testing and inspecting
 equipment maintenance and control of subcontracting,
purchasing, and services

9. Results
 measurement of results
 substantive results in quality, services, delivery time,
cost, profits, safety environments
 intangible results
 measures for overcoming defects

10. Planning for the Future

 grasp of the present state of affairs and the
concreteness of the plan
 measures for overcoming defects
 plans for further advances
 linkage with the long term plans
THE 2001 MALCOLM BALDRIGE NATIONAL QUALITY AWARD REGIONAL
CONFERENCES

Executives from many of the Award recipient organizations will share their
knowledge and insights to help you improve your organization’s quality efforts

The 2000 Award Recipients:

Award Recipients will be announced in mid-November 2000, and the recipients will
participate in the 2001 Regional Conferences. The recipients could include, for the first
time, education and health care organizations.

Previous Baldrige Award Recipients:

1999 BI Service 1993 Ames Rubber Corporation Small Business

The Ritz-Carlton Hotel Service Eastman Chemical Company Manufacturing
Company, LLC
STMicroelectronics, Inc. Manufacturing 1992 AT&T Network Systems Manufacturing
Regions Americas Group Transmission
Sunny Fresh Foods Small Business Systems Business Unit
(now part of Lucent
1998 Boeing Airlift & Tanker Manufacturing Technologies, Inc. Optical
Programs Networking Group)
Solar Turbines Inc. Manufacturing AT&T Universal Card Service
Texas Nameplate Company, Small Business Services (now part of
Inc. Citigroup)
Granite Rock Company Small Business
1997 3M Dental Products Manufacturing The Ritz-Carlton Hotel Service
Division Company
Merrill Lynch Credit Corp. Service Texas Instruments Inc.
Solectron Corp. Manufacturing Defense Systems & Manufacturing
Xerox Buss. Services Service Electronics Group (now
part of Raytheon Systems
1996 ADAC Laboratories Manufacturing Company)
Custom Research Inc. Small Business
Dana Commercial Credit Service 1991 Marlow Industries, Inc. Small Business
Corporation Solectron Corporation Manufacturing
Trident Precision Small Business Zytec Corporation (now part Manufacturing
Manufacturing, Inc. of Artesyn Technologies)

1995 Amstrong World Industries, 1990 Cadillac Motor Car Company Manufacturing
Inc. Federal Express Corporation Service
Building Products Manufacturing IBM Rochester Manufacturing
Operations
Corning Inc. 1989 Milliken & Company Manufacturing
Telecommunications Manufacturing Xerox Corporation Business Manufacturing
Products Division Products & Systems

1994 AT&T Consumer Serivce 1988 Globe metallurgical Inc. Small Business
Communications Motorola, Inc. Manufacturing
Services (now the Westinghouse Electric Manufacturing
Consumer Markets Corporation Commercial
Division of AT&T) Nuclear Fuel Division
GTE Directories
Corporation Service (now
part of Verizon
Communciations)
Wainwright Industries, Inc. Small Business
Motorola (1998)

1. In the past five years, Motorola has reduced its defect rate in manufacturing
99.5%, generating cost savings estimated at about $900 million this year, and $3.1
billion cumulatively.
2. Motorola’s prices fall an average of 8-12 percent a year; it’s cellular phone prices
25% a year.
3. “Minority report program”. Employees can file a report if they feel that their ideas
are not being supported. An example is the concept behind the microprocessor 68000
series which later became the brains of Apple’s Macintosh line.
4. In 1987, Motorola announced two productivity goals: to reduce manufacturing defects
by 90% every two years, and reduce cycle (new product development) time by 90%
every five years.
Eastman Chemical Company

1. Eastman is well accepted by its surrounding communities and has a strong

environmental record. Safety serves as a driving force. The company earned inclusion
in OSHA’s voluntary Star Program.
2. Eastman averaged 22 % of sales from new products commercialized within the last
five years, compared to an average of 11% for 13 leading chemical companies, twice
the average in a recent study.
3. Eastman has adopted a no-fault return policy on its plastic products and states a
customer may return any product for any reason. This policy is believed to be the
only one of its kind in the chemical industry.
4. Over the past four years, more than 70% of Eastman’s worldwide customers rated
Eastman their number one supplier. For the last seven years, Eastman has been
rated outstanding in five important customer factors-product quality, product
uniformity, supplier integrity, correct delivery, and reliability. Shipping reliability
consistently has been near 100% for the last four years.
5. Eastman’s new product development practices are ranked second among a group of
13 leading chemical companies.
6. Eastman uses multiple approaches to drive continuous process improvement
through an “interlocking team” structure that involves virtually every employee
in the teaming and quality improvement process.
7. Data use is deployed widely, with virtually all employees using data to track their
individual and/or their team’s performance.
8. Eastman has a fully integrated planning process that systematically deploys the key
business priorities to all employees and all work groups throughout Eastman’s
innovative four-dimensional organizational structure.
Quality Achievements

Ames

1. Every teammate at Ames is a member of at least one “involvement group” dedicated

to quality improvement. The company currently has 40 of these groups.
2. The percentage of defective parts reaching customers is among the lowest in the
industry. For Ames’ largest customer, the defect rate has been reduced since 1989
from more than 30,000 parts per million to 11.
3. Productivity, as measured by sales per employee, increased by 48% from 1987 to
1992.
4. Over the past five years, teammate ideas have saved the company and its customers
more than $3 million and will average over $2,700 per teammate in 1993.
5. Ames product warranties are among the best in the industry and include a
comprehensive warranty for prototypes, which refunds development costs if
specifications are not achieved.
6. Ames has developed a consolidated supplier base be selecting suppliers who share
the company’s quality values and are responsive to its established “continuous
improvement” goals. Down from 42 key suppliers in 1989, Ames Rubber Corp. now
relies on 19 suppliers whose quality performance is about 99%.
 Table 1
Impact of Quality Improvement on Business Performance

Performance Indicators No. of Direction of Indicator Average annual

Responding positive negative no change positive
companies (favorable) (unfavorable) performance
improvement
a. Operating Measures
Reliability 12 12 0 0 11.3
Timeliness of delivery 9 8 1 0 4.7
Order processing time 6 6 0 0 12.0
Errors or defects 8 7 0 1 10.3
Product lead time 7 6 0 1 5.8
Inventory turnover 9 6 1 2 7.2
Costs of quality 5 5 0 0 9.0
b. Employee-related
measures
Employee satisfaction 9 8 1 0 1.4
Attendance 11 8 0 3 0.1
Turnover 11 7 3 1 6.0
Safety/health 14 11 3 0 1.8
Suggestions received 7 5 2 0 16.6
c. Customer
Satisfaction
Overall customer 14 12 0 2 2.5
satisfaction
Customer complaints 6 5 1 0 11.6
Customer retention 10 4 2 4 1.0
d. Financial
Performance
Market share 11 9 2 0 13.7
Sales per employee 12 12 0 0 8.6
Return on assets 9 7 2 0 1.3
Return on sales 8 6 2 0 0.4
Source: Adapted from U.S. General Accounting Office, Management Practices: U.S.
Companies Improve Performance Through Quality Efforts, Washington, 1991,
pp. 18-28.

SPRING 1993
Result

1. Increased Customer Satisfaction

2. Lower Costs
3. Reduced Product Development Time
4. Increased Employee Satisfaction
5. Higher Quality Products
6. Innovation
7. Increased Productivity
 Average Category Scores
100
90
80
70
Percent

60 SVC
50
40 ED
30
20
10
0
0 1 2 3 4 5 6 7

Sue Rohan, David Luthy Categories

Education Pilot Program
Overview

Average Category Scores

100
90
80
70
Percent

60 HE
50
40 K-12
30
20
10
0
0 1 2 3 4 5 6 7

Categories
Note: Categories 5.0 and 7.0 show significant differences.
Sue Rohan, David Luthy
Education Pilot Program
Overview