This brief history of quality, would not be complete without sharing a passage from Prophets in the dark, by David Kearns, the former CEO of Xerox:

With the earlier account by Larry Sullivan as a second reference point, consider what happens when a craftsman works on the design of a product at home, where the customer and producer are often one in the same. One person designs the product, procures the raw material, fabricates the corresponding parts, and then assembles them into the final product for personal use. The producer-as-customer is quick to judge the product quality and adjust the design-procurement-fabrication-assembly process, as needed, should the resultant product quality fall short of expectations.

While the DIYer in the garage is not necessarily a master craftsman, the connection to the model of a single person engaged in most of the design-procurement-fabrication-assembly tasks is relevant to the topic of quality and an appreciation of the TPS and how it differs from a mass production system. As a personal example of craftsmanship, let's return again to the example of the DIYer in the garage, this time doing home repair.

Imagine a piece of wood moulding is needed to replace a damaged length of wood in between two existing pieces. We begin with a piece of moulding which is too long and needs to be cut to length. In rapid order, the required length is measured, and the piece is marked for cutting. As a next step, a saw is readied. Consider how many lines one typically would draw across the top face of the wood before making the cut. That is, instead of using short marks to indicate where to place the saw, how many lines would be drawn across the top face to guide the placement of the saw blade during the cut? Most often the solution is to use a single line and subsequently cut close to this line. Why is the habit not two lines, as in the standard industry use of manufacturing tolerances with an acceptable range, in keeping with the practice of interchangeable parts? The single line answer implies a belief there is a target length for this piece of moulding and indicates a strong intuitive sense of knowing the piece of wood is "part of" something rather than merely a "part". A "part of" perspective is likely when engaged in a home improvement project where connections are visible and immediate. In the moulding example, the lesser quality of the fit if the piece is longer or shorter than desired will be obvious. Any effort required to adapt the moulding piece, because of variation in its length – a little too long or too short - represents quality loss, a concept introduced and developed in Japan by Taguchi.

As shown in the figure, Taguchi's quality loss function model increases continuously as the piece of moulding length misses the target by larger and larger amounts in both directions – shorter or longer than the desired target dimension. In either case, the extra effort (loss to the DIYer) is both finite and real, just as the use of hammers to assemble parts at the Ford plant were finite and real to Frank Pipp and his assembly team. Could it be such losses are accounted for and then reduced through routine efforts within the TPS to better align the organisation's resources? That is, the resources of time and effort would be invested to produce a given dimension closer to its target value, but only if this effort was less than the corresponding reduction in loss, thereby making the effort a worthwhile investment of resources. According to personal conversations with Taguchi, Toyota has been a world-wide leader in the use of his quality loss function concept to direct efforts to move from the traditional part quality model of mass production to one in which a greater emphasis is placed on what craftsman know as relationship quality, as in how far from the target value is a given parameter?

According to Taguchi, Toyota's efforts with the quality loss function date back to his consultation role in the early 1950s. Within 10 years, he was honoured in Japan with a Deming Prize in Literature for his contributions to a new definition of quality. Specifically, he defined quality as "the minimum of loss imparted to the society by a product after its shipment to a customer." By contrast to the mass production system's conformance to requirements model of quality, Taguchi suggested a model that looks at quality from the vantage point of the relationship of a producer to its customer. In doing so, Taguchi acknowledged the existence of a never-ending connection (and impact) between the provider of the part and what it is part of. The technical aspects of this holistic model are shown in the figure, where the horizontal axis represents the specific value of a part dimension on a continuum and the vertical axis represents the associated quality loss for a corresponding part dimension. If one considers the quality loss to be the extra effort required for installing a part of a given dimension, the distribution (quality loss function) theorised by Taguchi - a simple parabola centred on the target dimension (with minimum loss at target), accounts for the loss associated with dimensions that are not produced to target dimensions.

Taguchi's model brings in to question the mass production belief all parts within the range of the specification limits are equally good, and, therefore, absolutely interchangeable. The degree to which variation from a target dimension produces harmful effects downstream in the organisation and society is a function of the steepness of the quality loss function, which, in turn depends on the specifics, or context, of the system which the part is actually a part of. Of foremost importance, Taguchi's model suggests interchangeability be modelled as something relative and not absolute.

By comparison to Taguchi's model of continuous quality loss, the mathematical model associated with the mass production concept of zero defects is a step-function, as referenced in the fizzy drink exercise, earlier in this series. The figure offers a side-by-side comparison of these models. In keeping with a step-function model, all parts within the specification limits are good and equally good. No change in quality is perceived across this range and the only changes in quality that do occur happen instantaneously at the transition across either of the specification limits. Inspired by Taguchi, and influenced by Deming, Toyota has long modelled quality as a continuous feature, rather than discrete, with a preferred value (target) that provides for minimal loss. Such a view leads to the conclusion any deviation from a target dimension results in some degree of loss being imparted downstream by the part after its shipment to the customer.

Let me close with a strong promotion for the use of tolerances when the accumulated expense of the added efforts to manage variation around a target value is not off-set by greater savings from reducing losses to others, either within an organisation, or to external customers. In these situations, we will continue to focus on the good parts and the bad parts. For situations where the financial impact of quality losses are significantly more than the effort to manage variation around a target value, we should either strive to achieve the beautiful prospects of lower loss (snap-fit) operations, or overlook this option and fall victim to the ugly prospects of higher loss (rubber mallets) that inspired Frank Pipp into action upon discovering Toyota's early progress in managing variation as a system, as would a craftsman. Could it be possible that Toyota has married the quality insights of Deming and Taguchi and created a system of production which is being viewed by many through the lens of mass production using interchangeable parts?