Understanding Systemic Challenges in Logistics Operations

Continuing their discussion from part 3 of this series, Bill Bellows and Andrew Stotz talk more about acceptability versus desirability. In this episode, the discussion focuses on how you might choose between the two.

TRANSCRIPT

0:00:00.0 Andrew Stotz: My name is Andrew Stotz and I'll be your host as we continue our journey into the teachings of Dr. W. Edwards Deming. Today, I'm continuing my discussion with Bill Bellows, who has spent 31 years helping people apply Dr. Deming's ideas to become aware of how their thinking is holding them back from their biggest opportunities. Today is Episode 4 of the Misunderstanding Quality Series, and the title is Quality, Mind the Choices. Bill, take it away.

0:00:31.3 Bill Bellows: All right, Andrew, welcome. So podcast three, I think the title was Acceptability and Desirability. And one correction there, when I went back and looked at the transcript the concept of... At least the first person I heard tie together acceptability, desirability, at least in the Deming community, was a professor, Yoshida, Y-O-S-H-I-D-A. He was a PhD student of Dr. Deming, I believe at NYU but I mispronounced or misspelled his first name. I thought I've heard people refer to him as Kauro, perhaps spelled K-A-U-R-O, maybe that's his nickname, and maybe I just didn't remember properly but his proper first name is Kosaku, K-O-S-A-K-U and he at one point in time was in Greater Los Angeles at Cal State Dominguez Hills. And then I think sometime in the mid '90s, early '90s, last I heard he moved to Japan.

0:01:51.1 BB: I've never met him. I've watched videos of him, there's a classic presentation. I don't know if it's got, it might be online someplace of he did a guest lecture. There was a... Dr. Deming was speaking in Southern California and needed an emergency surgery, had a pacemaker put in, so this would've been '92 timeframe. And Professor Yoshida was called in to give a guest lecture. And that ended up being something that I think was sold eventually. The video, the lecture was sold by Claire Crawford Mason and so he is... I don't know how much of that is online, but anyways.

0:02:38.4 AS: Is Kauro, Kauro wasn't that the name of Kauro Ishikawa?

0:02:43.7 BB: That may be where I... Yes that was a Kauro. There's two Ishikawas. There's a father and the son and I... So I'm not sure if Kauro was the father or the son, but anyway correction there. In the first series we did, going back to '23, 2023, I mentioned the name Edgar Schein, but I don't believe I've mentioned his name in this series. So I wanted to throw that, introduce that in this series today and give some background on him for those who have not heard his name or not aware, did not listen to the first series and Edgar Schein, who passed away January of this year. He was an organizational theorist, organizational psychologist, spent the greater part of his career at MIT. And one of the concepts I really like about what he talked about is looking at an organization in terms of its artifacts. So if you walk around an organization, what do you see? What are the artifacts? That could be the colors, it could be the artwork on the wall, but the physical aspect of the organization Schein referred to as the artifacts. And what he also talked about is if you dig beneath the artifacts, they come from a set of beliefs, and then the beliefs come from a set of values.

0:04:23.9 BB: And again, the first series we did, I talked about Red Pen and Blue Pen Companies, and Me and We Organizations, and Last Straw and All Straw organizations. And those titles should make it easy for our listeners who are not aware to go back and find those. And what I talked about is, this imaginary trip report, if you visited a Deming organization, if we could think in terms of two simple organizations, a Deming organization, and a non-Deming organization in this very simple black and white model. And I had people think about the physical aspects of both, if they were to go visit both. What I then followed up on in our conversation is what you see physically comes from a set of beliefs. Now, they may not be articulated beliefs, what Schein would call espoused beliefs. And then you have what they really believe and I forget the term, I use this for that, but it comes from a set... But anyway, the physical comes from the beliefs, the beliefs come from the values.

0:05:39.0 BB: And part of the reason I bring that up for our listeners, and I'm thinking in terms of the people that have a responsibility in their respective organizations. They could be consultants, internal consultants, working in quality likely, given the focus of this series. First of all, you have to start where you are. But even added on, included in start where you are, is you have to start where your management is. So, if your management is tasking you with an improving scrap and rework, then that's what you better be talking about. Now, you don't have to be guiding your actions based on acceptability because the other aspect is scrap and rework are typically associated... Well, not typically, they are associated with acceptability. The lack of acceptability, acceptability is the idea that this is good, it is acceptable, it meets the requirements, defines...the quality requirements that are defined.

0:06:52.0 BB: If it's good, it is acceptable, if it's bad. There's two categories of bad, bad could be I have to throw it away, that's scrap, which means I can't recover it or rework, which means I can do something with it and perhaps salvage it. And so if your management is tasking you with improving scrap and rework, then first of all, where they're coming from, quite naturally, is acceptability. And why do I say that? Because everywhere I've gone, that is the deepest foundation of quality in every organization I've ever met, worked with, I have met people that work from whether it could be... Whether it's clients that I've worked with, whether it's students, my university classes. Acceptability, scrap, and rework, all go together. And, so if that's where your management is, then they're asking you to focus on improving acceptability.

0:08:05.6 BB: But, you may find it invaluable to shift your focus to desirability to improve acceptability. And that will be a focus, well I get into some of that tonight and others or today, and then on a future podcast later. But, I remember once upon a time at Rocketdyne, the executives were, the VP of Quality was task master asking for improvements to scrap and rework and also things called process capability indices, Cp’s and Cpk’s. And if you've heard of a Cp or a Cpk, great, if you haven't all I could say is I find them dangerous. I find them, well I say they're all about acceptability. And what makes it, reason I would encourage people to stay away from them because they appear to be desirability, but they're really acceptability.

0:09:15.7 BB: We'll save that for later. But anyway you have to start where they are. So if people are asking for improvements in scrap and rework, then, instead of fighting them, you go with it. And then what we'll be talking about tonight is, is it worthwhile to shift? Well, what does it mean to improve acceptability and the difference between acceptability and desirability? And relative to the title tonight, Mind the Choices is being aware that there's a place for acceptability and there's a place for desirability. And going back to Yoshida in episode three, what I was referring to is, in presentations he was doing from the early '90s, maybe even going back to the '80s, he talked about Japanese companies are about desirability. So, he presented this model of acceptability and desirability. And then, his explanation of what makes Japanese companies, again, back in the '80s, Japanese companies were viewed as those setting the quality standards.

0:10:20.5 BB: And, he was trying to say that the way they're doing that is that they don't rely on acceptability as other companies in other countries do. They have a higher standard. And that's what I wanted to introduce in our last episode, Episode 3. And, what I wanted to do tonight in this Episode 4, is to put some, add some more to that. But, also reinforce I'm not saying that there's anything wrong with acceptability, it's a question of what does the organization need at that point of time? And, really it has to do with... Really, it has to do with how big a system you wanna look at. So if you're looking at something in isolation, which is, I mean, when you look at something and saying it's good or bad, that is the epitome of looking at something in isolation.

0:11:17.5 BB: You're looking at a pen and saying it's good. You're looking at the diameter of a hole and saying it's good. That is not looking at what goes in the hole, that is not looking at how the pen is being used. So by definition, that's what Ackoff would call analysis, which is looking inward. It's not what Ackoff would call synthesis, which is looking outward. And how far outward you look is all according... I mean you could look, it comes down to how big is the system. And I wanna introduce the name Shel Rovin, Sheldon was his full name. Shel was his nickname. I met Shel through Russ Ackoff in 2006. Shel was, he was in charge of the Chief Nursing Officer program, which was a two-week immersion program at the University of Pennsylvania.

0:12:14.5 BB: And he was doing that in the, 2003, 4, 5, timeframe when I met him. And Shel was a dentist by background. He was Dean of the School of Dentistry at University of Kentucky and University of Washington. And I met him through Russ and invited him to Rocketdyne on numerous occasions. And Shel spoke about relative to looking at a system, 'cause people talk about, well "Andrew, we've gotta look at the whole system," but how big is the system? And, so people say, well, systems thinkers look at the whole system. Well, how big is that? Is that 1,000 foot view? And people say, oh no, Bill, it's bigger than that. Is it a 10,000 foot view? Is it... How big is the system? Well, Shel's perspective, and the word I wanna introduce from Shel is relative to systems is boundarylessness.

0:13:12.7 BB: Say that a few times fast. 'Cause systems have no boundaries. So I'm sure our listeners... I'm sure you have heard, I don't if our listeners have all heard, Dr. Deming would say to executives, does your system include the future? He used to ask questions such as what business are you in? What business will you be in five years from now, 10 years from now? Well, why not 15 years from now? Why not 25 years from now? Native American Indians, associated with Native American Indians is the idea of looking at the seventh generation after you when you're making choices. And so what I would ask people is, well, why seven? Why not eight? Why not nine? Why not 10? I mean, within an organization, we could be working with our supplier to try to get across these quality ideas to our suppliers.

0:14:05.5 BB: Well, that's looking at the system. Well, wait a minute. Do our suppliers have suppliers? Yes. Do their suppliers have suppliers? And so relative to boundarylessness is this idea is when people start talking about the whole system, I don't know what "whole" means. What I'd rather look at is what size system are we looking at? That's a choice. That's a choice. So we could decide to look at our suppliers. We're gonna go one step, we're gonna look at procurement. Who do we buy from? Now, we may educate them and give them the responsibility of looking at their suppliers on... But that would be a way of managing quality. Likewise, we can look at the impact of our work on our customer and give them heads up as to how to look at the impact of their work on their customers. But that's looking at the system in an X, Y, Z, physical coordinate, add onto that, the time dimension. And so, again, all I wanna throw out there is that when it comes to making choices on acceptability, desirability, a lot of it has to do with how big is the system that we're looking at. Some everyday examples of acceptability.

0:15:23.5 BB: Again and what I wanna get across is, in part the difference to help people make choices. And so when we were on a vacation in Europe recently, I took a number of photos of people making choices. And,` when I travel, anywhere I travel, especially out of the country, I love walking into supermarkets just to see what they sell that perhaps is not sold in the States or in California. I know there are things you can't find in California that you can find on the East Coast. That's one thing. But I like going into supermarkets just to see what products are there. I mean, you can go to England and find in the refrigerator section, hard cider, apple cider, you know, alcoholic cider that I got exposed to going to a Deming conference in 2000. I've become a fan of it ever since. Well, in the States it's pretty hard to find hard cider, period. You go to England and you'll find, a dozen different brands and each brand may have a number of different types.

0:16:44.9 BB: And so that's, but anyway, relative to that when you walk into a supermarket, if you're looking at canned goods, or just look, well, looking at cider, we can look at this cider versus that cider. We treat a can as a can, whether it's buying tomato soup or cider, we treat all those cans as interchangeable, interchangeable parts. But when we go to into the bakery section, that's where I was taking photos in Amsterdam and I was watching people sort through the pastries. And yet what was laid out were a bunch of pastries of the same style. And yet people were, I want this one, I want that one.

0:17:26.0 BB: Well, part of acceptability is treating all those pastries as the same as we would treat all those cans of tomato soup as the same. Now relative to tomato soup I know you live with your mother, and I'm willing to bet your mom, early, early on when she took you to the supermarket, taught you how to buy canned goods, right? And she says "Andrew when you buy a can of something you pick it up, you're looking for dents," right?

0:17:55.1 AS: Mm.

0:17:56.0 BB: Because if it's dented, that's bad. And if it's not dented, that's good. I know my mother taught me that. So I know when it comes to buying canned good we look for dents. If dented, that's bad. If it's not dented, it's acceptable. But I don't see people sorting between cans of tomato soup made by the same manufacturer. They're just, we treat it as they're acceptable. Acceptable implies either one, the differences don't matter or I don't see differences.

0:18:33.0 BB: Desirability is, you wanna see a great example of desirability, go to the produce section and again, either watch people sort through pastries that are all acceptable, and yet they're looking for the biggest one, or... And when it comes to fruit, we're looking for the ripest banana, or maybe we're looking for bananas that are green because we're not gonna use them for a while. So acceptability, again, I'm trying to give everyday examples of acceptability is going in and saying, looking at all the fruit there, and just taking five peppers, whatever it is, and throwing them in the bag and saying, I need five 'cause my spouse said, go get five. And I throw them in the bag. And it could be time-wise, I don't have time to sort through them, or I quite frankly don't care that they're different. That's acceptability. So acceptability is either acknowledging they're different and saying, I don't care. Or...

0:19:29.6 AS: Seeing them as the same.

0:19:32.4 BB: Or pretending they're all the same. And I had a guy in class years ago, and I was asking about buying fruit and I was trying to use the example of we go into the supermarket. We sort through the oranges looking for the ripest one, and this guy says, well, I don't sort through the oranges. I said, well, how do you buy the oranges? I buy them by the bag. I said, do you sort between the bags? He says, no, I don't sort and his arms were crossed. I don't sort, I don't sort. So then I noticed that he had a ring on his left hand, a wedding ring on his left hand. So I said, I see you're wearing a wedding ring. And he said, yep. I said, did you sort?

0:20:15.2 AS: I don't sort.

0:20:15.3 BB: Meaning... I don't sort. And so when you're looking at things that meet all the requirements and saying there is no variation or the variation doesn't matter, that's acceptability, Andrew. When you look at all the things that meet requirements and you see them as being different and saying, I want this one, that's desirability. And so that could be, when it comes to selecting a spouse, when it comes to selecting an orange, when it comes to selecting a parking spot, in a university, you're looking for the, an ideal, the best professor for Thermodynamics II, and there's 10 professors the university says are acceptable. And you talk to classmates and you find out, oh, no, no, no, stay away from that one. What are you doing? You're sorting amongst things that meet requirements, that are acceptable and saying, that's not good enough for me in that situation.

0:21:17.2 BB: Well, what I wanna say then added to that is, this is not to say desirability is better than acceptability. It really comes down to is desirability worth the effort? Because when it comes to desirability, I am looking beyond, I'm looking at a bigger system. So I'm looking at the fruit in terms of how I'm using it. If I'm aware of that, I'm looking at the parking spots in terms of: I'm gonna be in the store for an hour and I want the most shade, or these parking spots have a little bit different distances between cars, and I want a spot with a little bit more width so somebody doesn't ding my car. So what I'm hoping is with these examples, people can appreciate that every day we make choices between acceptability and desirability.

0:22:11.3 BB: Every day we're making a decision based on saying, this is okay, code word for acceptable, or I'll take that one, that's desirability.

0:22:27.6 AS: That's quite a breakdown.

0:22:28.1 BB: Well, and the idea being... The other aspect of it is when you're choosing to say, I want... When you decide that acceptability is not worthwhile, my proposal it's because you're looking at a bigger system. You've got a bigger system in mind. You're not looking at that fruit in isolation. You are somehow saying, there's something about how I plan to use that, which is the reason for this decision. And then it gets into how big is the system that you're looking at? Are you looking at the person downstream of you at work, which that could be an internal customer. People used to use those terms. Are you looking at the person after them, two down from them, three down from them? And that gets into a choice. So what I would tell the folks I was mentoring at Rocketdyne is that they were designing things or going to see how they were used. And I'd say, first of all, nothing requires you to go see how that's used. Your job as a designer, whatever it is in engineering you design it, you give it to manufacturing. But you don't have to go downstairs and see how they're using it.

0:23:47.5 BB: I said, but if you do, you might learn a lot. And then they might say, "well, so I should go talk to the person who's first using it." Well that might be helpful. And then what about the person after that? Well, that might be helpful. And then what about the person after that? Well, that might be helpful. And I was trying to get across to them, we hire really bright people and if we just turn you down to don't look beyond, just deliver the thing, complete those drawings, do whatever it is, pass it to the next person. I said, the system may not require you to go look to see how it's used.

0:24:31.9 BB: But what Dr. Deming is proposing is, the better you understand how it's used, the better you can serve the system. But then you get into the question of how big is the system that you want to be thinking about? And there I would tell them that there's no right answer. I mean, you wanna be and this is what I would tell them is we hire really bright people and then we condition you to believe that it doesn't matter. What I'm proposing guided by Dr. Deming is that there's a possibility that it matters anywhere from a little to a lot, but you won't know unless you go look.

0:25:12.2 AS: Yeah. It's funny.

0:25:12.3 BB: And so what I wanna get... Go ahead Andrew.

0:25:14.4 AS: When I was a supervisor at Pepsi in Los Angeles at our Torrance factory, they asked me to help... Could I figure out how to quicken the pace with which we got 80 trucks or 100 trucks out the gate every morning because it mattered. If you got trucks out an hour late on the LA freeways, now you have overtime and all kinds of trouble. So, what I did is I climbed up... At 4:00 AM I climbed up on top of a building, one of our buildings.

0:25:54.1 BB: Wow.

0:25:54.9 AS: And I had a clipboard, which I always have. I have extra clipboards always with me, here's one right here. And I had paper and then I just observed, and I took a lot of notes. And what I was seeing was all these drivers were, they were checking their trucks and they were spending a lot of time with their trucks. So, after I observed it that morning, the next morning I went down and went around and I asked them, what are you doing? And they said, well I'm checking that the quantity that's on the paper is the quantity that's on the truck. And I said, how could that not be? And they said, the loaders at night don't fill it up right. So, the next night I went and talked to the loaders and I said, drivers are saying that you guys are making errors.

0:26:40.4 AS: No, we're not making any errors. Okay. So, now I gotta dig deeper into the loaders. And then I start to see, okay, the loaders are making errors. So, I went and talked to one loader and said, why are you making this error? He said, well, the production are supposed to put this particular Pepsi item in this spot. But they didn't, they put it in another and I got confused, but it's just 'cause it's normally always there. So, I go to talk to the manufacturer, hey guys come on, why did you put that stuff in the wrong spot? He said, well, sales told us to produce so much that we were overloaded. We didn't have any place to put all of this products. So, we had to basically put it anywhere we could as it's racing off the line and on and on.

0:27:27.9 AS: And then you start to realize like, okay, the system is bigger. Now I went and focused on the loaders and said, how do we make sure that when the loaders load that we can lock the truck and then tell the drivers, you must not open this truck. How do we build the trust between the loaders and the drivers that they're loaded correctly and that they can go, because the drivers don't want to get to San Bernardino or wherever they're going and find out, oh, I don't have what this particular customer wanted and it's supposed to be on here. So that's just a little bit of a picture of kind of a very narrow start that starts to bring in more of the system.

0:28:06.8 BB: Oh, yeah. Oh, that's a brilliant example. And also what you're talking about is a term we used the first series, which is the value of synchronicity. That those handoffs are smooth. And they disrupt...

0:28:26.7 AS: I love that word handoffs, by the way. I was just talking with a client of mine. We were talking about the core processes of the business. And I just now realize that what I was missing and what we were missing in our discussion was how do we make sure that the handoffs work.

0:28:43.6 BB: Well, then the other thing, again a concept you may recall from the first series is, I liken it... I think in terms of two types of handoffs. And, actually, I think in one of the first, maybe in the second episode we talked about this, is associated with acceptability. When I hand off to you something, my report, whatever it is I'm assigned to delivered to Andrew by 5 o'clock tomorrow, you look at it, you inspect it, and you're making sure before you accept it that it is acceptable, that it has all the content. And, if anything's missing a figure, a graph, a label, you send it back to me and then I go through and massage it and then send it off to you. And, part of acceptability is when you say, that's good, then the handoff we're talking about is physical.

0:29:51.6 BB: Right. I mean, there's nothing wrong with a physical handoff. I give it to you physically. And what you may recall me mentioning, I think, again likely episode 2, podcast 2 of this series is I would demonstrate this with people in the class. And I would say, if, if what I give you is not acceptable, what do you do? You give it back to me and you say it's incomplete. And then I go through, massage it. If I now give it to you and all the requirements have been met, it's acceptable. Now what happens? What do you say? And I would kid them and so now you say, thank you. But what I'd also point out is that part of acceptability in a non-Deming organization is the handoff is physical and mental. I mean, physical is: It is yours, not mine.

0:30:38.5 BB: Mental is that if you have trouble with how that fits into what you are doing with it, because that report does not exist in isolation, you're doing something with it. Right. So you're doing your things with it. Now we're looking at the system. And if in the system of you're using it, you have an issue and you come back to me, in non-Deming environment, acceptability is my way of saying "Andrew I'm not sure why we're having this conversation because what I gave you is acceptable." But in a Deming organization, the handoff is physical, but not mental. What does that mean? It means, I'm willing to learn from what you just said and the issues you're having. And now I'm beginning to wonder, there's two possibilities. Either one, what I gave you is not acceptable. There's something wrong with the inspection.

0:31:34.3 BB: Or two, what's missing is desirability, that there's some... What I give you is acceptable, but there's something about how it's, it's um, there's a degree of acceptability, and so instead of viewing it as it's good or it's bad, black and white. Now we're saying there's degrees of good. Desirability is degrees of good. And, so in a Deming environment, when I hand off to you and you have an issue with it, you come back the next day and say, "Bill, somehow this didn't get caught in the control chart." And I said, "well, let me take a look at it," and I may find there was something wrong with the inspection, or I may find that there's a degree of good I'm not giving you that I need to be giving you. So, that can either be an acceptability issue or a desirability issue. I'm willing to have that conversation with you in a Deming environment. So, in a Deming environment, the handoff is physical but not mental. And the learning, as you're demonstrating, the learning that comes from the ability to have those conversations, improves the system. That's a lot more work.

0:32:53.8 AS: So, if you were to sum it up, was that the sum up or would you add anything else to your summation of what you want people to take away from this discussion?

0:33:05.6 BB: Yeah, that's it. I'd like to say one is that there's, acceptability is fine. Choose acceptability, if that's all the situation demands then you've chosen that. But pay attention to how it's used, pay attention to the ramifications of that decision, which may show up an hour from now, may not show up until a year from now. And, the possibility that hiccup a year from now could be either it wasn't acceptable, in which case there's an inspection issue or it was acceptable, which means there's a degree of good, which means it's a desirability issue. And, that gets us into future conversations, talking about degrees of good and the whole idea of variation in things that are good. That's desirability, variation in things that are good.

0:33:57.6 AS: All right. Bill, on behalf of everyone at T      he Deming Institute, I want to thank you again for this discussion. And for listeners, remember to go to deming.org to continue your journey. And if you wanna keep in touch with Bill, just find him on LinkedIn. He responds. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming. "People are entitled to joy in work."