Kaoru Ishikawa was one of the pioneers in the quality management. Some of his ideas are still used nowadays. He thought that the quality of the products depended on the training and education of the employees. One of his most famous ideas was to create the quality circles at the enterprises in which the workers could share their opinions and improve the products by working together. He also introduced the concept of “company-wide quality control” and “seven basic tools” of quality that include: a check sheet, a graph, a histogram, a Pareto chart, a scatter diagram, a control chart, and cause and effect diagram (Rose, 2005, p.31).
The cause and effect diagram remains to be a popular tool for analysis nowadays. In the article “Cause-Effect Analysis for Target Costing”, Chen & Chung (2002) provide an example how the cause and effect analysis was used at the NPC polyester fiber plant in Taiwan in the 1970s. The NPC’s activity depended on the oil prices and there was a task to reduce the production costs. At first, a project team was created and consisted of the employees from various departments. Then the costs of each product were presented in the format of a fishbone diagram. The team understood that there was too much scrap and the chemical engineers started to work together with the representatives of the quality department in order to reduce the amount of scrap and cut the material costs. As the result, the executives were able to take several important decisions. They set up tighter controls and worked with the suppliers to assure the better quality of the materials. In a couple of months, the amount of scrap was reduced by 80%. Than the project team analyzed the cost of packaging materials and reduced the costs by 30%. Moreover, the sequencing and scheduling practices were updated. Overall, the NPC cut the costs by 18% in just three months and identified some managerial problems that later were resolved by the parent company.
References
Chen, I., Chung, C. Cause-Effect Analysis for Target. Management Accounting Quarterly.
Winter 2002. Retrieved from http://www.imanet.org/docs/default-
source/maq/2002maq_winter_chen-pdf.pdf?sfvrsn=0
Kenneth R. (2005) Project Quality Management Why, What and How. J. Ross Publishing, Inc., 192 pages
