Deming's Point Four

End the practice of awarding business on the basis of price tag alone.

♦ Instead, minimize total cost by working toward a single supplier for each purchased item.

♦ “We can no longer leave quality, service and price to the forces of competition for price alone – not in today’s requirements for uniformity and reliability.”  (James K. Bakken, Ford Motor Company)

♦ “Price has no meaning without a measure of the quality being purchased.”  (Walter A. Shewhart)

♦ Deming never said that price tag wasn’t important, nor did he suggest that we spend money like drunken sailors on purchased materials, components or services.  Rather, he was merely pointing out that price is but one variable in the total cost of purchased materials, components and services.

♦ The policy of forever trying to drive down the price of anything purchased, with no regard to quality and service, can drive good vendors and good service out of business.

♦ Got a low bid?  Better find out why.

“We cannot afford to purchase equipment and buildings at the lowest price.  We have to be more careful.”  (Sr. Jeanne Perreault, President, Rivier College)


Notes

W.E. Deming, Out of the Crisis, MIT Center for Advanced Educational Services, Cambridge, MA (1986), pp. 31-33.


© 2015 James F. Leonard.  All rights reserved.

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