What Is the PDCA Cycle?
The Plan-Do-Check-Act (PDCA) Cycle is a four-step problem-solving iterative technique used to improve business processes. Originally developed by American physicist Walter A. Shewhart during the 1920s, the cycle draws its inspiration from the continuous evaluation of management practices and management’s willingness to adopt and disregard unsupported ideas.
The method was popularized by quality control pioneer Dr. W. Edwards Deming in the 1950s who coined the term “Shewhart” Cycle after his mentor. It was Deming who realized the PDCA Cycle could be used to improve production processes in the United States during World War II.
- The PDCA Cycle is a four-step technique that is used to solve business problems.
- Many managers unknowingly use the PDCA Cycle as it encompasses much of the same framework as strategic management.
- The last step of the PDCA Cycle (act) calls for corrective actions to stimulate and sustain continuous business improvement.
- The PDCA process is similar to the Japanese business philosophy of Kaizen.
- Many large corporations, such as Toyota and Nike, have seen dramatic growth after implementing PDCA or Six Sigma methodologies.
How the PDCA Cycle Works
The PDCA Cycle can help differentiate a company from its competitors, particularly in today’s corporate world, where businesses are always searching for ways to streamline their processes, reduce costs, increase profits, and improve customer satisfaction.
Many managers apply the PDCA Cycle unknowingly to help direct their organizations as it encompasses the basic tenets of strategic planning. The four components of the PDCA Cycle are outlined below.
A well-defined project plan provides a framework for operations. Importantly, it should reflect the organization’s mission and values. It should also map the project's goals and clearly indicate the best way to attain them.
This is the step where the plan is set in motion. The plan was made for a reason, so it is important for players to execute it as outlined. This stage can be broken down into three sub-segments, including training of all personnel involved in the project, the actual process of doing the work, and recording insights, or data, for future evaluation.
Typically, there should be two checks throughout the project. First, checks alongside implementation ensure the project's objectives are being met. Second, a more comprehensive review of the project carried out upon completion addresses the successes and failures so that future adjustments can be made.
The final step is to take corrective action once past mistakes have been identified and resolved. The PDCA Cycle is repeated and can be redefined perhaps to better results under new guidelines.
Given its cyclical nature, the PDCA Cycle is something businesses can institute once and then use to continuously iterate and improve their operations.
The PDCA Cycle and Kaizen
The PDCA process is similar to the Japanese business philosophy of Kaizen, which, when translated, means "change for the better" or "continuous improvement." Kaizen is where all employees are involved in improving productivity by finding efficiencies in the work environment. Like the PDCA cycle, Kaizen aims for continuous improvement through small, incremental changes.
Examples of changes that might be made through Kaizen or PDCA are using new systems, eliminating waste, or implementing just-in-time delivery. Not all changes need to be small or incremental.
The concept behind PDCA and Kaizen is that the culture of an organization changes as the employees learn to be problem solvers and critical thinkers. The PDCA cycle tests employees' ideas, adjusts them, and then implements them if they have potential. The cycle is an iterative process that continually tests concepts and promotes improvements.
Benefits of the PDCA Cycle
Companies looking to enhance their internal and external processes often deploy the PDCA methodology to minimize errors and maximize outcomes. Once established, companies can repeat the PDCA Cycle and make it a standard operating procedure. The final stage of the methodology, "Act," takes corrective actions and makes the methodology ideal for continuous improvement efforts.
Lean methods like PDCA and Kaizen helped Nike to double its profits from around $100 billion in 2015 to over $200 billion in 2021.
Examples of the PDCA Cycle
The Mayo Clinic
The Mayo Clinic, a nonprofit, world-class hospital and research center, conducted a quality improvement study that looked at wait times for patients who were possible candidates for large cochlear implant surgery. The idea was to employ Kaizen principles to remove barriers and improve access for patients.
The study looked at the refining of specific treatments, the management of patient records, and waiting room times. Ultimately, there were positive outcomes for patients. Among the results, median cycle time for candidacy testing decreased from 7.3 to 3 hours, and total inventory of clinic stock was reduced by 31%.
As of 2021, Toyota Motor Corporation was the seventh-largest company in the world by revenue, according to FXSSI. Kaizen and Toyota are synonymous because Toyota’s principles and "The Toyota Way" define the idea of continuous improvement in the production system. Toyota’s employees receive incentives for finding inefficient practices and designing ways to improve them, and the application of the PDCA cycle supports quick decision-making.
Nike embraced "lean," a similar philosophy to Kaizen. The company's innovation manifesto states, "Lean is the foundation of how we advance sustainable manufacturing." The manifesto reflects Nike's continuous improvement culture that relies on those closest to the work to solve problems and deliver quality products on time.
When the leading sports shoemaker was criticized for paying low wages, the company employed PDCA to empower its employees, partners, and customers. Incentives were offered to factories to improve working conditions, and a scoring system assessed the performance of the production facilities.
The company improved conditions for workers, eliminated waste, and employed value-oriented managers. The commitment to lean methods and Kaizen helped Nike to double its size from around $100 billion in 2015 to over $200 billion in 2021.
Is PDCA the Same As Total Quality Management (TQM)?
Total quality management (TQM), which is the precursor to Six Sigma, includes the philosophy of PDCA, but it goes one step further.
According to Smartsheet, which quotes Marlon Walters, the Founder and CEO of Horizon Group Consulting, "With TQM, you have to wait for your customers to confirm that it’s good. With Six Sigma, at the end of the day, you don’t guess if your product is better. You know it. If you properly identify your market and your product has the best fit for the niche, you know you have the best product from a process perspective."
Kaizen, or PDCA, is more of a philosophy for how to organize the larger workplace and how to engage coworkers. It is less about waiting for customer feedback or results. Both PDCA and TQM consider the whole company responsible for continuous improvement.
What Is the Difference Between PDCA and Six Sigma?
The difference between PDCA and Six Sigma is that Six Sigma is an all-encompassing management principle that includes PDCA as part of its structure. PDCA explains how to enact Six Sigma, it is the plan, do, act, check process. Six Sigma calls this the DMAIC method (define, measure, analyze, improve, and control).
According to Walters, PDCA is people-oriented while Six Sigma is process-based. For example, the term "define" in Six Sigma removes the human element, and the term "measure" puts the focus on data.
What Is the Difference Between PDCA and PDSA?
PDCA stans for plan, do, check, act, whereas PDSA stands for plan, do, study, act. They are both iterative, four-stage problem-solving models used to improve a process. The main difference between the two is that PDCA, which was developed before the PDSA model, has the "check" stage. In this stage, the team determines whether what they intended to achieve has actually occurred by checking expected results with the actual results. So, PDCA has a built-in check for every cycle in the process.
The Bottom Line
The PDCA Cycle, PDSA, Kaizen, and Six Sigma are all proven ways to continuously improve processes. Many companies including Nike, Toyota, the Mayo Clinic, and many others have seen dramatic growth after employing one or more of these iterative strategies. The concept changes the culture of a business so that all stakeholders have input and can act as problem solvers and critical thinkers. The result is more ideas for change.