Some 50 years after the advent of the total quality management (TQM) movement championed by W. Edwards Deming, manufacturers of all different sizes and stripes are still being dogged by high-profile manufacturing quality defects. The list is long, and getting longer every week, and crosses every manufacturing vertical. At least a token "quality program" is de rigueur for U.S. manufacturers, but many are still at lip-service level agreement with the means required to reach the necessary ends. However, talk is cheap -- recalls are not.
From tainted beef to spinach, from lead-painted toys to poisoned pet food and blood thinners to exploding laptop batteries and malfunctioning medical devices, the costs in scrapped product, consumer lawsuits and lost brand equity from defects and recalls are huge.
Persistent, expensive and well-publicized recalls are striking companies with even the most stellar quality reputations. Toyota, the progenitor of a legendary quality-focused production system, has suffered a rash of defects that have caused the company to drop in Consumer Reports' Annual Car Reliability Survey ratings -- an important market barometer for its consumers.
On a perhaps less dangerous but equally costly front, Microsoft's X-box 360 video gaming platform suffered a high-profile manufacturing defect that at one point had up to one-third of all units suffering from a "fatal error" (device owners called it "the red ring of death") that led at least indirectly to markedly weaker competitive positioning in the crucial holiday selling season, as well
as a warranty extension that is estimated at more than $6 billion in unplanned accruals.
Many of these manufacturing problems are coming from global supply chains, which is a failure as much of management as it is the defective products themselves. However bleak the situation may seem, all is not lost. Indeed, the responsibility for quality manufacturing finally seems to be taking hold across all levels of the enterprise.
Quality Goes Upstream
Talk to the manufacturing community about quality's place in today's environment and a clear pattern emerges -- companies are finally grasping the "shared responsibility" aspect of Deming's teachings. If quality is truly everyone's responsibility, then the idea goes beyond the shop floor and into the front office, the service department and everywhere else that provides value to customers and shareholders.
Ron Atkinson, chairman of the American Society for Quality (ASQ), has been watching this trend unfold. He describes the path that the idea of quality management in manufacturing has taken over the years.
|"Quality is everyone's responsibility."
-- W. Edwards Deming
"When I started in manufacturing 35 years ago, there was a policeman installed at the end of the line who looked at the parts and said, 'That one is OK, that can be shipped and that one can't.' Gradually, it got to, 'Let's find better ways to do the checking,' and then to, 'Let's find a way to predict what the parts are going to look like when they hit the end of the line,' so we started doing defect prevention. Now where we're at is that quality is expanding to cover everything, including outside of the actual manufacturing process, to 'how do we improve the quality of our HR services and support services? How do we improve the quality of the decisions that are made?'"
According to Atkinson, concepts crucial to establishing a top-quality manufacturing line have been driven upstream, and expanded to become part of an overall continuous improvement strategy. "Quality has become a systems approach, rather than focusing on one part at a time and whether it's dimensionally correct. Quality is continuous improvement."
Juergen Boenisch, executive manufacturing consultant and chair of the Society for Manufacturing Engineers' Toronto chapter, also has been witnessing the expansion of quality's scope to meet the needs of today's customer-centric manufacturing enterprise.
|Top 10 China Sourcing Import Segments
|Electrical machinery, sound equipment, TVs, etc.||65|
|Nuclear reactors, boilers, machinery & parts||62|
|Toys, games & sporting equipment||21|
|Furniture, bedding, lamps etc.||19|
|Footwear, gaiters & parts thereof||14|
|Apparel articles & accessories (non-knit)||12|
|Articles of iron & steel||8|
|Apparel articles & accessories (knit)||8|
|Plastics & articles thereof||8|
|Leather art, saddlery, hand bags||7|
|Total imports from China||288|
|Source: Deloitte Consulting, LLP|
"Quality can be many-fold," he says. "Quality can be how conforming my product is with the customer expectations, but quality is defined differently in a call center, so the first questions to ask are, 'What is my quality? What are we going to measure? What do we want to improve?'" This can be, according to Boenisch, an aspect of product design, engineering or equipment tolerances, but also can be service-centric, and have as much to do with talent and human capital management as precise and rigorous tolerance-testing mechanisms.
Boenisch's own definition is surprisingly simple: "Quality is whatever my customer is paying me money for." However, he admits that this expanded idea of quality starts to creep into areas that are less quantifiable than, say, a non-conforming part. "Customers call and complain and they say, 'Your service stinks.' But how do you measure that?" And as the manufacturing industry shifts with the rest of the economy and becomes more service-and customer-centric, executives and experts alike are seeing the need for spreading the quality message across the enterprise.
How best to get this quality mission accomplished? Boenisch hearkens back to the gospel of Deming, who preached a hybrid approach of quality control methods and employee empowerment that has perhaps found its fullest expression in the Toyota Production System (TPS). In his work as the chair of a "Human Side of Lean" committee for SME, Boenisch often makes the point that while line-level manufacturing quality control techniques have gained widespread adoption -- the ubiquity of defect reduction strategies is proof of their spread -- the employee-engagement part of this equation has been given short shrift.
"You need a standard process, sure, but at the end of the day, you need the people that catch the ball whenever something comes out of the ordinary," says Boenisch. He notes that while the idea of quality is still mostly stuck in the defect-reduction paradigm, "I am very certain we will see a very clear shift from our process view, which we have today, towards a people-centric view in the future."
Rework and Morale
Larry Coburn, vice president of operations at high-tech audio equipment manufacturer Crown Audio, has seen the need for strong management and employee commitment in his company's recent quality improvements. The market in his industry was driving the development of more complex products that need to be produced more cheaply, and these twin trends put so much pressure on his manufacturing operations that things were breaking down. Their first-pass yields had gotten so bad that their rework inventory had piled up, and even became a major line item on the balance sheet.
|China's Share of Total U.S. Imports in Category (%)|
|Electrical machinery, sound equipment, TVs, etc.||72|
|Nuclear reactors, boilers, machinery & parts||25|
|Toys, games & sporting equipment||81|
|Furniture, bedding, lamps etc.||49|
|Footwear, gaiters & parts thereof||72|
|Apparel articles & accessories (non-knit)||31|
|Articles of iron & steel||29|
|Apparel articles & accessories (knit)||23|
|Plastics & articles thereof||22|
|Leather art, saddlery, hand bags||72|
|Total imports from China||16|
|Source: Deloitte Consulting, LLP|
"We had areas that were designated for rework that were so large that they were getting on our inventory control list because they were major entities in terms of dollars in inventory," he recounts.
In fact, the problem was large enough to conceal what Coburn and his team call 'hidden factories' -- millions of dollars of untapped production and sales potential existing within their production line.
"We started analyzing these hidden factories and we actually identified $4 million of cost related to poor quality," Coburn says.
To stem the tide of red ink, Crown Audio embarked on a drastic plant-floor triage process that involved stopping production entirely, so as not to generate any more rework. They then analyzed and tested the defective inventory, broke the components up into groups based on the common problems they exhibited, and used those groupings to analyze potential process improvements and defect reduction strategies before plugging them back through the process. Once they finished, they not only had saleable inventory to get out the door, but also had a pretty good handle on the parts of their process that needed changing, says Coburn.
"When we started, we had months and sometimes close to a year of backlog that needed to be fixed and repaired," he relates. "Now we are talking in terms of hours of rework in front of us."
However positive and dramatic this change, Coburn and his management team also realized that it wouldn't help much if the scrap and rework inventory piles kept growing, he says, which is where he says the less-tangible "employee engagement" part of the equation comes in.
The first aspect is enabling them to do their jobs. "We're continuing to empower our workers to get real-time data at their fingertips so they're making good decisions without two-week-old data, or without estimating or just evading what they think the problem is," he says. Rather than having his workers hanging their heads, Crown Audio's management team is now in the enviable situation of having different lines and shifts brag about their first-pass yields to each other.
Sustaining this motivated, engaged workforce is itself a team effort, says Coburn, who says that he has learned over the course of Crown Audio's continuing quality initiative that solidly designed manufacturing processes backed up by an engaged and empowered workforce is the essential combination to move any company forward. Quality truly is everyone's responsibility, and everyone appreciates a job well done.
"There is nothing more frustrating than working hard and then knowing that what you did, did not work out or did not come through."
Coburn stresses this point in no uncertain terms. "Morale is everything in quality," he says. "People want to do a good job, and we have to enable that."