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Case in PointAt one company, the president (who was also the chief stockholder) expressed his displeasure to the QC manager concerning the relatively low amount of returns. He believed the returns should be about 3% of the monthly shipments. If returns were greater than 3%, the quality level was not sufficient and had to be improved; if returns were less than 3%, production was spending too much time (and money) on the products. The president based his standards on the “law of diminishing returns” and said that the additional costs of increasing quality levels (i.e., reducing returns below 3%) would lower the maximized rate of return on shareholder equity.
In another situation, a company purchased a closed plant and re-employed some of the past workers. The workers, thankful for an opportunity to work, wanted to produce high-quality goods so they could please the customers and have stable jobs. With this commitment to quality, the workers were dismayed when the plant manager began sorting through scrap bins, pulling out rejected parts and placing them on the trays for further processing. The plant manager felt that many of the rejected parts were “good enough” for shipment. No one realized at the time that the plant manager received a bonus based upon quantity shipped. His bonus was not adjusted for the number of products that were returned or credits that were issued.
At yet another company, the incoming QC department rejected a very large lot of components. After reviewing all internal manufacturing and QC records for the components, the supplier felt strongly that the customer’s specifications were being met and sent a technical representative to the facility to discuss the problem. While observing the incoming inspection procedures at the customer’s facility, the representative raised some questions concerning the criteria that were used to select parts for defect analysis. When the incoming QC inspector modified the sample selection procedure, the lot was found to meet the specifications and was kept. No one ever questioned the actual quality of the parts. The representative was relieved to have prevented the return. But what if all the paperwork and procedures were correct, and the parts weren’t really suitable for the application? The QC inspector didn’t know how the parts were supposed to function in the final assembly—the decision to accept or reject was strictly a matter of documentation and procedure.
On the Receiving EndMy mother recently received a pacemaker. I could not help but wonder whether all QC documents and procedures were in order, and whether those documents actually reflected the pacemaker’s quality…or if someone in production had a different opinion on what was “good enough” for shipment…or even if that pacemaker was one of the 3% of a lot that contributed to the manufacturer’s maximized shareholder equity.
Quality is not an absolute. As a result, the perception of what constitutes a “quality product” often varies from person to person and from company to company. However, one view on quality is common in all cases: Every person believes that the products they buy should be high quality products, without faults, defects or failures—just like the person receiving a pacemaker.
What is your expectation of quality when you buy something? What perspective of quality do you want the manufacturer of that product to follow? Is it the same quality perspective you apply when you produce your products?