The value, and cost, of quality

Disciples of TPS and TPM see Toyota's solution within its system.

By Bob Call, CMRP

In the same way that comedians have only to look to politicians for great joke material, we don’t have to look far these days to find excellent examples of how things can go so wrong, so fast, in the world of reliability. As I write, we find ourselves deeper and deeper into what I will call the “Great Toyota Reliability Story of 2010.”

The massive recall of several Toyota models for “accelerator” issues is the stuff of manufacturing legend, though certainly not in the sense that Toyota might have wished. Not even the devastating earthquake in Haiti can overshadow the outcry for the heads of Toyota leadership to be removed summarily and all their vehicles pulled from U.S. roads. What a fickle lot we are, that seemingly overnight all of us become perfectionists and experts in automobile functionality and reliability — we who drive around with bald and underinflated tires, worn-out wiper blades and oil that hasn’t been changed in years.

The media as a whole seems to have become “Toyota Paparazzi,” and is, I believe, single-handedly driving down the value of Toyota stock. No doubt the weight of that huge red bulls-eye is wearing on Toyota leadership. Unfortunately, it’s human nature to attack and attempt to destroy those at the top of their game. But, I don’t discount the seriousness of the potential hazards to drivers and owners. The issues for Toyota are real and must be addressed.

As soon as there is a little crack in the focus, the downward slide begins.

– Bob Call, CMRP

This is about quality: how it builds and sustains your business, and how a lapse of concentration on quality can bring it down. Toyota’s reputation as a leader in industry, and THE leader in business process and quality, was no accident. Those of us who are disciples of the Toyota Production System (TPS) and Total Productive Maintenance (TPM) can easily understand how Toyota got to the top of mountain. They got there through rigorous process, incessant demand for quality and full employee engagement at every stage of the design/manufacturing/marketing/sales process.

So, what is quality? Quality is a look, a feel, a functionality, an acceptable state for delivery to a customer. Quality is defined by design engineers, proven in test applications, taught (what to look for) to manufacturing operators and maintenance personnel, then manufactured and delivered to a customer, who is the ultimate defining authority. Does it do what I need it to do? Does it do what you said it would do? Does it function as designed? Does it function without failure? These are some of the questions that must be answered to determine quality.

Early in the life of a business, we’re generally good at delivering high-quality, and first-pass quality, goods. In many cases, we’re able to sustain this level of productivity for long periods — years, sometimes decades. We’re typically pretty safe in our product quality for as long as we can sustain the original players who were on the ground at the beginning of the journey. The original team has focus, drive and a sense of urgency to “make it right the first time.”

However, as soon as there’s a little crack in the focus, the downward slide begins. I have a theory that the degradation of quality begins at the point when the first member of the team leaves and is replaced by someone new. The change is negligible at first, but every time a team member is replaced, the negative change grows a little. What is being lost is hard to define. It could be a loss of focus on quality on the part of the new team member, a small decrease in process knowledge, a failure on the part of remaining team members to train and instill a sense of purpose in the new team member.

On the manufacturing floor, there can be many reasons for quality to begin the downhill slide. At higher levels in the organization, it might be an engineer or procurement person looking for a more cost-effective (and perhaps lower-quality) part to help increase that profit margin a little. At the top, executives can get caught up in focusing more on shareholder comfort levels than product quality levels. (I wonder how many Toyota shareholders actually drive Toyotas.) Ultimately, the decline continues to a point that there’s a negative quality breakthrough, and we find ourselves in an embarrassing situation with our customers.

Acknowledging the fact that businesses must make a profit to ensure longevity, we can’t overstate the long-term effects of “less-than-first” quality. We might be able to maintain our market share and reputation for some period of time — there is always some “middle man” out there who is willing to take less-than-first quality product and re-sell it to a certain consumer market — but in the long run, it will come back around to bite us. It’s sort of like the Russian submarine captain in “Hunt for Red October” who removed all the safety features on his torpedo. He got whomped by his own weapon. If you really want to remain successful and sustain the largest market share in your business, you have to keep your safety features (quality control program) in place, and less-than-first quality simply must be unacceptable.

I think the bottom line is that no one — no one — in an organization can ever lose sight of the value, or the cost, of quality. Sustained, long-term, high quality brings market share and a good reputation. A decline in quality can quickly cause a decline in market share and shatter a good reputation. I recall a saying from my Navy days: one “aw-shucks” can outweigh a whole bucket of “attaboys.” Some of the nation’s airlines, Ford/Firestone and now Toyota, are living proof of that little idiom.

I have no doubt that Toyota will emerge from this current turmoil an even stronger and more reliable company. Toyota leadership will put TPS and TPM to work, determine the root cause of these issues, eliminate the causes and come out the other end with an even better automobile than the ones they have been producing for decades. I think Toyota will see this event as a wake-up call to re-focus on the things that made them one of the most successful and admired companies in the business world.

All of us can take a lesson from that. When you look at your own operation, you have to ask yourself, “What is the value, and cost, of quality?” At the end of the day, it doesn’t matter if you are Toyota or Joe’s Bait and Tackle. Quality, or lack of it, will determine your reputation and future for you.

Bob Call, CMRP, is a principal consultant with Life Cycle Engineering. E-mail bcall@lce.com.

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