Quality Magazine

Manufacturers' Quality Practices Vary in Slumping Economy

January 16, 2009

MILWAUKEE--It is easy to assume that when the economy is in a recession, businesses will make major cutbacks in order to survive. However, according to the American Society for Quality's (ASQ) latest Quarterly Quality Report, many manufacturing companies are not in the crisis mode one would expect.

ASQ talked with its members to gain insight on the issue from practicing quality professionals. The feedback received clearly showed some of the expected pain companies are going through – such as reductions in work force, reductions in training, and budgetary cutbacks for quality initiatives.

However, not all share that view. The results displayed two very different types of organizations reacting in fundamentally different ways to eroding economic conditions. On the one hand are those going into crisis mode, cutting back and de-emphasizing quality initiatives. On the other hand are those that continue to invest in quality and innovation as a competitive advantage in the face of economic uncertainty.

It’s a business dilemma that affects many other functions besides quality: To cut back or to forge ahead when the going gets tough? Organizations that refuse to panic, that move ahead with new initiatives, and that don’t cut too deeply will be better positioned to excel when the economy rebounds.

“The really good news, if there is a silver lining in these times, is that while some companies are shrinking back into their shell, other organizations are moving decidedly in a forward-looking direction, and keeping quality practices at the top of the list,” says Ken Case, ASQ past president and emeritus professor at Oklahoma State University.

Those members who felt their organization’s viability is different today than a year ago and attributed it to the deteriorating economy were the ones who were much more likely to report reductions in work force, less training, and overall culture changes when it comes to business improvement where they work. Many were even backing away from quality initiatives that organizations typically use to cut costs.

In between the two obvious extremes is the middle ground of organizations that are attempting to balance efficiency with innovation and growth. Members said that waste reduction and increased efficiency are receiving a considerable amount of increased attention. Also garnering more attention are efforts to generate inspiration and new ideas. Members state that they are listening to the voice of the customer more and are more engaged in programs to bolster innovation and creativity. Innovation, creativity and quality initiatives are key for organizations looking for continued growth.

Overall, many members felt their companies and the management at their companies were looking forward and using quality for long-term strategies. The results presented are an indication of what many manufacturers may also be experiencing.