This may sound familiar. Manufacturer’s efforts to do more for less have resulted in the purchasing department sourcing products to the cheapest provider. Such cost-cutting certainly makes purchasing groups look like heroes to management, but the effect on manufacturing and quality may be just the opposite.
Many times, sourcing to the lowest cost supplier results in part defects, increased internal non-quality costs, production delays and other undesirable side effects like higher warranty costs and disgruntled customers.
Experts like Dr. W. Edwards Deming, in point 4 of his 14 points for management, stressed to “end the practice of awarding business on the basis of the price tag alone.” The focus should be on minimizing the total cost. “Price has no meaning without a measure of the quality being purchased.”
Cost-cutting pressures and global sourcing challenges are now the norm, so how can quality professionals combat these challenges? One answer is root cause analysis (RCA) which, when fully utilized, can eliminate defects occurring in operations as well as defects inherited from suppliers, ultimately helping to maintain satisfied customers.
No doubt this example will sound familiar. The end customer is upset because Apex Inc.’s (fictitious) product doesn’t meet expectations. The end customer notifies Apex’s customer service department, which passes the complaint along to its product quality group or manufacturing department.
Based on the initial information, the conclusion is that the issue originated at Disco Ltd. (also fictitious), one of their suppliers. Apex cracks down on Disco by issuing threats and other demands.
Disco scrambles to perform damage control and disciplines people suspected of producing nonconformances. Meanwhile, Apex tells its customer that it’s very sorry and the problem has been solved. The customer wants to know what actions were taken. “The operators were disciplined.” Everyone has been told what they wanted to hear. Blame has been fixed and business has resumed as usual.
Did any of the players in this scenario really make changes that will solve the problem? Does Apex really understand its end customer’s issue? Does Disco know what the problem really is, let alone what will meet the end customer’s needs? For that matter, does the end customer really believe that Apex is being totally honest?
In this scenario, there is a disconnect in problem investigation and resolution, but this is common in the flow of information. With decentralization of sourcing, there are more levels and players, which means more layers between the end customer who has a problem and the solution that will solve it. The result is that players in the supply chain, in an effort to handle customer complaints quickly, may not even realize that they are restricting the flow of information that would enable actual problem resolution.
There are better solutions than the one presented above. Quality professionals are actually in an enviable position to facilitate more effective solutions. A few years ago I was asked to intervene between a company and supplier (we’ll call them Apex and Disco).
The first step was to immediately encourage representatives of both parties to stop viewing the issue as Apex vs. Disco and start thinking it’s “us” against the problem. Next, they were asked to resist the urge to point fingers or make premature assessments, but instead to allow the RCA process to unfold.
Although people did need to vent, they were able to move on to identify causes and back them up with evidence. By focusing on the cause and effect relationships, Apex and Disco were able to reach these conclusions:
Both parties were responsible. Apex’s specifications and requirements were less than adequate. Disco, meanwhile, was providing inferior product characteristics.
Each party had significant challenges to overcome in their processes, due to the cutting-edge nature of their product lines.
By creating a visual picture of the problem with a simple flowchart and cause-and-effect diagram, everyone could see the entire system of causation. An empathetic environment was established because facts, not emotion, prevailed.
During two full days mutual brainstorming of solutions occurred, and the mood became one of collaboration. They uncovered and realized a host of related issues that, in themselves, weren’t big deals, but when combined created significant problems for all concerned.
Quality professionals are in a unique position to use their expertise with RCA tools to improve relations with both customers and suppliers by involving them in root cause analysis. Along the way, the parties will improve communications, effectively solve problems, keep customers happy and, ultimately, enjoy greater success.