In these highly competitive times, it may seem as though improving productivity is the key to market share. Manufacturers often focus on improving productivity and managing, controlling and reducing costs. While this seems like a worthy goal, it is not. A focus on productivity often backfires. According to the wisdom of W. Edwards Deming, “Improve quality, you automatically improve productivity.” Yet many manufacturing leaders consider quality a cost driver rather than a profit driver.
With the traditional view of quality as an end-of-the-line inspection function, finding a quality problem at the end of the line is an expensive proposition. Recalls can be even more expensive. Consider the cost of some recent recalls: Pfizer spent $3.3 billion in 2009; Takata shelled out $26 billion for its faulty airbags; and Volkswagen reserved $7 billion and counting for its emissions scandal. The Grocery Manufacturers Association pegs the average cost of a food recall at $10 million in direct costs, not counting lost sales and the effects of brand erosion. McKinsey reports that the cost of a single med device recall is upward of $600 million, and the average cost exceeds $5 million a day.