Source: Forbes.com /Dave Evans
Systemic manufacturing and industry-wide production quality issues have caught up with Ford in recent years and undermined its famous 1980’s-era ‘Quality is Job 1’ slogan.
As a result, new vehicle launches have been marred by quality concerns, the company’s infotainment systems have been dinged by consumers, and production has been delayed by defective parts and problematic assembly lines. Beyond a reputation concern, these challenges have hit the bottom line, with the company having spent $3.87 billion in warranty repairs over the first three quarters of 2020.
Unfortunately, quality concerns are not limited to Ford. Companies around the world regularly suffer from quality lapses in design, production, and assembly that can sabotage success. From overzealous cost cutting to poor supplier management programs, the reasons for inferior quality are numerous.
The stakes for meeting quality expectations are high. A Yotpo study found that poor product quality is the number one reason why brands lose loyal customers. Conversely, it found that more than half of consumers are brand loyal because they love a product.
Today, a unique convergence of factors – growing consumer demand post-pandemic, a focus on reimagining supply chains, and the digital transformation underway in manufacturing – makes this the perfect opportunity to refocus on quality and realize its long-term benefits to revenues.
Get on the Front Foot
Many brands are comfortable playing defense using quality control programs. This approach to managing quality can be effective but requires enormous investments of time and money. Companies must build inspection teams, allow for timeline buffers to execute inspections and potentially replace defective parts, and even hold excess inventory on hand to account for possible issues – incurring more resource expenditures for additional storage.
Inherently, this strategy also shifts the onus from partners within your supply chain onto your own teams. By letting partners off the hook, it avoids solving for the original quality issue and only perpetuates an expensive quality problem and management program.
Instead, shifting to a proactive quality assurance stance helps create a superior process throughout the entire supply chain. We call this approach quality by design, not inspection. Businesses should assess their supply chains to identify potential sources for defects or liabilities, and then partner with suppliers to build in rigorous and systematic checks. Ensuring visibility at every stage of production is also important because it can provide real-time look-ins on quality and on-time delivery.
While this might require more up-front investment in tools and communication, it ultimately saves time and money on the back end, allowing for greater growth and revenues over time with reduced customer complaints and warranty or recall concerns.
Begin with Good Design
Quality in design is also a critical element of an overall quality strategy. Product design and manufacturing are collaborative, balanced efforts that rely on one another, affording designers a chance to influence better quality outputs.
It is incumbent then upon businesses to ensure that in-house teams and engineers are designing for superior manufacturability. Optimizing designs for production and engaging partners for feedback before placing orders is a powerful way to minimize the potential for defects or lapses within the supply chain.
With an end-to-end quality by and in design program activated, it’s imperative to hold everyone accountable to higher standards. In the case of Ford, the company plans to charge those suppliers linked to a part issue for half the cost of a resulting warranty problem. Ford is also making it possible for suppliers to claw back some of those costs through a rebate if they resolve the problem quickly enough.
While this may seem severe, holding partners accountable for quality can help eliminate customer facing issues after products have shipped. Companies that would rather avoid punitive programs could instead incentivize suppliers for hitting quality benchmarks or improving performance over time.
Importantly, extending that accountability up the chain to in-house designers and executives also reinforces the concept of quality as a team effort.
Take the Long View
Quality is a complex formulation with significant downstream implications for brands in terms of customer experience and satisfaction. Quality issues or product recalls can have devastating effects on even the biggest companies and potentially drive small and medium sized operators out of business completely.
Ignoring quality or relying on the diligence of your supply chain partners is a high-stakes roll of the dice. As the world reopens for business, companies should make an honest assessment of their quality programs and invest the time and money needed to proactively reduce points of exposure.
Ultimately, money spent now will be returned exponentially in terms of brand loyalty and revenue growth later.