Warning! Warning!

Five signs quality is at risk within your organization. This year has seen tremendous lapses in quality with equally tremendous costs—whether it’s lives lost, or environmental catastrophe. How does a company that used to be a quality leader fall so dramatically, and what are the risks to consumers and employees from companies that do not have successful histories with quality improvements?

Juxtaposed against this backdrop, there is a constant drumbeat from financial analysts for improved corporate profit margins, with never-ending improvements to the labor productivity metrics tracked by companies. But when does an endless series of cost-cutting cycles, or related warning signs, lead to an inexorable decline in the quality of the products or services companies provide?

There are five warning signs that are indicators of a change in corporate attitudes toward quality. Some of these can occur naturally over time as corporations become enamored with their progress. In other instances, the company is led astray due to the misapplication and shortening of the quality improvement cycle.

The five warning signs are:

Repeated cost-cutting cycles.
Operational signals ignored or delayed.
Aging equipment or degradation of maintenance services.
Direct cuts to quality or operational excellence personnel.
Elimination or outsourcing of customer assistance resources.
Each of these warning signs portends a potential drop in quality. In some cases, many of these signs occur at the same time in a comprehensive drive to eliminate costs and improve the bottom line.

Cost cutting
If your corporate culture has degraded into one cost-cutting cycle after another, there’s good reason to believe quality will eventually be affected. Cost cutting short-circuits quality improvement cycles—whether it’s define, measure, analyze, improve and control (DMAIC) or plan-do-check-act.

Companies that have well-trained staffs can handle some direct cost cutting without having a negative impact on quality, but not when these cycles become the primary strategy for meeting the corporate goal of ever-increasing profit margins.

For example, costs are usually cut when products and services are improved using the full DMAIC project cycle. There is no guarantee that product quality is preserved when cost cutting occurs outside this cycle, particularly when the 15% cut that occurred last year is followed by the 25% cut desired this year. It is a path to degraded quality.

Missed signals
Under the best scenario, a good quality program has set up many effective control charts to monitor the real-time status of key operating parameters. These charts provide the first indication of process changes and allow for any signals to be addressed immediately. This response should occur with limited scrap or internal rework and certainly without any impact on the customer.

What happens, though, when signals are ignored because of the expense of shutting down an operation? Think of the pressure readings in an oil well that may have been ignored or had a delayed response, or the gas measurements in a mine that can indicate conditions are unsafe for workers.

When a mind-set develops that employees can ignore operational signals or delay their responses to those signals, there is potential for severe issues for customers and employees alike.

Consider the companies that never developed effective quality operating systems in the first place. Do they even have the appropriate signals on the right sets of charts to know when a mine or oil well should be shut down?

Equipment breakdown
Getting the most out of your organization’s equipment is a hallmark of remaining competitive in your industry. Understanding how often preventive maintenance needs to occur to keep optimal performance levels is a key challenge faced by any manufacturing-based business.

Having appropriate numbers of internal or external service resources is also important to minimize down time, especially with highly capitalized equipment. In a cost-cutting environment, it’s easy to let these efforts lapse, to never upgrade older equipment and to chip away at the requirements for optimal equipment performance.

Maintenance service personnel may be eliminated as part of the cost-cutting operations. Service contracts are eliminated, even if there is a lack of internal knowledge to respond effectively when the equipment eventually breaks down. As equipment gets older, more resources may be required for optimum performance, not less.

If your company cuts maintenance engineers, eliminates service contracts and reduces preventive maintenance cycles without the necessary projects to show these things can be done without an impact on quality, your organization risks degradation in long-term quality and a higher likelihood of defects.

Personnel cuts
The number of quality or operational excellence personnel is a direct measure of a company’s commitment to its quality program. These resources are allocated to set up and monitor projects that drive the continuous and breakthrough improvements needed for organizational success. They also monitor the organization’s progress to the specifications in place to ensure quality.

Companies can become complacent over time when they have set up successful improvement programs, such as Six Sigma, that have been effective in promoting corporate quality. At some point, the false belief can arise that the organization no longer needs the knowledge provided by the external quality experts who assisted in putting effective quality programs in place and statisticians who helped with statistical process control or design of experiments.

When these resources are eliminated, who is responsible for training new engineers or other staff in the quality basics? Who consults with engineers who have limited knowledge levels? When the quality personnel resources are cut to promote margin performance, how long does it take for corporate quality to be affected?

Customer assistance
Satisfied customers are the key to successful businesses. Every business needs to handle situations in which products are defective or fail to meet customer expectations. With the corporate focus on improving profit margins, it’s easy to cut personnel who respond to customer complaints and ensure problems are rectified.

When these cuts are contemplated, it should be part of ongoing improvements to customer service through the right processes, such as the DMAIC cycle. An efficient customer service process does not mean more people are needed. In fact, if customer service quality is improving over time, there may be positive ways to streamline the process and keep customers highly satisfied.

Heed the warning
These signs are a warning to corporations that quality is not guaranteed to remain at high levels when waves of cost cutting are undertaken without the appropriate project framework of the DMAIC cycle. It is unfortunate so many companies seem to have fallen into a trap of sacrificing long-term quality for the short-term benefits of an improved gross margin.

Corporations can reverse this cycle by returning to the basic principles that led to greatly improved quality in the first place. Follow the guidance provided by W. Edwards Deming and strive for significant improvements in all aspects of business activity.

Highlight significant projects that will drive customer satisfaction while simultaneously lowering costs. Provide the proper resources to ensure the success of these projects. Train your workforce in the principles of lean, Six Sigma and total quality management, and work with your suppliers to provide the highest material quality to use in your manufacturing or service environment.

These steps will lead to improved profitability and a safe work environment, while also providing the highest quality products and services to your customers.

Reference: QP