What The Data Says

February 17, 2010
Lessons from  the Japanese:  Monozukuri, Quality, Cost Cutting, and the Risk of Recall.

In this case, up is "Not good."

Graphic credit.

Recalls on products sold in Japan (excluding cars, food and drugs) are up more than 80% from three years earlier, according to a Wall Street Journal report credited above.

It’s not just Toyota.

It’s not just Cars.

Is it the relentless pursuit of cost cutting?

Is it the reduction in part count (sku reduction)? As a component is used across many products, increasing scale and  so reducing price per piece,  this also  increases the scope and scale of a recall if the design or manufacture is defective.

It’s not just Japan.

Ford recalls 2007-2010: 15.505  million vehicles according to my analysis of the data here. See our post from October 21 2009 here.

Where was Congress when Ford announced these huge recalls?

GM recalled 1.5 million of its vehicles last year.

Did Congress weigh in? (I mean, besides bailing them out with lots of our tax dollars.)

Why is Congress suddenly calling for hearings?

I think that OEM manufacturers and businessmen  EVERYWHERE, not just in JAPAN, have taken their eyes off the ball of continuous improvement in their manufacturing processes.  They have been distracted by the fleeting flash of lower prices.

Continuous reduction in ‘costs’ is not the same as paying  continuous attention to Quality. And when you take your eye off the Quality ball, it  really shows up when you have a near perfect record.

Cultural footnote: This summer, I spoke with managers at Japanese auto companies who told me that MONOZUKURI is about ‘the existential joys of making things.’  Of ‘implementing a process that realizes a design to product.’  This was a really big deal. It was their long and storied tradition. It’s their national heritage, and they are “sharing it with the world.”

 I’m starting to  think that MONOZUKURI is really more about mercantilist economics and economic nationalism

 And maybe 安価.  Or 失敗.

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Precision Contract Manufacturers-Why Do People Buy From You?

July 30, 2009

Unless they are family, or are under encouragement from someone on the Sopranos, people have three reasons to buy from you.

The lowest price.

The best quality.

The best delivery.

Which do you think it is?

I'll hum the Jeopardy theme while you think.

I'll hum the Jeopardy theme while you think.

Time’s up.

When I was the newly minted quality manager at a little steel operation in Medina, Ohio, I was confident that the reason people bought from us was because of our quality (that’s  the second answer  shown above). I’m betting that many of you believe that too- your brochures and websites always have a big section and color photo about your quality.

My vice president at the time was convinced that customers bought solely on price. “The Sales Department  is always coming in here trying to get me to lower my price.”

And that was true- it was always the outside salesmen who were trying to wheedle down the price another fifty cents or a buck, it seemed. So my VP was convinced that it was  the very first answer given above.

The Wisdom of Inside Sales.

It took a veteran inside salesperson to straighten this out for me.

It’s not your Quality,” he said to me, saying quality with a capital “Q”.

“If your Quality isn’t adequate, he’ll never call back again. You won’t get any orders. Quality is a given.”

That took the new quality manager down a peg or two…

“And it’s not price. The material will sell for the market price- what the market says its worth.”

He let me stand there and think for a moment.

“Hmm, I’m wrong, the VP is wrong, and the outside sales guys are wrong?” I asked.

“I take orders from customers all day long. That’s what I do. None call me and say, ‘I’d like some of your  quality XYZ today.’ Every customer that  calls me asks me this question: “Do you have any XYZ in stock?”

“Do you have it in stock?”

That’s why people buy from us! ‘If it’s in stock, we have it.’ It better meet the standard for quality, or they won’t call again. They won’t pay one penny more than what it would cost if they could get it someplace else- if someplace else has it in stock.”

“People buy from us because of our delivery.”

For those of you keeping track, that is  the third answer.

The best delivery.

And that’s my final answer.

What is your final answer? How does the answer in your head match up with your company’s sales materials? Web site? Inventory policy?


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