Is it expensive to increase the quality level in a factory?

Does it necessarily cost more to reduce the number of defects? That’s a good question in the sense that it brings up different responses from different people.

I am going to expose a few very different mindsets about the whole “quality” concept.

The traditional mindset that is prevalent in China

If you ask 99% of Chinese manufacturers, they will say “of course, it will cost more to reduce the proportion of defects”.

They think there are only two ways of increasing the quality standard:

• More time spent on writing and enforcing procedures
• More manpower spent in inspection activities

Importers use statistical quality control standards based on AQL limits. If a buyer sets the tolerance below what is usually considered “normal” for general consumer goods, the supplier generally raises prices.

What is wrong with this mindset? It is 100% reactive, 0% proactive. There is no initiative to improve design & production processes.

It is a very “old school” approach.

A more sophisticated vision

A high defect rate is actually quite expensive. It is at the root of the “costs of poor quality“.

Here are a few examples of such costs:

• Scrap or rework
• Re-inspection / re-testing after a failure
• Disruption of production planning to address an urgency
• Expediting and/or discount given to customer
• Loss of customer confidence in the long run

Juran, one of the great quality thinkers, summed it up nicely with the graph below.

• Reducing the defect rate pushes the “costs of poor quality” down and benefits the bottom line…
• … But after a certain point the cost of preventing and catching defects becomes so high, it offsets the costs of poor quality.

How I think about this

I like Juran’s cost of quality graph. And it is important to note that the point where the two curbs intersect (when cost of quality = cost of poor quality) is not in a fixed position. It can move to the right, and allow for low-cost AND high-quality production.

So, how to move it to the right? Here are a few ideas:

• Simplify the material and information flow
• Design products so that they are less complex to make and less likely to be defective
• Try to improve each process step, document the new procedures, and train the operators
• Accelerate the flow of production, to get finished products earlier and detect problems as quickly as possible
• Set up fool-proof devices (poka-yoke) to prevent defects at the source, when possible
• Make operators feel a certain “ownership” of their process (JKK), and have them do a “self quality check”

All these actions improve quality without increasing the average unit cost.

When will most Chinese manufacturers understand this? When will they make the link between a better production organization and better financial results?

Renaud Anjoran is the founder of Sofeast Quality Control and helps importers to improve and secure their product quality in China. He writes advice for importers on the Quality Inspection blog. He lives full time in Shenzhen, China. You can contact him at info@sofeast.com.