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"Keeping Murphy out of the plant:" a life-cycle approach to quality strategies.

"Keeping Murphy Out of the Plant:" A Life-Cycle Approach to Quality Strategies

The quest for quality is on. While this is nothing new, what is new is the fervor and intensity with which it is being pursued by U.S. businesses. This intensity is spurred on by increasing demands from consumers for more value (quality) for their dollar.

Though the cry for increased quality is heard throughout the land, many companies stall at this point. American companies know that quality means manufacturing a better product, but they lack insight into how to proceed beyond the point of recognizing the need for it.

There are various strategies designed to increase not only the quality of products but also the perceived quality of these products. Perceived quality is the consumer perception of the product as one of high quality when it may or may not actually be that way. Or a product may be of high quality in only one or a few areas, thus giving the impression of over-all quality. The Japanese automobile illustrates this point:

The quality superiority of Japanese cars is principally in fit and finish, with sharply reduced warranty work. In the quality dimensions that relate to safety, durability, and corrosion resistance, U.S. manufacturers have maintained superiority. But where customers see a clear-cut quality advantage, they usually favor that product, without trying to weigh all the factors.

Certain strategies are deemed appropriate for use based on the product's position (stage) within the product life cycle. A model has been developed depicting recommended quality strategies for each stage of the product life cycle.

Many firms use approaches advocated by either Juran, Deming, or Crosby, rather than determining how and why the philosophies of each expert can be used together. The life cycle approach to quality strategy does not align itself with the philosophy of any of these three quality "gurus" but instead proposes to be useful no matter which approach the user may embrace.

The Product Life Cycle. Much has been written about the product life cycle. Originally a marketing concept, the product life cycle was defined as the classification of a product into its various stages depending on the product's position on a scale based on diffusion of innovation. The stages of the product life cycle were classified as the introduction stage, growth stage, maturity stage and decline stage. Marketing strategy in each area of the "4Ps" could be derived from the product's position in the life cycle (e.g., the decline stage calls for a "continuous," a "concentrated," or a "milking" strategy).

Lately, the concept of the product life cycle has been expanded to include other areas of business strategy. Some have developed their production and operations management text around the life cycle concept, and others similarly use the stages of the product life cycle as a basis for selecting an appropriate forecasting technique. Yet others define a related phenomenon they call the "process life cycle" to facilitate the understanding of the strategic options available to a company with regard to its manufacturing function. This article furthers the use of the product life cycle concept, this time as a basis for identifying and describing the critical quality improvement factors and strategies appropriate for each stage of the product life cycle of an item.

The Quality Life Cycle Model. In "How to Choose the Right Forecasting Technique," the authors re-defined the product life cycle stages as:

* Product Development (parallels the introduction stage).

* Market testing and early introduction (also part of the rapid growth (parallels the growth stage).

* Steady state (parallels the maturity stage).

* Phase out (parallels the decline stage).

Each stage involved the use of a variety of forecasting techniques depending on the type of decision involved. The product development stage entailed decisions on the amount of development effort needed, product design, equipment design and business strategies (including distribution and pricing). The rapid growth stage's typical decisions were centered on facilities expansion, marketing strategies, and production planning. Finally, the steady stage required decisions on promotion, pricing, production planning and inventories. No typical decisions were offered for the phase-out stage.

Using the re-defined stages of the product life cycle as a basis for formulation, the factors critical to quality improvement can be identified for each stage of the product life cycle of an item. The figure accompanying this article depicts these factors and describes the ingredients necessary to have better quality at the various stages of the life cycle of a product or system of an item. The Product Development Stage. Before development of a product begins, a couple of misconceptions should be cleared up.

* Higher quality and performance goals increase costs.

* It is necessary to exceed competitive quality by a wide margin.

First, to be a competitive manufacturer, one must realize the folly of the first axiom. By setting high performance goals early into the development of the product, significant cost savings can be made in areas of scrap, rework, routine inspection, field costs, and warranty losses. The majority of U.S. manufacturers use an "acceptable quality level" as their objective, while the Japanese establish "zero defects" as their goal. Obviously, U.S. manufacturers are "beating a path" to Japan to learn the "magic" of their superior levels of quality.

Second, it is not necessary to exceed the quality of the competition's product by a wide margin in order to ensure success. In fact, it can be commercially unrewarding. However, it should be noted that consumers' perception of quality can be different from how the manufacturer assumes they see it. Therefore, the development effort should include research into how the consumer defines quality in this type of product.

Parallel to product design should be the consideration of the design of equipment the manufacturer will use to make the product. By designing a machine to create your product, rather than buying one that is designed to run any number of types of products after extensive set-up time (and costs), you eliminate the safety margins and design cushions built into general-purpose machines. This lowers costs, shortens delivery time, and eliminates dependence on equipment manufacturers.

The author of "Japan-Where Operations Really Are Strategic," says that American companies usually view manufacturing as being responsible for the following eight major types of decisions:

* Capacity.

* Facilities.

* Vertical integration.

* Production technologies.

* Work force.

* Quality control.

* Production planning and materials control.

* Organization.

The first four are customarily treated as having long-term strategic implications, while the latter four are treated purely as operational (notice that quality control does not appear as a strategic factor). This practice can result in some unfortunate side effects. Therefore, each factor should be treated with regard to its implication to a long-term strategy. What is needed is a profound commitment to a strategic operations policy--what has also been called "a commitment by senior management that all functional departments within the organization will take the necessary action steps for... meeting long-term goals of profit performance and competitive standing."

The Market Testing and Early Introduction Stage. Senior management must consider its degree of commitment to quality when determining optimum facility size. By increasing the level of quality, the manufacturer decreases the amount run as scrap, the amount of rework necessary, and the amount of service work done in the field (warranty work). A reduction in these areas frees labor and machinery and, of course, dollars for use in making a quality product the first time. Thus, capacity has been increased.

Today's consumers are demanding high quality at low prices. In order to serve this demand, the manufacturer must watch for key trends (e.g., changes in consumer attitudes). This involves collecting and analyzing internal data (customer surveys, interviews of potential customers, reports from salespeople, and field experiments) and monitoring publicly available information (pollsters, independent research organizations, government agencies and news media). By monitoring this information, managers can identify and respond to trends early on and capitalize on opportunities.

At this stage it is also mandatory to ensure quality after the sale if one is to graduate to the growth stage. This requires a top-notch customer service operation. Although this cannot compensate for a poor quality product, the lack of it can defeat the competitive edge you have achieved by designing a product of exceptional quality. This outstanding customer service operation will serve to differentiate a company from its competitors, generate new sales leads, discourage switches to alternate manufacturers, and reinforce dealer loyalty. If time for testing the product is short or potential quality problems do exist, the risk can be lowered by introducing a limited quantity of the product. By specially training sales-service people in those cities where the limited quantity is introduced, local problems can be rapidly corrected while quality problems are being resolved.

Finally, when making decisions regarding marketing strategies involving distribution, packaging, advertising, and development of incremental products, management must take care not to neglect other areas--such as upgrading manufacturing capabilities--as has been the practice in the past.

The Rapid Growth Stage. It was pointed out earlier that a commitment to quality can serve to increase capacity. Mangement must take care to not expand needlessly when the needed capacity can be realized through an obtainable increase in quality. Deming emphasizes the point with this statement:

"If I were a banker, I would not lend money for new equipment unless the company that asked for the loan could demonstrate by statistical evidence that they are using their present equipment to full realizable capacity."

The previous stage brought the need for an emphasis on customer service. In order to make sure your customer service operation fully realizes its potential, it must be part of your marketing strategy. Also, remember that customer service can be an aspect of "perceived quality." This requires a customer audit that, as outlined in "Quality is More Than Making a Good Product," should ask the following questions.

* What are your customer service objectives?

* What services do you provide?

* How do you compare with the competition?

* What services do your customers want?

* What are your customers' service demand patterns?

* What trade-offs are your customers prepared to make?

In order to effectively implement this marketing of a customer service program, there are seven guidelines:

* Educate your customer.

* Educate your employees.

* Be efficient first, nice second.

* Standardize service response systems.

* Develop a pricing policy.

* Involve subcontractors if necessary.

* Evaluate customer service.

In the area of production planning, Robert Hayes describes what he calls "keeping Murphy out of the plant."

To accomplish this, the manufacturer's machinery must receive regular preventive maintenance, constant cleaning and adjustment, and, if possible, reduced rates of use. Machine tools in Japan are reported to look newer and run newer while actually they are not. This is the result of the Japanese using their equipment while U.S. manufacturers abuse theirs through overload.

Production schedules should be iron-clad. Although this seems a virtual impossibility, many companies are finding that they are able to freeze their production schedules for short periods (e.g., up to three weeks before the actual production date). This creates a no-crisis atmosphere that in turn eliminates the expediting and overloading that can relegate quality to a secondary position.

Steady State. In the seven guidelines for effectively implementing a customer service program, the idea of developing a pricing policy was important. High-quality customer service does not have to mean free service since many customers prefer to pay for service beyond a minimal level. More important than free service is the development of pricing policies and multiple option service contracts that customers understand and view as fair. However, this does not mean selling a cheap product and making money on the service.

The discussion on production planning for the growth stage applies also to the steady state. However, at this stage the principles should be easier to apply since sales should have leveled off, facilitating the increased accuracy of forecasting. There should be less need for a manager to feel compelled to manipulate schedules and work force (the causes of crisis).

Many people believe that inventory is the root of all evil. It is surprising how much you simplify problems and reduce costs when there is little or no inventory. When something goes wrong, the system stops and the whole organization immediately becomes aware of the problem and quickly works to resolve it. Buffer inventories tend to hide these problems, thereby delaying or even avoiding their correction and allowing less-than-standard-quality items to continue to be made.

In "Japanese Manufacturing Techniques: Nine Hidden Lessons in Simplicity," Dick Schonberger deals with the problem on a much more expanded level and lists the following rewards resulting from reduced inventories:

* Enhanced scrap and quality control.

* Fewer rework labor hours.

* Less material cost.

* Faster feedback on defects.

* Heightened awareness of problems and problem causes.

* Smoother output rates.

* Reduced number of workers.

* Less indirect cost for interest on idle inventory, space and equipment to handle inventory, inventory accounting, and physical inventory control.

All this adds up to higher productivity, faster market response, better forecasting, less administration and higher quality products.

The Phase-Out Stage. No suggestions are made for quality improvement during the phase-out stage. While present quality would probably be maintained (depending on your marketing strategy at this stage) improvement in quality during this stage is not likely.

The product life cycle concept is very important. It has been used in part to develop marketing strategies, forecast strategy, and make production and operations decisions. The model proposed in this article identifies the key elements in the improvement of quality at different stages of the product life cycle curve of an item. Identifying these quality improvement strategies at an appropriate stage is extremely important managerial decision-making as well as subsequent criterion to improve productivity. It cannot be denied that improving quality ought to be a planned function and hence, one should and must plan the quality work and then work the quality improvement plan. Hopefully, the model described here will be an aid to planning the quality improvement work.

A 1981 consumer survey revealed that 49 percent of those questioned felt that the quality of U.S. products had declined in the past five years, while 59 percent expected it to stay down or further decline in the next five years. Little has happened since then to change this perception in the minds of consumers. Mindful of this fact, U.S. managers now have to realize the challenge that lies before them. What better place to initiate a quality strategy than at the product development stage and then continually update it at each stage of the life cycle. If U.S. managers are to meet the quality challenge, they must commit to the goal of attainment of quality at a high level and at every stage of the life cycle. Despite the fact that different decisions are faced during different stages, the challenge for quality remains the same throughout.

R. Anthony Inman is assistant professor of management in the department of management and marketing at Louisiana Tech University in Ruston, Louisiana. Satish Mehra is professor of production and operations management in the Fogelman College of Business and Economics at Memphis State University in Memphis, Tennessee.
COPYRIGHT 1991 Institute of Industrial Engineers, Inc. (IIE)
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Author:Inman, Tony; Mehra, Satish
Publication:Industrial Management
Date:Mar 1, 1991
Words:2522
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