Feature Article : Quality Management in a Global Recession
 By: Michael L. Hetzel, Vice President/Americas
Pro QC International
-The New Reality-
The global recession is intensifying and companies worldwide are reorganizing for survival. Although manufacturing and international trade flows are down significantly, a substantial amount of manufacturing activity still exists that is ongoing. And, a significant effect of the recession is to both alter and amplify the quality risks for those products that continue in production.
One might think that the slowdown would allow manufacturers and their suppliers to devote more attention to product quality, thereby improving results, but just the opposite is true.
Companies are reducing their workforces to cut costs, leaving a smaller and overburdened group of employees to manage operations. They’re also reducing capital expenditures and keeping older machinery in place longer, while employing fewer people to maintain the machines as the maintenance requirements rise due to equipment age. Inventories are being reduced and the costs and delays related to rejects are pressuring companies and their personnel to push through products and components that would have been reworked or scrapped just a short time ago.
Along with these physical asset risks, the human resource risks are increasing as factories are staffed by the “survivors” of layoffs who are generally feeling insecure in their own positions. They’re both distracted and de-motivated by the global situation, as well as at their companies as they watch and read the daily doom-and-gloom in the media.
Add to this the fact that many factories and material suppliers in the supply chains feeding inputs to the final product factories are experiencing the very same effects and we’re left with a situation that can, and most likely will continue to, lead to increased quality risks and costs at precisely the time when they’re least manageable. Worse than the cost implications, of course, are those potential defects that can lead to consumer injury or even death.
-Current Actions in Quality Management-
As companies reduce their internal workforces, including quality management personnel, they’re reducing external workforces such as source inspectors and in some cases curtailing the use of third party quality (3PQ) firms who are managing their interests in quality and conformance across their supply chains. The objective, of course, is to reduce costs. But, costs aren’t reduced when defects occur, components and assemblies don’t fit or operate correctly and replacement shipment delays stall the entire production and delivery operation.
Other companies are leaving their current quality management staff and protocols in place, but this also increases quality risks since the situation has changed and the quality systems need to be adapted to the new and potential risks.
-Strategic Options-
A new workforce balance needs to be established. Workforce reductions are certainly in order when demand and revenues fall, however, the allocation of workforce capabilities across the production, operations management and quality management areas needs to be reviewed and aligned with the new reality – not just scaled down equally. This can only be completed after the current and emerging risks are fully understood.
A company’s suppliers, along with their suppliers, need to be examined and analyzed in order to identify the changing distribution of defect opportunities throughout the supply chain. While this is being done, it’s very likely that new options in supply chain architecture will also be revealed, which will present new opportunities to not only mitigate risk during the recession but also to strengthen the long-term efficiency of the company. Notably, the nascent movement toward supply chain regionalization that began a few years ago may well intensify during the recession, and in any case it should continue developing since both the impulse and rationale for this had developed before the downturn.
One other area of consideration is the concept of reintegrating the manufacturing company. For decades now, manufacturers across the globe have been de-integrating their operations into isolated internal departments and outsourced specialties – components of the business that all work to their independent metrics, thereby creating the silo effect which has increased the costs of both production and quality. We’ll devote an entire future article to this concept, however for the purposes of this article, the benefits of reintegration of the business process components needed to efficiently manufacture is directly related to the effective identification and control of potential defect and product failure opportunities, both internally and across the supply chain.
-Tactical Options-
Fortunately, there’s no need for the development of new or exotic methods or tools to achieve a thorough and well qualified evaluation and definition of the new and emerging threats to quality and conformance.
Supplier questionnaires should be developed as the first step of an overview analysis of the current conditions. Supplier audits as the second step both verify the information supplied in the questionnaires, as well as reveal unanticipated issues. Process audits can then drive the information down to the functional level, as well as identify the known and new defect opportunity points in all processes. And, finally, a process flow analysis will provide the information needed to reconfigure the workforce quality management staffing allocations, as well as revise the quality and control plans.
-A New Beginning-
As with any crisis, the current global recession is accompanied by both considerable disruptions as well as substantial opportunities. Setting aside all presumptions based on past conditions, manufacturing companies who embark on a path of discovery will meet the immediate objectives of survival with risk and cost reduction, while very likely revealing opportunities to emerge from the current downturn stronger and more profitable than ever before.
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