There is a quality revolution going on in the world marketplace and it's going to produce casualties. Consumers have experienced higher-quality products, and they want more. As the revolution goes to completion, the results are going to be profound and far-reaching. What we have seen so far is only the beginning, only the tip of the iceberg. Already, there is an ever-widening ripple effect as more and more businesses become engulfed in the revolution. One way or another the revolution will affect us all.
We are affected by the products that we buy. The high quality and dependability of Japanese products is known the world over. Consumers are getting more value than ever before and they will get even more in the future. Americans will be affected where we work as new management practices are instituted to join the revolution. Finally, and unfortunately, many will be affected by unemployment because their employers did not have the foresight to become one of the winners of the revolution.
As an example, the recent shutdown of GM plants in Framingham, Mass., and elsewhere is partially the result of the quality revolution. The high quality of Japanese cars is costing GM lost sales.
What is causing this revolution? The most immediate cause is the Japanese use of statistical methods of quality control. These techniques were brought to Japan by W. Edwards Deming starting in 1950. Since then, the Japanese have expanded on their use of statistical methods to where they are now supplying the consumer a level of service, product quality, and value never known before.
Another cause is the drive to lower costs and increase productivity. When the quality of a product is increased, its cost goes down. However, in America, cost usually goes up because quality is increased by hiring costly quality-control inspectors to find and reject defectives. The correct way to do it is to prevent defectives by improving the system.
When defects are prevented, productivity is increased because efforts are transferred from producing junk to producing additional good products. Costs are lowered because waste of manpower, machine time, and materials are reduced. Doing it right the first time is always better. Herein lies a large part of the reason why the Japanese can produce a comparable automobile with higher quality, half the number of labor hours, and $2,000 less cost than a US manufacturer.
A necessary part of improving the system requires that the quality of items purchased from vendors be improved. Accordingly, one major result of the revolution will be that quality will become a prime factor in vendor selection. Manufacturers will have to reduce their number of vendors for a single item to only those vendors who can supply high repeatable quality. For items critical to the quality of the end product, they may give all of their business to a single source.
Why single sourcing? Because businesses will be lucky to find even one vendor who can supply perfect quality, along with low costs and reliable deliveries. Suppliers who have lived for decades with a piece of the business may suddenly find that they have none of the business! This will produce casualties. Bankruptcies and unemployment will result from those who have not prepared for the new realities.
For example, Xerox copiers had 2,200 suppliers in 1980. Today, they are down to 1,400 and they project only 500 by 1985. Somewhere out there, there are going to be 1,700 losers for Xerox copiers alone. The winners will be those who can supply the required high quality, low costs, and reliable deliveries.
Companies like GM, Ford, GE, and Digital Equipment are also cutting their number of suppliers, and in some cases are already single-sourcing for quality. Even Fiat in Italy has already cut one-third of its suppliers and is still cutting.
What must the US do? First of all, American management must understand that it is they who are responsible for poor quality. Nothing will happen until they accept this responsibility. Secondly, management must join the quality revolution. They must do strategic planning and develop a winning competitive strategy. They must use tools such as Management by Relative Product Quality and Statistical Quality Control.
We are in a new economic era. America is no longer a self-contained market. We are now only a segment of a global market. The future economic health of this country is dependent on how well we do in these global markets. How well we do will depend on the quality of our products.
As the revolution rolls on to completion, and consumers are exposed to more high-quality goods and services, they will come to expect even more. Those who satisfy these expectations will be the winners.