Process control is really a fascinating thing. No, that is not just the geek in me speaking – but he has a few comments that he’d like to add 😉
Really, in any business we are about the customer. The customer is willing to purchase an item at a certain amount. Anything above that determined price creates less sales, and anything less than the determined price will create an influx of sales and deplete your inventory. That, in marketing or sales, is the equilibrium or the amount where the supply and demand intersect. That being said – what does have to do with process control? Well, the same applies to quality.
Call it “over grading” or process waste… (it is also an example of eight wastes). In either case you may be making a better quality product than you currently have costed for. Let us say that the new Apple iPad Generation 10 comes out. The cost of this awesome machine is $500.00. The cost to make the unit is $300.00 which includes components, labor, and other company costs (marketing etc.). The company expects to make $200.00 profit for each unit. Somewhere along the line – an employee decides that at the end of every finished product he (or she) buffs the screen. Now the screen was already clean and clear but this gave it an extra bling. It takes an extra 10 minutes per piece to do this. Over the course of a day, it costs the company $2500 in labor for this process. That now digs into the piggy bank by decreasing the efficiency of labor. The customer was already buying at $500.00, but the “iprovement: adds tact time, process cost, and also creates a new “appearance” of how the iPads look. Over time the extra buffering step becomes standard to the process – all the operators are now doing it; the costs continue to grow. The market is now full of customers buying this awesome device with the extra buffing characteristics. Now what happens? The customer is used to the product in this morphed state. The company, not seeing the desired profits, looks at cost saving activities and identifies the extra step which is not called out in the original specifications. The process is corrected and the company is back to a true $300 (spec’d cost). Yet something else happened – the product changed. The company ships the spec’d product to customers and it suddenly appears the company has been taking cut backs; or have lessened the quality of the product. Do your future sales suffer? Possibly.
Granted, this is an over exaggeration, but many places have similar occurrences. Maybe you are culling out product going down the line for rework. Are the operators calling out what is the spec – or their opinion of what the spec should be? Having great quality is not a bad thing. Adding steps to make the process better is fantastic and what each business person is striving for. We just need to make sure our actions and costs are aligned.