REAL-WORLD EXAMPLES The inspection department at a major airline was
reduced to three inspectors for 500 technicians at a main maintenance hub. The reason given was that the mechanics should be building quality into their repairs and would be held accountable, therefore inspection was not necessary. This sounded good, but there is also that characteristic of human beings to contend with — we are fallible. Here is the perfect example of the marriage of quality and safety. Fortunately, the integrity of the mechanics was much higher than their management counterparts and they would not allow any item to go through their hands without being scrutinized by another set of eyes. They would insist that a certifi ed inspector be used when the manuals indicated. This situation has recently been restored after the “retirement” of the maintenance manager. Toyota, the once-great pioneer in quality operating systems, is not immune. In order to increase profi ts in 2005, the president of Toyota pressured the chief engineers (who were responsible for a product line throughout its entire sales life) to cut costs aggressively. They did so and production took priority over quality and safety. The chief engineers were also isolated and cut off from normal communication channels, leading to delays in gathering feedback of the ramifi cations of those cuts. This tactic lasted for fi ve years until the president resigned. The bill for the cost of recalls and fi nes during this period was estimated to be $5 billion. The computer industry is also susceptible. The one- time darling of the PC market, Dell rose rapidly to prominence. Around 2005, Dell started to run into stiff er competition and began to pursue lowering the price of its computers by emphasizing production and cost control. Because it used low-cost, subpar quality components, the Dell desktop PCs were riddled with faulty electrical components that were breaking down prematurely. A subsequent lawsuit against Dell revealed that employees knew that the computers were likely to fail because of the quality of the components. The cost of lawsuits and fi xing faulty computers was estimated to be in the billions of dollars.
The tactics at the major airline, Toyota and Dell are
great business models that became synonymous with effi ciency, outsourcing and tight inventories. These tactics are taught at Harvard Business School and other top-notch management schools as paragons of business smarts — outthink the competition and improve earnings per share. (After all, that is the holy grail of business.) The problem is that they don’t work in the long run ... but, then again, business isn’t concerned with the long term. As long as the dollars are rolling in today, tomorrow is someone else’s problem.
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