| Mass Production's Good and Evil | | | | the answer. The struggle now is to rescue American |
| If industrialization originated in England, the techniques | | | | businesses from competition from low-cost countries, |
| for mass production were invented here at home in | | | | and quality seems to be the only solution. |
| America. Pioneered by Ford Motor Company in the | | | | Understanding Quality |
| beginning of the previous century, American | | | | The call for quality is not a new phenomenon. |
| corporations became the engine for prosperity by | | | | Manufacturers have implemented sophisticated quality |
| focusing on standardization and low-cost production. | | | | management systems for more than half a century. |
| The application of assembly line and interchangeable | | | | To feed the quality drive in the business sector, a wide |
| parts enabled American manufacturers to speed up | | | | array of complex theoretical and statistical models |
| the production process and at the same time cut | | | | have been developed over the years. The ISO9000, |
| down production cost. As a result, consumers indulged | | | | Total Quality Management, Advanced Product Quality |
| in easily accessible and low-priced goods, and | | | | Planning, Lean Manufacturing, Quality Circle, Bench |
| American businesses saw their profits mushroom. But | | | | Marking, and Six Sigma are some of the buzz words |
| there was a catch that many American firms had not | | | | in the world of quality management. But the underlying |
| foreseen. As the middle class Americans grew | | | | objectives for most of these programs are product |
| wealthier, they increasingly demanded higher quality | | | | standardization and production process improvement. |
| products such as, BMW, Mercedes, and Toyota in the | | | | Product standardization is about ensuring that all |
| car market, Sony and Philips in electronics market, and | | | | products within a given category are identical. |
| so on. On the other hand, the rising tide of globalization | | | | Standardization efforts do not aim at improving the |
| opened up the US market to low-cost suppliers from | | | | overall quality of the products, but at making sure that |
| China, India, and other developing countries. With those | | | | all products are of the same quality. A customer who |
| Americans looking for quality turning to the European | | | | walks into a McDonald's restaurant has certain |
| or Japanese products and those demanding | | | | expectations about the taste, flavor, volume, and |
| affordable products turning to the Chinese or Indians, | | | | design of a burger. McDonald's seeks to satisfy the |
| the customer base for many American firms dried up. | | | | customer's expectations by supplying identical burgers |
| In addition to sweeping economic impact for American | | | | every time the customer visits the restaurant. For |
| businesses, this phenomenon had political, cultural, and | | | | McDonald's, quality management is not about improving |
| environmental ramifications. America's political power | | | | the nutritional value or the design or the taste of the |
| rose in the last century as a result of impressive | | | | burgers, but it is about ensuring that customers can |
| economic performance. The decline in the US | | | | enjoy identical burgers every time. Product |
| businesses led to erosion of America's political | | | | standardization is an important measure to secure |
| leverage abroad. Many countries increasingly looked | | | | customer loyalty, but not to raise the quality of the end |
| east for a new rising superpower. | | | | product. |
| A vast literature has been produced on the cultural | | | | Production process improvement focuses on the |
| and social effects of mass production of low-priced | | | | production process and operational efficiency. It aims |
| goods. This discussion is beyond the scope of this | | | | at eliminating waste and inefficiency, but it does not |
| article, but it is worth mentioning that mass production | | | | address the quality of the end product. Six Sigma is |
| flooded the market with cheap goods that were | | | | one of the latest inventions in quality management. The |
| designed to last for a limited period of time. On an | | | | system was developed by Motorola in 1981, and has |
| individual level, easy access to cheap goods meant | | | | allegedly saved the company millions of dollars by |
| that American consumers developed a mundane | | | | detecting and rectifying errors in production process. |
| materialistic relationship to household products: they | | | | Process improvement is an important cost-saving |
| would use them for a short time, become tired of | | | | measure. By eliminating errors, manufacturers minimize |
| them soon, and replace them. On a national level, | | | | the possibility of customers returning defected |
| Americans celebrated their success in generating | | | | products. |
| enormous wealth, but their sense of national pride | | | | Advanced Product Quality Planning (APQP) was |
| dissociated from American products. While Germans | | | | invented not long before Six Sigma and has been |
| pride themselves in their Mercedes, and the French in | | | | embraced by Ford, Chrysler, and General Motors. This |
| their fine wines and scrumptious Brie, Americans saw | | | | and many other quality management schemes rely on |
| no reason to link national pride to low-quality Ford or | | | | customer feedback in their quest for "quality". In theory, |
| fatty burgers. | | | | APQP was designed to satisfy customers' needs, but |
| The low-cost production comes with a high price for | | | | what was hidden behind that slogan was much of the |
| the environment. According to the United States | | | | same old programs for efficiency, standardization, and |
| Census Bureau, the average American generates | | | | minimization of product returns. The application of |
| about 1679 pounds of trash per year. Less than a | | | | customer feedback was certainly a step in the right |
| quarter of this is recycled. The rest is buried in landfills | | | | direction. But the fact that a low-cost manufacturer |
| or incinerated. The more cheap goods are consumed | | | | such as Ford employed the scheme clearly showed |
| and dumped in the nature, the more the environment is | | | | that APQP was implemented in an environment where |
| harmed. | | | | quality was subordinate to cost. It is reasonable that |
| The low-cost production techniques that proved | | | | the scheme was named Advanced Product Quality |
| indispensable for American progress and prosperity in | | | | Planning, and not Advanced Product Quality |
| early twentieth century, turned out to be America's | | | | Improvement Planning. |
| worst enemy in the long run. | | | | Although standardization and process improvement |
| America Must Put Quality atop Its Agenda | | | | play significant roles in ensuring the overall quality, they |
| Faced with growing competition from other countries, | | | | are not primarily designed for raising the quality of the |
| a paradigm shift from cost saving to a focus on quality | | | | end product. Standardization and process |
| is required for American businesses to stay | | | | improvement are ingredients of the cost-driven |
| competitive at home and abroad. This requires a | | | | production strategy rather than quality-driven strategy. |
| commitment at every stratum of the society: not only | | | | After the top management of a company has made a |
| the business managers, but also the consumers and | | | | decision about what level of quality the firm wants to |
| workers alike. Consumers must demand quality, | | | | achieve, these methods are implemented to reach the |
| business managers must put quality atop their agenda, | | | | set goal in the cheapest and fastest possible way. |
| and workers must produce quality. | | | | The message of this article is not standardization or |
| The strategy of low-cost versus high-quality production | | | | process improvement, but the quality of the end |
| has guided businesses for centuries, though it was | | | | product. This is not to say that standardization and |
| formalized in 1980s by Michael Porter, who claimed | | | | process improvement are not essential for a firm's |
| that competitive edge was achieved by either focusing | | | | success. Any supplier has to design efficient |
| on cheap manufacturing or on quality products sold at | | | | operations that eliminate waste and errors. But the |
| a premium price, but not both (Porter himself used the | | | | point of this article is about making a strategic choice |
| term differentiation instead of quality. The application of | | | | to compete on quality rather than cost. |
| quality in this article is the author's simplification). The | | | | The Realization that the cost-driven strategy was not |
| key for Porter was to choose the strategy that | | | | a feasible option in the long-run led to the development |
| enabled a business to specialize in one market | | | | of the concept of sustainable competitive advantage, |
| segment only, instead of trying to be everything for | | | | where the idea was to supply high-quality goods that |
| everybody at the same time. In other words, for a | | | | were cost-effective, but not necessarily the cheapest. |
| business to succeed, Porter argued, it needed to | | | | With cost-effective goods it was meant products that, |
| specialize in supplying products that were either | | | | given their relatively high quality, were the best value |
| qualitatively indifferent but were affordable for | | | | for the money, though not the cheapest on the market. |
| low-budget consumers, or products that were | | | | In other words, the idea was about supplying products |
| qualitatively differentiated but targeted consumers | | | | of higher quality than the competition sold at prices |
| willing to pay premium prices for them (see discussion | | | | higher than the competition but low considering the |
| on generic strategies in Competitive Strategy: | | | | quality. The concept incorporated two objectives: |
| Techniques for Analysing Industries and Competitors, | | | | relatively high quality and relatively low prices. But it left |
| The Free Press 1980). | | | | it an open-ended question as to which of these |
| With a rapidly growing population and little competition | | | | objectives must be the primary focus for suppliers. As |
| from abroad, the obvious strategic choice for | | | | it turned out in practice, many American businesses |
| American businesses in the beginning of the twentieth | | | | continued to focus more on pricing than on quality of |
| century was mass production of cheap goods. Many | | | | their products. |
| new-comers to America were poor and had few | | | | The priority in the US has been to search for |
| resources. Thomas C. Cochran noted that the | | | | innovative technology that could help bring down cost |
| immigrants brought with them relatively little household | | | | and keep prices low, instead of shifting over to |
| goods. They wanted new supplies fast and at low | | | | products of higher quality sold at a premium. While it is |
| cost, and were not in the position to haggle about | | | | undeniably vital for American firms to invest in new |
| quality (see: Challenges to American Values, Oxford | | | | technology, history has demonstrated that new |
| University Press 1985, page 7). American businesses | | | | technology has been quickly adopted by foreign |
| strategically positioned themselves to cater this | | | | competitors, whereas quality-driven businesses have |
| growing market by supplying large volumes of | | | | been booming as long as rising national income in the |
| affordable goods. | | | | West has enabled consumers to pay increased prices |
| As America's demographics became more stable and | | | | for high-quality products. |
| goods from the Third World saturated the US market, | | | | Germany provides an example of a quality-driven |
| it became apparent that the low-cost production | | | | economy. After WWII, Germany began its economic |
| strategy was sustainable only in a static world, where | | | | recovery program based on high-quality manufacturing. |
| there was no competition from outside and the market | | | | As the average income level rose in Western Europe, |
| factors remained unchanged, or in a world where in | | | | demand for German goods increased, proving that |
| order to meet changing market factors, companies | | | | striving for quality is the only long-term strategic choice |
| could switch their strategic focus forward and back | | | | for businesses in soaring economies. |
| with no implications for their brand image. But the real | | | | American businesses must seek quality more |
| world never works in this way. Market factors change | | | | ambitiously. It is no longer good enough for American |
| frequently in a dynamic world, whereas brand images | | | | firms to supply standard products at low cost. In this |
| remain inflexible. When a company positions itself as a | | | | global market, American car manufacturing must build |
| low-cost provider, it builds its brand accordingly. The | | | | the American equivalent of Mercedes or better; |
| brand image makes it hard for the company, though | | | | American vineyards must supply American equivalent |
| not impossible, to change its strategic focus from cost | | | | of French wine or better, and so on. |
| to quality when market factors change. It would be as | | | | The shift of focus from cost to quality does not only |
| hard for Ford to shift its brand image from one of a | | | | seem to offer a viable survival strategy for American |
| low-cost producer to a quality provider as it would be | | | | businesses in an increasingly global market, but it also |
| for McDonald's to switch over to French cuisine. | | | | seems to present a solution to the cultural, political, and |
| In an increasingly global market, the only viable option | | | | environmental problems of this generation, as |
| for US businesses is to produce high-quality products | | | | discussed above. High quality products last longer, |
| for the simple reason that the relatively high labor cost | | | | which help reduce waste and protect the environment. |
| in the US will force American low-cost producers out | | | | High quality products will also help Americans regain |
| of business, when competing with foreign suppliers. | | | | their trust in American brands, and the world to once |
| The American challenge a hundred years ago was to | | | | again acknowledge the new American excellence. |
| build the country rapidly, and low-cost production was | | | | |