"Originally, I had never intended to write a follow-up to 'Why First Generation Apple Products Suck'. But after receiving exceptional feedback on my thoughts, I think I need to make few things clear. Many of you thought I was unfairly singling out Apple even though defective first generation products are a common occurrence across the technology sector software or hardware. Just to be clear, let's not mesh software and hardware together. Neither I nor anyone else should ever expect software to be perfect. On the opposite end, with hardware, it is possible to perfect the craft of developing tangible products, such as the iPod music player."
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Member since:2005-10-12
"Increasing the build cost to reduce the return rate is only effective if you can pass the build cost increase on to the consumer and the reduced return costs exceed the cost of lost sales due to higher price."
No, this is very sadly wrong. Fewer defects does not mean higher costs and thus higher prices. It means lower costs. It is absolutely dreadful that 40 or 50 years after Deming there are still people who think this way. What is even sadder is that some of them are working in Product Management and Manufacturing, raising costs in the name of lowering them, and lowering profits in the name of raising them.
If you think like this, it is only because you have never established the real costs of poor quality in a company with quality problems. They always dwarf what it costs to do it right the first time with no recalls.
The approach suggested in the quote was a favourite in the British motorcycle industry 30 or 40 years ago. "The customer will never pay for it, its good enough for them".
As the Japanese showed, they don't have to pay more for it, and will indeed not. What they will do, is pay less for it.
Member since:2006-02-15
You betray a very superficial understanding of Deming and of cost/benefit analysis.
You're confusing manufacturing defect and production process quality, which was Deming's main concern, with underlying product design quality.
The Japanese did not show that consumers don't have to pay more for quality. What they did show was that assembly-introduced defects are very expensive to repair, compared to the cost of reducing the assembly defect rate. And they showed how, in Japan, it was possible to use social engineering to dramatically reduce the assembly-introduced defect rate.
What is more accurate in the computer industry is that 50 years after Deming, all of the lessons to be learned from his approach have been learned, the bar has been raised, and now, the dominant factor in the quality/cost equation has returned to being component/design quality rather than manufacturing quality.
For our current product, my company uses a Japanese ODM. Manufacturing quality is high, QA is good, and recalls are non-existent. But in our business, consumers care a lot about price, and there are two things I can control in the cost of the product: feature set and component quality. If I spec higher quality componets, the build cost (Bill of Materials, or BoM) goes up.
In consumer electronics, a business where a product has an average shelf life time (from first to last sale) of less than eighteen months, and a fifty percent turnover factor of twelve months, consumers are not going to pay for the quality that would make a device last ten years instead of two. (It was Sony, by the way, who taught the CE business that lesson.)
Member since:
2006-02-15
Quality is free, because product costs are not the sum of the component cost plus manufacturing overhead.
Quality is not free, because product costs include opportunity costs, and establishing quality impacts time to market.
But even in terms of build cost versus return rate, quality comes at a cost. Increasing the build cost to reduce the return rate is only effective if you can pass the build cost increase on to the consumer and the reduced return costs exceed the cost of lost sales due to higher price.