I’ve been in and around the quality profession for decades. When I first started, we were most concerned about products failing in our customers’ hands... too often and too soon. I worked at General Motors in those days, in the Frigidaire division when Frigidaire was part of General Motors. We made major home appliances and parts for automotive air-conditioning systems.

I was fortunate to simultaneously see two very separate industries at the same time. In both industries our quality was generally as good as anyone else’s. Our customers liked our quality, but not enough to influence the choice of what products they bought. Our jobs in those days as quality professionals were to try to improve quality without increasing cost, at a time when everyone absolutely believed that improving quality meant increasing cost. That was about to change.

By the mid-1970s, I was at Ford Motor Co.’s world headquarters, and we were about to go out of business—and not because of General Motors. By that time, Toyota and other Japanese automakers were taking market share away from us. When we did our research, we found out we were losing market share because Japanese cars were four times better than any domestic auto manufacturers’ cars—General Motors, Ford, or Chrysler. In Ford’s case, we determined that our customers could expect to take the cars back for repairs four times during the one-year warranty period, while Toyota customers did not take their cars back at all during their similar warranty period. We were clueless.

A Texas Ford/Toyota dealer told me, “Son, when we get Fords, we need to spend a week getting them in good enough shape to sell. When we get Toyotas, we wash them, we sell them, and we never see them again.” Around then that kind of observation occurred in any industry anywhere in the world that competed against the Japanese.

Further research into Japanese automakers, including many visits to those companies, yielded one salient observation. Japanese assembly lines would shut down once a week so that the foremen could ask employees what was going wrong and what could be done to improve the situation. Then they made those improvements. We saw other things but didn’t understand their significance, because we didn’t yet understand quality in the way that the Japanese understood quality.

Seeing those quality circles and understanding that they were doing something akin to what we had learned in graduate school, we created a movement within Ford and with our major suppliers to encourage all our managers to participate more and develop our employees. We called that effort “participative management/employee involvement.” That effort, along with a top-management focus on quality, made a difference. The Japanese still had better quality, but not that much better.

They had, however, another advantage that we really couldn’t understand: We found out that their costs to build cars that compared to ours were $2,500 less per car than ours—this when $2,500 was a lot of money.

As an aside, one of my jobs at world headquarters was to review proposals for new plants. Because of our investment in Mazda, we asked them to propose a new plant for us to provide half the production for a new powertrain assembly. I reviewed both the Mazda proposal and the internal proposal, and was very surprised. Mazda’s proposed labor cost for each assembly was less than ours, while the labor rates were comparable. The real surprise came when Mazda’s cost and size of the plant was also less at a time when we assumed that lower costs came from expensive automation. I had no idea that when you make good quality, you also save labor, equipment, and inventory costs.

 In 1980, an NBC white paper, “If Japan Can, Why Can’t We?”  changed all that. It introduced the world outside the quality profession to W. Edwards Deming. If you’re not familiar with it, the video is about 90 minutes long. The last (approximately 15-minute) segment focuses on Deming’s work, the man most people consider the father of managing for continual improvement. Most of us quality folks had heard of Deming at that time but didn’t know much about him. 

Deming taught us that quality doesn’t cost money. It saves money. When we create products or services, some of them are good and some of them are bad. When our customers don’t like what they’ve bought they might complain, but most don’t; they just tell their friends and neighbors and walk away. What an interesting way to lose sales! Some customers might even send the product back. That might mean that we need to replace the product. With a service, we may need to repeat it. We might also add inspection and auditing to prevent those poor products and services from getting to the customer.

When the inspectors find bad products or services before they get to the customer, that means more scrap and rework. Our accounting systems in those days either completely ignored those costs or called them overhead, burden, or loss, and just considered them a cost of doing business. (Some accounting systems still assume that.)  Investigations in those days found that those costs were 15–40% of a company’s total costs. If sales minus costs equal profit, and profit is 5%, it’s obvious that reducing those costs of waste and rework can make a big difference on profit. Deming summarized this understanding as his “chain reaction.”

That waste also packs our landfills and pollutes our groundwater. Some of it is carbon dioxide that increases climate change. Some of it is the loss of critical raw materials that can, in turn, create conflict as people struggle to claim those resources.

So, as quality professionals, we know how to please our customers; improve sales; reduce waste, rework, and overall costs; improve profitability; improve our environment; even avoid conflict over shortages of natural resources. And most of us are actively doing this work.

We keep doing the work by:
• Finding and identifying waste and rework
• Estimating, with the help of our accountants if we can, the annual cost of those losses
• Working with upstream folks to prevent those losses in the first place, thereby saving money and improving quality
• Continuing the improvement process

Although most of you already know all this, I think it’s worth reminding you: Quality isn’t just functional quality as it’s been traditionally defined. It’s getting the right product or service at the right price, to the right place, when the customer wants it. And all this is done in both a physically and psychologically healthy way. We also know how to set goals, how people are motivated, how systems work, and how learning and improvement go hand in hand.

Noble work indeed!