We tackle the big question of cost versus quality in manufacturing. Aside from what this concept means, we look at the rather surprising (for foreigners, at least) Chinese attitude about how quality is linked to price, why lean manufacturing is so effective but is not a quick fix, and we share some levers you can implement in most average factories relatively quickly that give you good ROI where cost and quality are concerned.
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What do we mean by Cost Vs Quality?
When approaching a supplier and asking for tighter tolerances, higher quality, more compliance, etc, their usual knee-jerk reaction is to increase costs, however, some lean consultants say that you can improve quality while cutting costs. This depends on the context of the project and the engineering resources available. So quality is related to cost and vice versa…in general when manufacturing in China, higher quality equals higher costs. (01:50)
A typical Chinese manufacturer’s logic about quality.
The logic in China is that if you pay a higher price, you can expect a higher quality standard. When faced with demands for better quality, a Chinese manufacturer will think they need to do more inspections, pressure and follow up with their suppliers, scrap more material, send more rejects back for repair or rework, etc. This means that they are paying for more inspection time, time spent by their purchasers to manage suppliers, and more, and it all has a dollar value that they will be calculating and adding to your initial price. Also, if you have bargained for a low price, but then hit the supplier with chargebacks when they send you a lower quality, they will feel this is unfair and a Chinese court is often minded to side with the supplier because they work on the basis that ‘the customer got what they paid for.’
Chinese culture is that the unspoken context matters when communicating. So in this case, if you have driven down your prices, there should be an unspoken understanding that you are willing to accept lower quality and vice versa. Therefore, to avoid this kind of misunderstanding, you need to be clear that your quality level is non-negotiable and if this has an impact on the price it needs to be discussed upfront with your purchasing department (and as early as possible, so that changes to your product don’t have a disastrous impact such as attempting to make design changes once the product is in mass production). (04:49)
The Lean manufacturing ideal.
Implementing lean manufacturing, as perfected by companies like Toyota, is often held up as the ideal and a great way to achieve lower costs and higher quality at the same time, but how does it work?
In summary, a better process leads to higher quality, lower costs, and shorter lead times. Compress the timelines such as when materials sit waiting for the next process and it will lead to better quality as you will observe each process and find causes of quality issues, which will lead to lower costs. This initiative includes key suppliers as well as in your factory.
Lower costs come from less inventory because you don’t have as much material sitting static which is at risk of damage or loss and needs to be stored in a warehouse waiting for their next process as everything is transformed quickly. Finding sources of quality issues quickly also saves on costs as you will have less rework to do and less scrap, both saving a lot.
The problem is that it takes a lot of engineering work to implement and most Chinese factories probably can’t quickly jump to an advanced lean setup from a traditional one as it takes years for management to learn how to run the factory like this efficiently. Therefore, if you’re working with a ‘normal’ factory right now, a lean manufacturing initiative is not a quick fix for quality and costs. (15:29)
Day-to-day keys that can give you quality and cost benefits.
If lean manufacturing is a long-term fix, what can be done by manufacturers to get quality and cost improvements sooner? (25:32)
- Do design for manufacturing and assembly
Putting resources into designing the product to be more easily manufactured and assembled at an early stage will reduce costs and quality risks as there will be fewer problems to contend with when it goes into production that cost time and money to fix at that point. A couple of examples: The engineers may focus on using off-the-shelf components that are already tried-and-tested as being good quality and reliable and usually cost less than custom-designed ones, for example, or they may work out that certain processes will be faster and cheaper, such as machining the parts in one way over another. DFM and DFA represent a great ROI and are well worth pursuing. (26:38)
- Follow a sound NPI process
This is the process that industrializes your product and gets it to market with reduced quality and compliance risks if the different stages are followed and the tasks are not skipped. The NPI process is a blueprint for making your product concept a reality with various structured phases that result in a finished product being launched. The phases are controlled by approval gates which ensure the project has met specific criteria before moving on to the next phase in the process, reducing risks and their associated quality and cost as you go along. The higher your quality standard, the more comprehensive your NPI process needs to be. (29:30)
- Use good tooling and automation
Good tooling, fixtures, dies, etc, save a lot of time. For instance, fixtures and jigs will ensure that operators place the parts in the right position reducing delays, variation, etc, which has a positive impact on costs and efficiency. The fixtures may also be used for mistake-proofing which unsurprisingly reduces costs and improves efficiency. Ultimately, engineers can spend some time to implement automation for some of the production processes using certain types of tooling and machines which can also lead to quality and cost improvements. (32:57)
- Staff training for avoiding defects and more
If operators are well trained in the process and when and how to do visual checks, preferably practising in a pilot run, this should include recognizing and avoiding defects. A defect board can be kept near the line and updated with new examples periodically, and the operators can check it daily, further cementing issues they need to look out for during their visual checks into their minds. If line managers are then made aware of the issues quickly, the root causes can be found and fixed before too much harm is done. This is a low-cost, but high-value activity where quality and cost are concerned. (35:12)
- Experience effects
After the product is in mass production, devote some process, quality, and industrial engineering resources to check and refine the manufacturing processes and over time through experience effects, the cost should be reduced as tweaks are found that improve costs, efficiency, and so on. (37:21)
- Documenting Your Company’s Quality Standard into the Details
- The Design for X Approach: 12 Common Examples
- NPI Process (New Product Introduction)
- What is the “lean” approach to manufacturing, and is it applicable in China?
- Design for manufacturing (Video)
- Design for assembly (Video)
- Get NPI support from Sofeast’s engineers to bring your product to market
- The NPI Process: Trouble Awaits If You Skip Its Steps! [Podcast]