Are Quality Methodologies All Smoke and Mirrors? Part Three

Performance Improvement H. James Harrington

“Quality shouldn’t be measured by cost savings.”

Industry

Are Quality Methodologies All Smoke and Mirrors? Part Three

In the first post of this three-part series, I reviewed an interview that was conducted in 1988 with F. James McDonald, president of General Motors. In this interview he explained what GM was doing to improve quality and customer satisfaction. Typical activities that GM was involved in during that period were:

  • Top management involvement in leadership in the quality movement
  • Design quality into products
  • A vision to offer world-class quality in every market segment. By world-class, we mean parity with or superior to the best in the field—product for product
  • Management’s total commitment to quality
  • People development
  • To be the world’s leader in quality, reliability, durability, performance, service and value
  • They had a five-year plan to reach their vision statement

In the second post, I reported what you, the reader, believed was the reason that the GM action plan for quality didn’t work. You stated that GM performed so badly because of:

  • Too much focus on quality tools, not on results
  • Poor management throughout the organization
  • Too much focus on suppliers and little focus on internal processes
  • Being too big an organization and reacting too slowly
  • Poor reliability designed into products
  • Poor teamwork between GM and the unions
  • Poor or a lack of customer focus

I asked for input from someone who worked for GM, but I didn’t get any input. I did, however, get a lot more input from GM customers or past customers as a result of the second post in this series. Almost all of it supported the inputs reported in the second post. I did get one e-mail from a person who stated that he had a GM car that he liked.

Well now it is my turn to look into my crystal ball and give you my opinion of why the very standard and practical quality improvement plan failed at GM so badly, driving them into bankruptcy.

I have to admit it looks like GM did read books by quality leaders such as Joseph M. Juran, W. Edwards Deming, and Philip B. Crosby, and tried to implement their teachings in the organization. They looked at the Baldrige Criteria for Performance Excellence and tried to use it as a guide for their activities. They took benchmarking to the extreme by forming a joint venture with the best of the breed—Toyota—and set up a new company called NUMMI, in Fremont, California. This joint venture with Toyota allowed GM to live with Toyota’s best practices and have a detailed understanding of how to apply them in every one of their production lines. But this, too, proved to be a failure as GM has pulled out of the joint venture because it was not profitable for them, leaving Toyota with more than 3,000 workers at the Fremont plant.

I tried to find out if the GM factories were registered to the quality standards QS-9000 or ISO/TS 16949, but I couldn’t find any records indicating that they are. I hope I am wrong on this point; but it was easy for me to verify that their key suppliers are registered. Please let me know if I am wrong.

As good quality professionals, we must draw our conclusions based upon data, not just hearsay. Consumer Reports published their ratings of auto manufacturers, based upon their performance and reliability, in the April 2009 issue of the magazine. The five best rated auto manufacturers were:

  • Honda
  • Subaru
  • Toyota
  • Mazda
  • Mercedes-Benz

The five middle-of-the-road auto manufacturers were:

  • Nissan
  • Volkswagen
  • BMW
  • Hyundai
  • Volvo

The five worst auto manufacturers were:

  • Mitsubishi
  • Ford
  • Suzuki
  • General Motors
  • Chrysler

You will note that the three U.S. auto manufacturers make up the majority of the five worst companies, with Chrysler rated as the very worst and General Motors second from the bottom. America’s auto industry that once was the nation’s pride and joy is now the worst of the major organizations.

If you look just at reliability performance and consider that 100 percent is what the customer really wants, then a rating of 79 percent is what the customer considers as acceptable reliability. Now let’s compare the key auto manufacturers against the 79-percent standard acceptable level.

  • Toyota rates at 98.2-percent acceptability
  • Ford rates at 71.9-percent acceptability
  • GM at 48.20-percent acceptability
  • Chrysler at 40.5-percent acceptability

How can you expect customers to buy GM or Chrysler products that are performing at less than 50 percent of what their customers expect.

A five-year-old GM or Chrysler vehicle will have almost 300 percent more problems during a five-year period than a Honda or a Toyota vehicle. GM’s major reliability problems are:

  • Drive systems
  • Suspensions
  • Brakes
  • Body integrity

GM and Chrysler, along with the rest of the world, know what their reliability problems are, but in 30 years they have not been able to correct them.

I pulled a sample of quality articles written by GM quality personnel and more than 80 percent of the articles related to the work they were doing with their suppliers. It looks like GM doesn’t understand that supply chain management starts with the design and the internal processes. GM needs to have fewer supplier quality engineers and a lot more reliability, which would start with enthusiastic, qualified design engineers.

GM and Chrysler conceded that they had a major reliability problem in the 1980s and were aware of it before then. Now, after 30 years, they still haven’t been able to correct it. There is no reason for us to think that the U.S. government can step in and make it better by taking taxpayers’ money to bail GM out of their financial state of affairs. Their fundamental difficulty that needs to be resolved is related to reliability issues. Their problems are internal and they have not been addressed.

I feel sorry for all of the people that GM and Chrysler would put out of work if they went under. Maybe it is better to take the taxpayers’ money and use it to retrain these workers for jobs in other fields. We have a need for nurses and teachers, as well as needs in other professions that could use competent, caring, quality workers. GM and Chrysler need to come up with a sound logical approach to have a major breakthrough in the reliability of their products. Unless GM and Chrysler solve their reliability problems, any money that is invested in them is just going down the drain.

It is time for the quality professional to realize that Six Sigma and lean manufacturing will not meet the customers’ requirements today. They may reduce cost, however, quality improvement should never be measured by cost savings. It must be measured only on customer satisfaction improvement and mean-time-to-failure. We need a lot more certified reliability engineers than we have Six Sigma Green Belts and Black Belts combined. GM and Chrysler in the last 30 years have not learned that it is better to prevent problems than to be the very best at correcting them. I hope the rest of our industries learn their lessons before they go bankrupt as well.

Are Quality Methodologies All Smoke and Mirror, Performance Improvement

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