In managing quality, companies may be faced with defects that arise in the production of a good. Perhaps the most pressing issue is a widespread defect found after the customer receives the product, often times resulting in massive external failure costs by means of a recall. A recent study by law firm Clyde & Co. found that product recalls have peaked over the last five years, with their research based primarily on the food and car industries.
This data can be a result of many possible factors. Clyde & Co. notes two prevalent trends causing this hike in the rate of recalls. For one, in the food industry, regulators are paying closer and closer attention to the making, processing, and creating of food. More advanced detection methods and technology have given food safety organizations a better ability to spot anything harmful within food items that would put consumers at risk. Also, in the automotive industry, cars are becoming more and more complex, resulting in a greater room for error. With such a vast range of features in cars now, it is simply becoming harder for companies to ensure products are completely free of any defects before releasing them into the market. Finally, looking at an article posted by The Guardian, social media plays a huge role in the spread of complaints about faulty products or defects. For instance, Apple has recently been hit with severe backlash over their old iPhone 7 models as well as the new iPhone X models not working, primarily by means of customers taking to social media to voice their complaints. In posting tweets or statuses, consumers have the ability to collectively show displeasure in a product, in a less formal yet even more effective way than a customer service hotline or website.
However, looking again at the Clyde & Co. study, they found that even though product recall levels are high, companies are only moderately successful in ensuring their success, with organizations having a difficult time in persuading consumers to actually return the faulty products. Their analysis states that convenience will often times outweigh the “cost” of using a defected good, so many consumers will simply disregard the defect altogether because they deem it too much of a hassle to send the product back for a new one. For instance, many large-scale automotive recalls in the United States were found to have success rates of just around 50% (Financial Times).
In connecting these trends back to the discussions we’ve had in class, clearly a big issue with recalls from product defects are external failure costs. Recalls are incredibly expensive, with the average value of a large scale recall in Europe being €12.4 and €7.9 million in the auto and food industries respectively (Financial Times). Furthermore, these changes will alter how companies utilize quality management to ensure their customers are satisfied. With greater risk for scrutiny, companies must place more and more weight on the employee involvement and continuous improvement principles of TQM. In finding different ways for employees to contribute to quality management, such as better monitoring the various new ways consumers are voicing their opinions, as well as evolving the PDCA process to be more effective considering these recent trends, companies can work to eliminate the possibility of recalls and increase overall customer satisfaction.