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An Environment Where People Fuel Quality-focused Actions
Today, when everything depends on the global supply chain, it must run like a well-oiled machine because, if not, it can lead to an inadequate supply of essential goods. One of the biggest concerns regarding inconsistencies in the supply chain is defects in the product itself or quality inconsistencies. It was evident in 2023 when the global manufacturing industry faced this jarring reality. According to some sources, the loss in the automotive industry alone reached a massive $28 billion, all because of product recalls.
These issues not only affect the company’s profits but also severely impact its credibility, trust, and reputation and, in the worst-case scenario, can lead to a catastrophic safety failure. Quality inconsistency is a common challenge. Whether due to supply chain disruptions, human error, or variations in raw materials, OEMs must navigate these hurdles effectively to sustain their growth and meet evolving market demands. So, how do they overcome the challenge? It’s a journey that involves advanced technology, streamlined processes, and a laser focus on quality control.
The Unheeded Cost Of Quality Inconsistencies
Inconsistent quality can have serious consequences for OEMs. According to a study by McKinsey, quality inconsistencies account for 20% of all manufacturing losses worldwide, or around $1.3 trillion each year. OEMs suffer losses in various ways, including defective products that must be reworked, customer unhappiness that leads to lost business, and heavy regulatory penalties.
Automobile manufacturers have been especially prone to this issue. For example, in 2022, almost 30 million vehicles in the United States were recalled due to manufacturing flaws. Most of these recalls were due to poor quality, resulting in significant losses. According to an AlixPartners analysis, each recall costs automakers $500 on average per vehicle. As a result, profit margins have been significantly reduced. This has significantly affected innovation in the industry as OEMs are not confident about any change.
As mentioned before, the impact of quality inconsistencies is not limited to monetary loss but also to the loss of reputation and brand image. PWC conducted a survey that found that 87% of consumers will not buy anything from a particular brand after a bad product experience. This highlights just how important consistent quality is to maintaining customer loyalty.
Leveraging Technology for Betterment
To tackle the challenges of quality inconsistencies, OEMs are turning to technology and incorporating it into every step of the way to ensure consistency across the spectrum. Digital tools, automation, and data analytics are revolutionising how companies identify and address quality issues before they result in significant damage and impact their brand reputation.
When it comes to predictive analysis, OEMs are increasingly relying on predictive analytics and artificial intelligence. By evaluating the big information they get from sensors at the production lines, AI can identify patterns that may suggest future quality difficulties. According to an Accenture poll from 2023, 72% of OEMs implementing AI in quality control saw a 35% decline in quality-related failures. AI can monitor variances in performance, raw material quality, and machinery operation, allowing producers to anticipate and correct any quality inconsistencies in real time.
Another key to getting rid of any quality inconsistencies is Automation. It boosts production and drastically reduces the margin for human error. According to a Boston Consulting Group study, manufacturers which employed automated quality control systems saw a 40% drop in product faults. Advanced robots, machine learning, and optical inspection systems provide exact product quality monitoring, with real-time modifications to correct irregularities before they affect the finished product. Mostly, these tasks are called repetitive tasks, and in such tasks, AI and machines work like a charm, whereas humans are prone to errors.
Infusing A Culture Where Quality is Celebrated
While technology and supply chain management are important, they don’t amount to much without a company-wide commitment to quality. The value of this culture cannot be overemphasised. According to a Harvard Business Review study, organisations with strong quality cultures are 46% more likely to report high levels of employee engagement, which correlates with fewer errors and better production outcomes.
For example, at Toyota, every employee has the right and permission to stop the production line if they notice a quality concern. Toyota’s reputation for manufacturing excellence stems from its commitment to quality at all levels of the organisation, with failure rates as low as 0.1% in 2022. It’s no surprise that Toyota has made a name for itself as one of the world’s most reliable cars. They make cars that can take any punishment and still keep running. You can throw everything but the kitchen sink at them, and they will still run. This is what we can achieve through consistent quality control.
Today, OEMs face a significant challenge in overcoming quality inconsistencies. But manufacturers can reduce errors, enhance productivity, and sustain their competitive advantage in this cutthroat environment by blending technology, collaborating with suppliers, and fostering a robust internal culture. As the manufacturing environment changes, companies that focus on quality at every step of the way will not just stay afloat but also succeed in a competitive global market.
