The Ripple Effects of Poor Products and Services
by Adele Sommers
 Have you ever heard this familiar children's saying? "For want of a nail, a shoe was lost; for want of a shoe, a horse was lost; for want of a horse, a battle was lost; for want of a battle, a kingdom was lost."
So states the underlying philosophy of the "Taguchi loss function," an economic model that measures the losses to society due to poor products and services.
Named for the Japanese quality guru, Genichi Taguchi, the mechanics of the model are most powerfully summarized in simple terms: The farther products or services stray from perfection (where the producer's and customers' needs are balanced), the greater the negative impact on society. The more imperfections, the greater the ripple effects.
This article discusses how to avoid negative impacts that can have annoying to devastating effects on your constituents and society.
Measuring Ripple Effects
The undesirable outcomes for society due to imperfect quality are at least partly measurable in terms of costs, which is where Taguchi's model comes in handy. Too often, however, the ripple effects of less-than-perfect quality have subtle and far-reaching implications, involving missed opportunities of incalculable magnitude.
 Many illustrations of the Taguchi loss function exist in the automobile industry. An auto manufacturer who cuts an economic corner to save on the costs of production, but in doing so, ultimately requires its customers to visit repair shops more often, causes losses to society far greater than the customers' out-of-pocket repair bills. Society's losses include predictable effects on individual car owners, such as:
- Time away from work
- Extra child care expenses
- Lost travel or commuting capabilities
- Inability to keep appointments, buy food, run errands, or handle emergencies
Tragic or highly dramatic outcomes are also possible, however, such as:
- Being injured, stranded, or victimized by crime
- Missing the chance of a lifetime to make a critical sale or teach a class
According to Phillip J. Ross, the author of Taguchi Techniques for Quality Engineering, "a producer who saves less money_than the customer spends on repairs has done something worse than stealing from the customer." What an understatement, considering the domino effect of some of these consequences!
Example 1 - Driving
Your Customers Away
 Imagine
a car repair service that repeatedly fails to diagnose
a problem with a car and cannot fix it correctly after
numerous attempts. The car is in the shop off and on
for days; the customer, who is a single mom, misses
time from work from having to shuttle the car back and
forth. The car repair shop has no loaner vehicle, and
it does not offer a pickup or drop-off service. The
car owner cannot afford a rental car, nor does she have
insurance to cover this need. With no other repair shops nearby, her options are limited.
In addition, the customer's pay is being
docked for missed time at work, and she's been given
a reprimand. To add to her woes, she cannot respond to an
emergency call from her child's school when her child
is injured on the playground and must be rushed to
the hospital.
This example shows
how unfortunate circumstances
can compound, as the ripple effects expand outward.
Yet even with its inability to
fix the car, the repair shop could have compensated with better customer service, such as by
lending her a vehicle.
A potentially catastrophic situation could have been averted if the repair service were more competent, offered
a few more customer conveniences, or both.
Example 2 - Bringing a Company to Its Knees
Imagine that Acme Fabrication needs to
install new enterprise-wide production software and
has only one weekend in which to do it during its busy
year-end season. Because of the impact on daytime production
schedules, companies like Acme often must install this
type of mission-critical software during off-hours.
However, the vendor
for this particular software system provides no technical
support after hours, claiming that the procedure for
installing their product is simple and mistake-proof.
Thus, Acme's controller, Rebecca M., will attempt
to complete it without help, starting at 5:00 p.m. Friday.
 By
Sunday evening, Rebecca runs into major snags, and the
system documentation offers no help for her dilemma.
Working alone late at night with incomplete information
and under great pressure to complete the job, she is
left with a gut-wrenching decision: whether to 1) give up and reload Friday night's backup, 2) wait until Monday morning to contact technical
support in hopes of salvaging the current setup procedure,
or 3) forge ahead until early Monday morning,
hoping that by pure experimentation, she will figure
out and resolve what's wrong before the production staff
arrives.
Rebecca chooses the
third option. She finishes installing the software,
and because the system doesn't supply any warnings
to the contrary, the company begins using it. No one
realizes until two months later that the system
is corrupted, dating all the way back to that
first weekend.
Acme must then shut
down production operations and embark on a very expensive
and time-consuming resolution. Rebecca is furious with the vendor for failing to adequately test the software
and setup process, make fault conditions obvious, and
otherwise provide off-hours support for
its products.
The Solution: Prevent Variation in Service and Product Quality
 For services, preventing variation means competently and consistently satisfying all advertised claims, and providing excellent customer support.
For products, preventing variation means ensuring that every article produced conforms as tightly as possible to the ideal -- as close to perfection as is achievable. Unlike the "old school" of quality thinking, this requires going beyond merely staying within tolerances.
Weaknesses can arise from being "barely within specs" -- possibly enough weakness to cause system failure. It's far more likely when several critical values together are all "barely within specs," because the effects can accumulate.
In conclusion, no bargain-basement pricing can justify the ripple effects of poor quality. We are soon reminded of our proverbial kingdom: "For want of competent products and services, a company was lost . . ."
Copyright 2007 Adele Sommers
|
Keeping Your Customers Happy 
The customer thinks, "Why aren't they open to my ideas? Don't they believe my opinions have value? My complaint is valid, my suggestions are good, and if they don't want to listen to them, I'll take my business elsewhere!"
Are you wondering how to make bold promises but still manage to keep them? Read 
