When quality goes up, costs should go down.
When quality goes down, costs will go up.
It’s simple fact really, one that has been demonstrated repeatedly for decades. Thousands of manufacturing managers experience this truth every day. It’s a truth in manufacturing, and it’s true in service as well.
In my experience however, too many companies think increased service quality can only come at increased cost.
American manufacturers have gained some noticeable advantages over foreign competition in recent years. My close work with Chinese companies has helped me to see that trend from the Chinese perspective. Chinese managers have been slow to see their advantage slipping. They relied on low labor costs far too long. Now they have significant disadvantages when it comes to quality and efficient flow.
In the West we’ve understood the importance of quality for some time and now we’re moving to the next level of competition: quality in service.
Although we still categorize businesses as “manufacturing” or “service”, those labels are increasingly anachronistic. We find very few pure manufacturers anymore. Most deliver the product and service together, and often the revenue from the service is recognized as an important part of the business model.
The manufacturing/service marriage began in earnest as a natural part of changes in global economics. Let’s take a look at two events that both occurred late in the year 1979:
- The city of Shenzhen, China was declared a “Special Economic Zone”, effectively announcing the “open for business” policy that turned China into a manufacturing giant.
- Philip Crosby published his classic book Quality is Free, an argument for an increased focus on high quality as a way to reduce costs.
For the next 35 years, China became a more efficient version of America’s 1970’s manufacturing muscle. America struggled with the competition for a while, but it’s now become an even stronger competitor. Crosby’s theories became an accepted part of American manufacturing.
In the next 20 years, this iteration will occur again. China will become a more efficient version of America’s 2014 manufacturing muscle. Chinese managers will embrace quality at a deep level.
When this occurs, American and Chinese businesses will be competing at a much higher level of quality, one that will be defined by the quality in the ancillary service product. Today this isn’t even a competition, but we shouldn’t get complacent.
The development of service quality can be and should be similar to the development of manufacturing quality. Raising the quality of service can and should decrease the cost of service. Here are six questions for you to ask about your service system:
- Training: Do your personnel understand everything they possibly can about the customer, the customer’s needs, and your own product capabilities?
- Tools: Do your personnel have exactly the right tools they need to serve the customer? Make a list of both physical tools and information tools that could be useful to serve.
- Empowerment: Do your personnel need to ask someone else’s permission before being allowed to serve the customer’s need?
- Job Description: When asked for a job description, would your personnel provide a list of tasks, or would they simply reply “My job is to serve.”?
- Flow: Is your system built to maximize worker utilization, or is it built to maximize service flow?
- Teamwork: Do your personnel have absolute faith in each other, so that they will also serve each other as a means toward serving the customer?
The first three questions should be obvious requirements in any service system. If you answered no to the fourth question, then you need to ask whether your management style is creating fear in the workplace. Question five touches on the idea of lean principles applied to service.
Most important of all is question six. It’s this question that leads us to the real secret behind reduced cost and higher service quality.
Here it is: Treat co-workers the way you want to be treated. Your personnel must believe in one another, and in one another’s good intentions. Serve each other.
In many industries, foreign competition around these service principles is still fairly weak – but it won’t be for long. Don’t wait around to develop a quality service plan. Act now.
Find out more about MJ McKay Strategic Consulting.