Quality, reliability, and communication are the holy trinity when it comes to earning trust and loyalty in the consumer products sector, and the work to earn that trust never takes a day off.
Fair or not, one misstep, be it a product defect or a negative service experience, can tarnish reputations and erase years of built-up goodwill. A study by PwC showed that one in every three customers leaves a brand after just one bad experience, especially when it involves defective products or services. One of the more well-known, and expensive, examples in recent years involved defective automobile airbags which caused significant injury and cost the manufacturer more than $24 billion in recall-related costs.
Companies make defect prevention a top priority for good reasons and implementing lean management practices that focus on root cause analysis, standardized work, and continuous improvement, among other strategies, can be highly effective in minimizing defects, cutting out waste, and instilling a stronger quality-first mindset. Consistently low defect rates reflect consistent quality, which is a strong green flag for consumers. One recent report from Gartner found that 62% of consumers are likely to stop buying from companies that they view as cutting corners on quality.
Basics of Lean
Companies looking to increase productivity often turn to technology or equipment investments to serve as accelerators. But focusing on workforce-based continuous improvement through lean management can bring a greater return and help companies achieve more with less. The principles of lean management are rooted in the renowned Toyota Production System, which the automaker developed to eliminate waste and bottlenecks, maximize efficiency, and improve customer value through continuous improvement.
The key pillars include:
- Focus on waste reduction – lean can help identify and remove all waste in a production process, from defects to excess inventory to unnecessary motion or waiting time.
- Just-in-Time (JIT) production – lean incorporates this principle, which means producing goods on demand instead of trying to project demand going forward. This helps lower inventory and facilitates a quicker response to customer demand.
- Kaizen/employee empowerment – a commitment to continuous improvement builds a culture focused on problem-solving, collaboration, accountability, and results.
- Visual management – many companies use project management tools like Kanban boards to visually signal when to produce and move inventory throughout the production line.
Focus on Defect Prevention
By building quality standards into core processes, lean management puts the emphasis on defect prevention rather than defect detection, allowing firms to monitor and control the quality of their products more proactively. The Lean Six Sigma elements within the lean framework focus on the root causes of defects and have proven to be highly effective in helping both large and small companies eliminate them altogether. At its core, Six Sigma is a set of statistical tools that help companies:
- Define their goals
- Measure and quantify the number of defects
- Analyze and identify root causes
- Improve by integrating solutions that eliminate defects; and
- Control potential recurrences through proactive monitoring
One of the best-known examples of the benefits Six Sigma can provide was the company-wide initiative GE deployed in the mid- and late-1990s under CEO Jack Welch, which saved the company more than $12 billion in defect-related costs over a span of five years. A long time client of ours, Seaman Corp. embarked on a Lean Six Sigma Training and Certification program to enhance and sustain continuous improvement efforts.
Low Defect Rates and Customer Loyalty
The link between low defect rates and strong customer loyalty stems from the relationship between product quality, customer satisfaction, and trust. In this case, consistently high product quality leads to improved customer satisfaction, which in turn leads to fewer returns and complaints, which in turn builds brand trust. Whether an individual or a business, we tend to prefer brands that continually make quality products, have strong customer service capabilities, and are consistent in everything they do with minimal surprises.
However, as they say, and circling back to the delicateness of trust in business, first impressions are everything, and receiving defective products or services never leaves a good one. Conversely, companies with low defect rates not only earn loyal customers, but those customers also tend to be more likely to recommend the brand to others. Two strong examples of this within the consumer products sector are Toyota and Apple, both of which have low defect rates and high repeat purchase rates.
First Steps
We have helped many manufacturers incorporate lean strategies, and we have kept notes on how some of the best success stories began their journeys. The path and pace of adoption will and should be different for every company, but here is a brief list of best-practice strategies and behaviors:
- Keep it simple – starting with the basics helps get people oriented around the why’s and how’s of reducing waste and bottlenecks, and improving operational flow
- Prioritize – focus on improving targets that are critical to business success
- No substitute for learning by doing – some companies train only the people who will work on these critical targets, and then train them only on the lean tools and practices they will use to develop specialized skill sets
- Measure progress – tracking improvements creates momentum and serves as a powerful unifying and motivational force for employees by showing them how their work contributes to the larger mission
- Recognizing effort and milestones – leaders should never underestimate the importance of showing interest and recognizing teams for their efforts. This develops a sense of pride that shines through in how employees interact with customers
- Wash, rinse, repeat – once you get through the first lean project, raise the bar and apply the lessons learned when you tackle the next improvement project
Your Roadmap Awaits
We have seen the level of damage that product recalls on everything from airbags to laptops to Easy Bake ovens can cause – and we know that lean management practices have proven to be an effective foil. For companies looking to improve in this area, lean’s three-pronged focus on waste reduction, continuous improvement, and defect prevention can be the perfect antidote while also enhancing quality, lowering costs, and turning satisfied customers into brand ambassadors.
