A Case on Defective Chips
Abstract
Maintaining a high level of integrity is one of the hardest parts of becoming a professional in the engineering field because there are literally a lot of avenues where one can make the mistake of intentionally or not intentionally compromising professional integrity and ethics for the sake of profit maximization. The objective of this paper is to discuss a case about a plant quality control manager choosing to a small percentage of defective electronic chips in the market instead of repairing or simply discarding them. After studying the different possible courses of action, that the plant quality control manager could have taken, it shows that he chose the worst decision for the company both ethically and financially.
Introduction
This is a case of Shane, one of the prominent production line engineers in the quality control (QC) department of a chip manufacturing firm. His job involves checking the quality of every chip that the company has finished manufacturing and testing before they can finally be released for sale in the market. Another key person involved in this case study is Rob, one of the management level engineers. Basically, Rob’s main responsibility is to ensure that the chips being manufactured and released by the company are of high level and that the plant’s finances are kept in check as well. Between Rob and Shane, Rob has the higher position as he is practically Shane’s manager and he reports to him whenever any QC-related problems arise.
One day, Rob walked over to Shane’s line and said “why some other lines sink more dollars into a failed chip I cannot understand; we only make 25 cents off of each chip anyway! Spending an additional $2.00 per chip to repair it only means more money down the drain. Shane, in our line of work, we cannot afford to flush money down the drain”. Rob’s remark was basically due to the fact that the plant’s workers, at least in Shane’s line were finding defective chips once every 150 chips.
The following afternoon, Shane’s manager, Rob, informed him that his line is discarding too many chips, explaining further that the company bears a certain amount of cost (about $9.00) to produce and test the chip to prepare them for quality control tests (which is part of Shane’s job) and so to spare the company from the allegedly unnecessary expenses of releasing defective ships, Rob instructed Shane to include even the chips they found to be defective on the batch of chips that will be released. Shane questioned his manager’s decision saying that the customers would most likely complain as a result but Rob only ignored him. This paper will focus on the ethical principles that Shane and his manager Rob, may have violated with regards to their decision to release chips that were not checked and inspected for quality control.
Stakeholder Considerations
Three groups of stakeholders may be identified in the case. Stakeholder is a term used operationally in this case to describe any person or group of people who may be affected either positively or negatively by the decisions that the company or to be more specific Shane and Rob made.
The number one entity that will be affected by the Shane’s line of workers’ actions and performance in terms of checking the quality of the electronic chips it is manufacturing and releasing to the market will be the chip manufacturing plant itself. For the purpose of uniformity, the chip manufacturing plant in this case will be referred to as Company A. Rob, Shane’s manager, was right when he said that Company A would indeed be able to save a considerable amount of money by choosing not to repair or to discard the defective chips that managed to pass the initial quality control testing but were found to be defective by the workers in the final quality control process, the process where Shane and his line of quality control checking workers are involved.
According to Rob, by continuing to sell defective chips on the market along with the perfectly working ones, the company would yield some $416,000 as profit. While that decision, although desperate, may indeed be a good move to significantly reduce the existing overhead costs of the company, the consumers who happened to buy the defective chips that Shane’s department released despite failing to pass the quality control check standards imposed by the company would find out about the defective chips.
Assuming that all of the defective chips were still sold to the market, then Company A must brace itself for a significant volume of customer complaints regarding the quality and durability of their product. This will, of course, hurt their image as an electronic chip manufacturing company. As a result, their customers might start to lose trust and confidence on Company A and its products, which would of course have a very bad effect on their future sales projection. This is because with a bad company image leads to a bad or even negative sales performance both in terms of volume and profits.
Another stakeholder that would also be gravely affected by Rob and Shane’s decision to ship defective electronic chips to the market would be Company A’s customers. Electronic chips can be considered as a raw material that will be used to produce more consumer-ready commodities such as computers, and consumer gadgets. So, it only makes sense to think that using defective chips in the manufacture of consumer gadget and electronic products would affect the quality and durability of that particular batch of product outputs. Later on, it would not only be Company A’s reputation as a manufacturer that will be affected but also that of its customers which are most likely original equipment manufacturers (OEMs) as well.
If things continue to go south and manufacturing plant managers like Rob still continue to allow the slippage of defective chips on the market despite Company A having a standardized set of criteria for quality control, then its employees may also be at risk of losing their jobs.
Relevant Ethical Theories and Codes
According to the American Society of Civil Engineers, engineers (not just limited to civil engineers) and basically any person employed within the engineering industry, are expected and required to “be honest and impartial in serving with fidelity the public, their employers, and clients; strive to increase the competence and prestige of the engineering profession; and hold paramount the safety, health, and welfare of the public in the performance of their professional duties“ .
As professional engineers, both Shane and Rob, including all members of the line of workers involved in the quality control department, are expected to be honest and impartial in serving the public, their employers, and the public. This particular code was the second in the list of fundamental principles written in the engineering code of ethics. Since Rob was the most senior employee involved in the case, the responsibility and the large majority of the blame would be placed on him.
Clearly, he violated this particular part of the engineering code of ethics. By selling defective chips on their clients, he has already violated the part of the code where it says that engineers should be honest and impartial when it comes to serving their clients. By selling defective chips, Rob has also violated the part of the code of ethics that says that engineers should uphold a high level of performance of their duties. In the case, it would certainly appear that one of the reasons why Rob instructed his subordinates to release even defective chips into the market was so that the quality control department workers can have fewer tasks to worry about because individually checking the hundreds of thousands of chips being shipped by the company every year can indeed be a tedious task after all
Calculations
The table below shows the given and computed variables considering Rob and Shane’s decision. By deciding to ship even defective ships into the market, Company A, through Rob’s decisions can manage to save as much as 40,000 USD on production costs. That value was the value of the annual projected chip repair and retesting costs for the defective chips considering that the Company A can only produce 100,000 electronic chips per year. The question now would be if the decision to do so was worth it. The answer is no. An opportunity to save a meager 40,000 USD per year on manufacturing costs is too small compared to the future potential of Company A as a large scale electronic chip manufacturer. If it can keep its reputation as a reliable manufacturer of electronic chips, it can reap profits exponentially bigger than what it could have saved from shipping defective electronic chips in the market.
Alternatives Analysis
When the case started, Rob could have done one of three things. He could have instructed Shane and his workers to continue doing their job as quality control personnel and repair and retest every single chip they found to be defective even though it would be classified as an additional cost for the company. The second alternative decision that Rob could have taken is to just discard the defective chip. The third and only unethical decision among them would be to not bother replacing or repairing the defective chips and still sell them as if they are perfectly working in the market. Among the three, the second alternative would be the most sensible cost-wise because paying an additional $6 for the repair and retesting of the defective chips is a huge price to pay considering that it only costs $9 to manufacture a new one. However, no matter how small, this can still be considered as an added expense for Company A. As one of the managers of that manufacturing plant, it is automatically considered that choosing the decision that would best benefit the company is one of the most important parts of his job .
Appropriate course of action
The most appropriate course of action—or the action that is ethical and at the same time beneficial for Company A would be the second course of action discussed in the alternatives analysis. By instructing the quality control people to just discard the defective chips they could find, the company would not have to spend an additional $6 to repair the defective ones. At the same time, their reputation as an electronic chip manufacturer.
Conclusions
In summary, Rob and Shane’s decision to omit their responsibility as part of the quality control team and to sell defective chips into the market was an unethical move in an effort to maximize the revenues and profits that their department would realize per year. What is disappointing about their decision is that they could have chosen another manufacturing expenses-limiting option without having to compromise their integrity as an electronic chip manufacturer by selling defective products in the market, as discussed in the appropriate course of action section of the paper.
Works Cited
American Society of Civil Engineers. "The Engineering Code of Ethics." American Society of Civil Engineers UC Berkeley Chapter (n.d.): 01.
Carson, T. "Bribery and Implicity Arguments Abstract." Journal of Business Ethics (n.d.): 123-125.
Taylor, M. "I'm a Manager - What are my Responsiblities in Basic Terms." ACAPMA (2013): 01.
