CONTENTS
1. Introduction 3
2. The Contexts of Quality Systems 4
2.1. The Customers Gratification Perspective 5
2.2. The Ethical Perspective 5
2.3. The Legal Perspective 6
3. The Methods and Tools of Quality Control Process 7
3.1. Failure Mode and Effect Analysis (FMEA) 8
3.2. Cause and Effect Analysis (Fishbone Analysis) 9
3.3. DMAIC 10
4. Conclusion – The Impact of Quality Control and Assurance Management 11
Bibliography 13
Introduction
Quality control and assurance have evolved from essential competitive solutions to the foundational elements of effective business performance (Automotive Action Industry Group, 2008). Because of the unstoppable technological advent, the manufacturing methods, as well as the industrial outputs, are sophisticated technologically (Nederpelt, 2012). Thus, several research studies demonstrated that in spite of the all recent advancements in computational technology and engineering, projecting and assembling a vehicle, or a piece of consumer electronics takes more working hours and larger teams (Webber, 2007; Rose, 2005). While in the past the majority of products were mainly mechanical, the biggest parts of all industrial outputs are the combinations of mechanical elements and computerized control panels. Although this approach to technology development and its industrial implementation was initially assumed to improve customers satisfaction, and make the products ‘trendy’, in practice it resulted in many manufacturing complications and demand for more skilled employees (Evans & Lindsay, 2009).
In one of the most landmark cases, a leading international manufacturer of customized premium cars Ferrari recalled 1 200 vehicles in the United States of America, the Peoples Republic of China and Switzerland. In that case, the luxury cars were unexpectedly and unreasonably set ablaze, allegedly due to the thermal problems of hydraulic hoses for the convertible top. As a result, not only the company compensated the owners, which cars were damaged, but also it reported 12% loss in sales during the next year (Automotive Action Industry Group, 2008).
The case mentioned above demonstrates the importance of effective quality control procedures. Recently, this topic received profound attention of the scholars, many of whom argue that the manufacturing companies should harmonize their quality-related issues with the safety issues, expectations of the customers, legal and ethical considerations.
Thus, this research pursues several intertwined objectives. Firstly, it attempts defining the context, in which an effective quality system should operate, specifically focusing on the relevant legal and ethical aspects in case of Ferrari global recall. Secondly, it analyzes the most popular contemporary approaches and methodologies, which could have been potentially applied to avert such consequences. Finally, this research investigates whether development and implementation of quality assurance methodologies would have impacted Ferrari business in a positive way.
The Contexts of Quality Systems
ISO 9000 construes the concept of quality control as an integral part of quality management, which is applied by the organizations to ensure that the quality requirements of this organization products and services are fulfilled (Evans & Linsday, 2009). Quality control activities of an enterprise usually have three major dimensions, which vulnerabilities and errors may lead to the production of defective items (Ishikawa, 1985).
Coherence of the teams, functionality of the equipment and mechanical tools is the first group of elements of the quality control and assurance framework. Secondly, professional competence, skills and experience of the company staff constitute another important group. The proverbial ‘human’ factor has become especially relevant during the past decade; the products became more based on computerized electronics, which in turn require manual configuration and maintenance. Finally, the last, but not the least element of quality control and assurance matrices are soft elements, such as organizational and ethical environment of a business organization, integrity and effectiveness of cooperation between the employees. The coalescence of practice and theory clearly indicates that the effectiveness and efficiency of quality control programs of any enterprise directly depend on synergetic quality of these dimensions (Ishikawa, 1985).
Yet, there are certain perspectives, which practically define the standards of quality control and assurance operations, as well as they determine potential future developments of the trends in this context.
The Customers Gratification Perspective
Contemporary business practice demonstrates that the most effective metric of product quality is customers’ perception (Nederpelt, 2012). Engineers of a product, as well as quality control supervisors may not always correctly diagnose all problematic features of a product, which often transpire after the product has been practically tested by large portion of customers. Together with the features, which make the product attractive to the clients, it is the best way to understand whether this product is consistent with safety expectations of the potential consumers.
In other words, by analyzing sales statistics, the number of products return and the number of complaints submitted to the customer service department the company can conclude whether its product meets the expected quality standards or not (Rose, 2005; Kmenta & Ishii, 2004). As such, the products of Ferrari are thought to have one of the highest quality standards on the market. In particular, during the period 2008-2013 not a single customer has ever returned a single car. This situation demonstrates that the majority of customers consider the products of Ferrari as at least acceptable (Invernizzi, Rometni & Fumagalli, 2012).
The Ethical Perspective
At the same time, not only the company customers determine whether a product quality is sufficient or it is not. Any company is always bound by various ethical principles (Webber & Wallace, 2007). In other words, not only the company products should be safe, secure and have value for the customers, but also the process of their use and production should correspond to the ethical standards of the community.
The first important ethical dimension is the relationship between the company and the clients. In other words, one of the most essential ethical obligations owed by the company to its customers is the duty of care. Any product developed or service rendered should not harm any segment of the community. In case of Ferrari, the company should ensure that it products will not harm the users, as well as the outsiders while in use or parked. Naturally, the company cannot protect anyone from reckless or drunk driving. However, the cases when the engine of a care becomes seized with fire is never expectable, and thus may potentially inflict heavy damages.
In addition, the company should be ethically oriented in all its dealings with the government (Evans & Linsday, 2009). To be more specific, in some cases the government does not have technological or other capacity to analyze and measure quality standards of a specific product. The most common examples in this regard are from the high-tech industries, where the engineers hired by the large international corporations are often more skilled than the specialists hired by the government to analyze quality issues of a particular product.
The second fundamental ethical dimension of product quality control management is the idea of corporate social and environmental responsibilities. In practice, all ethical operations of Ferrari should be entirely consistent with these policies of a business entity, which, in their turn, should reflect expectations of the community. To illustrate, Ferrari may not introduce any quality control operations, which may potentially jeopardize natural environment or violate corporate social responsibility policies of this company.
The Legal Perspective
Finally, current research demonstrates that in many industries, the biggest part of quality control requirements are imposed by the government, or by quasi-government organizations, such as International Organizations for Standardization or different national agencies. Because Ferrari is produced in Italy, the main legal requirements for its products are developed by the Ministry of Economic Development, which regularly issues specifications, which should be taken into consideration by the company engineers (Invernizzi, Romenti & Fumagalli, 2012).
In fact, industrial conformity of the products is one of the conditions for licensing of a company. In some industries, those entities, which fail to meet the requirements of the law may be denied of being licensed, and, thus, will not be capable of staying in the business. Furthermore, if a company fails to implement adequate quality control procedures, license of a car manufacturer can be revoked (Automotive Action Industry Group, 2008).
The sphere of company quality control activities also borders daily operations of company. In other words, not only should the company ensure that the product meets the requirements dictated by the customers gratification, ethical or legal perspectives, but also it should ensure that the production process itself is entirely consistent with the principles of the law. Though the product may be entirely compliant with the demands of the law, the process of its manufacture may result in various penalties from the government (Rose, 2005). In that perspective, Ferrari demonstrates comparatively sustainable performance. The research shows that the company has never accused by the government or by the social advocacy groups in having environmentally unsustainable or other illegal production practices (Invernizzi, Romenti & Fumagalli, 2012)
The Methods and Tools of Quality Control Process
Nowadays, there are three primary solutions, which are ubiquitously applied by the business segment for designing, implementing and improving different quality control processes.
Failure Mode and Effect Analysis (FMEA)
This analysis mostly focuses on the analysis of various industrial failures and errors. In practice, this type of analysis is often viewed as a first step towards completing a reliability study of the entire business system (Kmenta & Ishii, 2004). Applying it to the case of Ferrari mass products recall seems to be justified, because it will help to understand how similar industrial errors and failures may be prevented in the future.
This analysis involves decomposition of the system to its structural elements and subsystems, which are in their turn individually analyzed, and potential failures are identified. For each failure the system analysts project causes and potential negative effects. There are several ‘ground rules’, which determine how the industrial organizations administer this approach to quality control management:
Firstly, this approach assumes that only one potential failure exists at a given period of time – In case of Ferrari, the quality engineers of the firm should have hypothesized that hydraulic hoses of the car may be damaged by the heat of an engine, and therefore fluid leakage becomes possible.
Secondly, the inputs of the system should have appropriately calculated numerical values – In case of Ferrari, the specialists could have calculated the chances of hose damage, and thus the vulnerability ratio of a car could have been developed.
Thirdly, the quantity of the examined variables should be available in sufficient quantities, to ensure that the representation of the data is sufficiently accurate. – In case of Ferrari, the specialists should have examined at least 4% of the entire company output, which is a common standard in automotive industry.
Finally, the project administrators should ensure that the nominal power is available.
In general, this practice is effective for identification of the industrial defects. However, it has several disadvantages as well. In particular, the following deficiencies of this method should be taken into consideration by the management:
This approach relies on the expertise of engineers, and often neglects feedback from the customers (Kmenta & Ishii, 2004).
This approach is hardly applicable for the service industry.
However, coupled with other methods of quality control management, this approach to quality assurance may be applied to ensure development and manufacture of upscale products.
Cause and Effect Analysis (Fishbone Analysis)
This solution is applied, when a particular industrial problem transpires, but the quality control & assurance department experiences difficulties in understanding the causes of the problem (Nederpelt, 2012). This approach prescribes that in such cases a particular business unit should be broken down in several organizational parts, which are the site, the task, the people, the equipment and the control. Applying this analytical tool for the case of Ferrari might have been reasonable, because the vehicles of this company are composite and technically sophisticated. Thus, making a quick, perfunctory analysis will not suffice to understand the root cause of a problem.
Then, each step should be subjected to intense analytical processing, and all potential causes of quality non-conformity should be identified (Webber & Wallace, 2007). Sometimes, the causes are very complex, the analysts should break them down into the smaller sub-causes. In our cases, technical composition of a car should be broken down into many sub segments – engine system, fueling system, electronics, accessories etc.
Finally, all potential causes are grouped together, and those, which are the most probable causes of quality disruption are examined additionally. Following this method, the analysts could have potentially identified that the problematic area of the car was hose, which is a part of the fueling system.
In general, the Fishbone Approach to industrial failures analysis should applied in the cases, when the root cause of industrial effects should be identified urgently (Evans & Lindsay, 2009). It is effective in the situations, when the changes in production are radically required. However, it is not recommended as a long-term quality assurance and management strategy. Thus, applying this solution, the company could have diagnosed the problem immediately after the first cases of fire were reported.
DMAIC
DMAIC is one of the most popular contemporary approach to quality assurance and product improvement management. It is one of the central elements used in Six Sigma quality assurance managerial framework. This approach has five consecutive steps, which should be followed by the organizations to ensure errorless production and continual improvement of its products (Evans & Lindsay, 2009).
The first step of the process is defining a problem. The company analysts should understand how this problem transpires, and what the stakeholders of this problem are. In the case of Ferrari recall, the problem was technical inadequacy of the convertible top hose. The stakeholders were the local Ferrari dealers and the clients.
The second stage is measuring the scope of problem. In particular, it is important to measure the gap between the expected and current performance of the organization. In addition, the project administrators should evaluate the effectiveness of the measurement system at this stage, concluding whether it is sufficiently accurate and precise. In the case of Ferrari, the scope of the problem could have been measured as 1,200 cars, which have been recalled. The desired performance in that case would be normal functioning of the cars, and absence of the recall altogether. Measuring the problem in the number of cars recalled appears to be reasonable, because each car has some monetary value.
The third stage deals with analyzing the root causes of the problem, and identifying the strategies of their elimination. The practice demonstrates that the project managers may integrate fishbone diagram to this stage in order to understand the origins of defective products. In our case the problem was technical mismatch between the heating temperature of the vehicles engine and roof hose
At the fourth stage, the project managers project potential improvements, designing the methods of reducing the number of problems in the future, as well as developing strategies of the improvements deployment. In the case of Ferrari, a decision to replace natural horse hairs used as isolation for plastic-based, hear-resistant analogues was made. Thus, this problem will be averted in the future.
The final part of the process involves the creation of effective controlling methodologies. The company should design the most effective approach to ensuring that the implemented improvements remain effective. Practically, the most useful solution in this regard is creation of a comprehensive control chart (Webber & Wallace, 2007).
Conclusion – The Impact of Quality Control and Assurance Management
The case of Ferrari car global recall demonstrated that the presence and enforcement of effective and harmonious quality control and assurance management practices impact businesses in a positive way.
Firstly, developing and maintain high quality management standards are essential for increasing customer satisfaction and retention. The business scholars unanimously agree on the idea that gratified customers have confidence in the company products, which seriously increases the likelihood that they will turn into repetitive buyers. Ferrari is one of the most illustrative evidences in this regard. Even after the global recall, customers’ trust in the company products was not shattered (Invernizzi, Romenti & Fumagalli, 2012).
Secondly, ensuring supreme quality standards is important for maintaining positive reputation of a company. The reputation of Ferrari is prevalently based on the oral recommendations mutually exchanged between the vehicles owners, thus, customer satisfaction should be always prioritized by the car owners.
Finally, effective quality management is essential for compliance-related issues of Ferrari. Thus, effective quality assurance procedures are indispensable for ensuring that the company’s activities are in line with the evolving regulations of the government and industry associations, which is especially relevant in the automotive segment.
Bibliography
Automotive Action Industry Group. 2008. Potential failure mode and effects analysis (FMEA): reference manual. Southfield, MI: Chrysler LLC, Ford Motor Co., General Motors Corp.
Evans, J. & Lindsay, W. 2009. The management and control of quality. Cincinnati, Ohio: South-Western College Pub.
Ishikawa, K. 1985. What is total quality control? The Japanese way. Englewood Cliffs, N.J: Prentice-Hall.
Kmenta, S. & Ishii, K. 2004. "Scenario-Based Failure Modes and Effects Analysis Using Expected Cost". Journal of Mechanical Design 126 (6): 1027.
Rose, K. 2005. Project quality management: why, what and how. Boca Raton, Fla: J. Ross Pub
Webber, L. & Wallace, M. 2007. Quality control for dummies. Hoboken, N.J: Wiley Pub.
Invernizzi, E., Romenti, S., & Fumagalli, M. (2012). Identity, communication and change management in Ferrari. Corporate Communications: An International Journal, 17(4), 483-497. http://dx.doi.org/10.1108/13563281211274194
