Fridge on the Fritz? When Lean Goes Wrong
Do you remember the Maytag Man, that 50-something gent in the blue uniform? The ads portrayed him as lonely, a result of the high quality of Maytag appliances and the need for few service calls. I fear the old mascot would not be able to keep up with the requirements of the new world of appliance quality. His replacement a year ago with a younger, more energetic model is perhaps a subconscious indicator of the job’s new requirements.
Even the slogan changed, from Built Strong to Last Long to What’s Inside Matters.
Hmm. I reflect on these changes as I settle up the bill on the second breakdown of our 2012 Maytag refrigerator. The first bill, from a few months ago, was to replace a faulty drain hose that led to ice building up in the bottom of the freezer. Cost: $234. The new hose was a redesign to prevent this from happening again. The second problem led to a complete breakdown, as the control panel circuit board faulted out. This time the fridge was down for more than a week while we waited for parts. Cost: $316.
Our initial thought was that we must have bought a lemon, that low-percentage product that somehow made it through the quality control process and ended up in our kitchen. How else could we end up with $550 in repairs on a two-and-half-year-old product that cost $2,000? But as I spoke to various service technicians and did broader research, the picture that emerges is very different.
Service technicians appear shocked that we did not buy the extended warranties on our appliances. (By the way, we have had two service calls on our dishwasher as well; knock on wood for the stove.) There is a proliferation of websites and forums that give consumers a voice on poor appliance quality or help in diagnosing problems with their appliances. LG is simplifying their repair service by offering a “one-price” flat-rate program, where consumers know ahead of time that any service call will only be, say, $110, regardless of the cost of parts. In one particularly troubling example, a technician told a story of touring a manufacturing plant for refrigerators as part of his training with that company, and seeing product being discarded at the end of the assembly line. When he asked why, the company representative indicated that if a fridge fails the quality check, it isn’t worth fixing, so they recycle it.
Lean is about value, and your customers determine what value really is. Focus on quality, simplicity, and duration, and this dialogue moves off the table
How did we get here? I like to say that the world is flat: globalization has happened. What that really means is that your organization is competing with other firms from around the world, and your customers have access to those same companies. Increased competition over the last 25 years has forced every industry through significant levels of change; firms that did not change perished. Nothing new here.
In the 1990s, Whirlpool (parent company of Maytag) launched a lean campaign as part of their strategy to combat increased competition from European and Asian manufacturers. Their progress through that initiative is well documented, highlighting the good (waste reduction), bad (mass layoffs), and ugly (plant closures). Authors such as Kevin Meyer and others have illustrated the disconnect between true lean and Whirlpool’s cost-cutting mandate. For me, lean has always been about value and not the cheapening of products or services. If value is about providing what the customer really wants and needs, then the difference between Whirlpool’s initiative and lean could not be starker.
This is an industry primed for disruption. With declining quality across the board (technicians tell me that Germany-based Bosch and Miele are better than most and that Koreans try hard to at least make repairs reasonable), someone will figure this out. I would happily pay a bit more for a product of quality from days gone by or for effective after-sales service (think of Bose, Lexus, and others). Manufacturers need to treat the design and engineering process as in other industries; provoke early failure in prototypes and virtual models and solve issues before launching volume production. While offshoring is a fact of life, without support from corporate quality, supplier development, and engineering, any offshore supplier will struggle, leading to some of the quality misses we witness here at home.
Most important, while the organization deals with poor quality, why not build in an extended warranty? An effective service response and resolution will in fact build customer loyalty and enthusiasm, despite the fact that the situation started with a breakdown.
Lean is about value, and your customers determine what value really is. Appliances may be about lifestyle to some degree, but they are supposed to operate well and stay in the background. Focus on quality, simplicity, and duration, and this dialogue moves off the table.
Barry Cross is adjunct assistant professor at Queen’s School of Business and co-author, with M. Kathryn Brohman, of Project Leadership: Creating Value with an Adaptive Project Organization.