workers in a factory warehouse

Back in April, one month into California’s lockdown, my wife and I decided to “celebrate” (in coronavirus-fashion) our anniversary by ordering take-out from one of our favorite restaurants. This being the height of quarantine, the restaurant’s normally packed parking lot was nearly empty. One might assume, then, that with demand down, my order would get extra attention.

My meal took an hour to prepare — much longer than the normal 15 minutes. And when I got home, I discovered that my onion rings were missing, and my wife’s burger was meat, not vegetarian.

There is an interesting parallel between my experience at this restaurant and what I expect to happen in the manufacturing industry as we emerge from COVID-19. As I discussed in my previous blog entry, there are strong signals that manufacturing is in for a quality crisis. (Ward’s Auto actually wrote an article about my conclusions.)

Why? Because COVID-19 and the related economic slowdown have created a perfect storm of disruption.

There’s not much we at Drishti could do to salvage my wife’s anniversary meal. But for factories, our hypothesis at Drishti is that video traceability can make this crisis much easier to manage.

Quality costs hit you in three phases

Manufacturers understand intrinsically that quality costs are more than the cost of a single scrapped unit. There are significant labor and materials costs associated with any one scratch, or missing screw, or bad component — to say nothing of the clear long-term link between quality issues and your ability to win or preserve your contracts.

We’ve analyzed quality costs as they cascade out across the organization, and we’ve grouped them into three phases that play out over the short and long term: Investigation, Remediation and Fallout.

Investigation phase

This phase begins as soon as a defect is discovered. Your goal during this phase is to understand why the defect occurred. This is easier said than done, because most manufacturers have very little record of past activities. Which means you have to throw bodies at the problem, incurring costs in several areas:

  1. Teardown costs: The time and labor spent understanding why an individual unit is defective.
  2. Root cause analysis costs: You’ll have engineers performing investigations and writing reports, which has both a direct cost and an opportunity cost.
  3. Stopped production costs: In some cases, your line will be down while you’re investigating your issues. This drives labor waste, causes overtime to catch up, and might force you to eat into your safety stock.
  4. Sorting and inspection costs: Did this defect occur in other units? You’ll be spending lots of time looking at units from the same lot (or beyond) to confirm “condition not present.” This means checking WIP, warehouse inventory and even goods that are in transit or already received by the customer. Depending on your distribution speed and your customer agreements, this can quickly cascade outward — especially if you need to hire third parties to help you at remote warehouses or customer sites.

Remediation phase

Once your investigations are complete, you need to do something about the problems you’ve uncovered. Again, you’re going to be paying to fix the problem:

  1. Rework costs: Time, labor and replacement parts to fix the defects you’ve found.
  2. Scrap costs: The costs of unsalvageable material.
  3. Countermeasure costs: You may need to add redundant inspection processes, people or equipment to address recurring defect issues. This may mean engaging process or quality engineers to fortify the process; hiring vendors to build poka-yokes; or adding inspection stations that increase labor content, cycle time and costs.
  4. Warranty/recall costs: If the defective units made their way to the customer, then you will face official claims that damage your supplier quality scorecard, as well as costs associated with retrieving and replacing those units.
  5. Additional production and shipping: In order to satisfy shipment releases, you may resort to overtime or an added shift and possibly expedite freight charges to ship on time.

Fallout phase

Unfortunately, there are long-term ramifications for quality issues. These are much less predictable — and much more significant if they hit you.

  1. Relationship costs: For most manufacturers, contracts are ultimately predicated on the quality of delivery. Every manufacturer has a horror story of small quality issues cascading into large lost contracts.
  2. Reputation and brand costs: Once you get a reputation for poor quality, the future of your business suffers as a result.

COVID-19 creates an opportunity to approach quality differently

The Toyota Production System (TPS) is designed around a few foundational assumptions about the nature of assembly work. COVID-19 is forcing us to rethink them. Here it is from no less a source than Akio Toyoda, CEO of Toyota itself, as quoted in Automotive News:

The grandson of Toyota’s founder, who has spent recent weeks at a Toyota training facility, said on Tuesday he is now questioning “Genchi-Genbutsu,” a Japanese phrase that translates roughly into “go and see for yourself.” The principle was built on the idea that problems can be solved more quickly and efficiently by going to where they exist and analyzing root causes.

“We’re taking a fresh look at the assumptions of ‘Genchi-Genbutsu’,” Toyoda, 64, said.

…he called for a return to the main idea behind Genchi-Genbutsu, by being smarter about seeing things in person and when to see them remotely.

Stop and ask yourself: Why has TPS been so oriented around seeing the line for yourself?

It’s the same reason that the investigation phase of a quality issue requires so much activity: Because the only way to understand what happened in the past was to infer it from present activities.

Now, imagine how all of this changes when you can see past activities as easily as pulling up a video on YouTube.


manufacturing quality costs video traceability

How Drishti helps

Drishti is a video analytics and video traceability tool. We place cameras at every station to capture video of the process. While many customers are initially enamored with our advanced AI for live video analytics, the sheer fact of having a video “record of truth” creates a tremendous reduction in quality costs.

When you can see into the past, quality issues are far less likely to cascade as they do today.

Think of all of the time engineers spend observing the line, and all of the intricate methodologies employed in problem-solving. If you do a “five whys” analysis, you get to the root cause: It’s because you can’t see into the past.

What would change in your factory if you could?

Talk to Drishti about how our video traceability tools can lower your quality costs.