COUNTING THE HOLES Pt. 2: Important Lessons

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There are some important lessons to be learned from “counting holes” (see the previous post, Counting the Holes, Part One).

First, Japanese (and many other high-tech oriented countries’) customers pay very strict attention to quality. These local quality standards and expectations may be higher or broader – or both – from what is customary in the U.S.  This can be “news” to many engineering and hi-tech firms that might be used to dealing with just meeting minimum ISO (International Standards Organization) requirements. After all, these specifications are just the minimum specifications. Expectations can often be higher in many countries.

Taking Japan as an example again, there is a deeply engrained expectation of high quality in the manufacturing realm, which can be seen as a manifestation of Japanese cultural values, where mastery of perfection in an art (or anything else) is always held in the highest regard.  Almost all Japanese manufacturers have at their core the “zero defect” philosophy built on the statistical analysis methods pioneered by American statistician W. Edwards Deming after WWII.  Deming is regarded as having had more impact upon Japanese industry than any other non-Japanese person.  He was honored in Japan in 1951 with the establishment of the Deming Prize, today considered the most prestigious and famous industrial award in Japan.  No analysis of the rise and success of Japanese industry and products will fail to give W.E Deming his due credit. (Today his work is carried on by the Deming Institute.) Yet despite that, his concepts and philosophy began to gain some modicum of recognition and adoption in the U.S. only shortly before his death, with the creation of the U.S. Malcolm Baldrige Award in 1987. Even today, few Americans have heard of this award.

Deming’s industrial and design practices have evolved into the “zero defect” approach virtually all Japanese companies build into their manufacturing processes, and in turn, Japanese customers build into their buying expectations.  By contrast, much of the U.S. manufacturing sector still bases its design processes on the concept of “minimum percent of defects.”  “Zero defects” is very hard to achieve, and no matter how good and advanced the manufacturer, some defect will occur. Rigorous application of a “minimal defects” approach will yield minimal defects, a goal much easier to achieve. The gap in results between the two approaches, at least for high quality manufacturers around the globe, can be small, maybe even the same.  But the gap in philosophy is huge.  The achievement of say, a 4% defect rate against a target of a 5%, would be cause for celebration (and maybe corporate bonuses) according the minimal defect approach, but for criticism and increased pressure for process improvement under a “zero defects” approach.

This difference with Japan (and other advanced-technology countries) can set up smaller U.S. companies for an unwelcome surprise when confronting customers who are demanding different and very high technical and quality standards that they are not used to domestically.  Engineers, marketers and customer service, among other groups in a company, often balk at the level of technical detail, commitment to quality, and customer satisfaction demanded by many of their overseas customers, their Japanese customers being the prime target of complaint.

Another area of difference in quality perspective with many international customers is that they are also concerned with the appearance of the product, not just its performance.  When products do not meet stated specifications – even cosmetic or minor ones – many international  customers take it just as seriously.  For Japanese consumers, for example, “Scratch and Dent Discounts” are not a consideration.  Customers demand perfection.

The implications for US manufacturers are that product shipments that consistently contain out-of-spec products or visual imperfections will erode confidence in the manufacturer.  This lack of confidence inevitably filters down to the field sales force level, and will eventually negatively affect the sales of the product.

This brings up another point about specifications. US companies tend to be very legalistic and narrow in their interpretation of contracts and product specifications based on U.S norms.  Recognize that a consistent pattern of customer complaints about “poor quality” or “frequent trouble” is an important information stream about potential problems in product quality in a certain environment.  Use your customers’ or distributor’s incoming inspection process as an extension of your own quality control. (We’ll return to this subject in a future column.)

Your international customers’ input is an important source of feedback to improve the quality of your product and your process to meet consumer preferences and expectations, in addition to environmental demands that may not be present in the U.S. domestic market.  When they hold your feet to the fire, don’t ask, “What difference does it make?” and try to avoid raising your quality standards.   See what can be done to satisfy the world’s most demanding customers.  You’ll end up building a reputation for quality around the world.   Why not reap the benefits of having somebody else count the holes for you?


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