Background
William Edwards Deming is the author of fourteen key management principles or points that form the foundation of his economic theory. The third of the fourteen points describes how quality can be achieved and maintained in a business setting.
At this point, Deming argues that businesses should not rely on quality checks to achieve consistent levels of quality. The economist implies that inspections are not the most efficient way to achieve quality. Deming claims that quality can be built into the product, thus eliminating the need for massive quality checks. This point highlights the need to consider improving manufacturing processes to achieve quality, rather than simply sorting the output. Using inspections to achieve quality is, obviously, less desirable from the economical standpoint, since it increases waste and requires additional financial and human resources. At the same time, once manufacturing processes are perfected, there is no need to allocate large amounts of financial and human resources for quality checks. This fact is the result of the fact that products are built with quality in mind.
If Deming’s point is interpreted more broadly, it can be applied virtually to any kind of business activity. For example, integrating quality policies into customer service will reduce the need to gather customer feedback to achieve quality service. It can be interpreted as the need to consider organizational factors and their influence on the quality of product or service.
Current Condition
Costco Wholesale Corporation is a membership-only warehouse chain that sells a variety of goods to its club members and their guests. It can be argued that Dr. Deming’s point was not fully adopted by the company’s management. Costco does employ a variety of quality control efforts to ensure that Costco products are of high quality. However, these efforts are mainly focused on quality checks, such as checking measurements, product-to-product ratio, etc. For safety reasons, quality inspection cannot be fully excluded in the case of Costco since Costco stores sell food in addition to other merchandise. However, there are reports online which suggest that Costco relies on massive inspections to achieve quality in non-food consumer goods. For example, experts note that Costco quality inspections of its number one selling product, toilet paper, are so extensive they seem obsessive.
Target Condition
The Costco should focus on finding responsible suppliers who provide high-quality goods, rather than rely on massive inspections to sort out low-quality merchandise. For those products which are manufactured under the Costco brand, the retailer should focus on improving organizational processes, using the best raw materials and most efficient manufacturing methods to produce quality goods. Relying on quality checks for non-food goods is time-consuming and expensive. In optimal conditions are established in the first place, there would be no need for such quality inspections.
Costco’s strategy should include actions to increase the quality of goods by establishing long-term contracts with responsible suppliers. This will allow the company to reduce expenses on human resources and reduce waste. Those suppliers, who compromise the quality of their goods, should not be a part of the Costco business, even if their price is the lowest. This is because while initial investment will be smaller, the total cost will increase due to expensive quality checks.
For food sold at Costco, the company should ensure optimal conditions to minimize the likelihood of products going bad and reduce waste.