All right, let’s take a quick break from disruption and discuss a more day-to-day operations topic.
We all know the famous tug-of-war between quality and quantity. BusinessDictionary.com was certainly accurate about the conundrum this still creates in modern firms:
Quality over quantity – it’s a simple concept taught to us throughout our formative years – but it’s one that fits like a square peg in a round hole in today’s corporate environment. The reason that it’s so hard to emphasize quality over quantity is simple – businesses are established to make money as quickly as possible and at the highest possible margins.
Crafting single high quality products tends to be expensive and time consuming, and must be sold at much higher, less attractive prices to the average consumer in order to be profitable.
Lower quality work, produced quickly in outsourced factories with a minimal time commitment per product, tends to be far more profitable, with higher margins as well as a lower, more attractive price point for consumers. Well-known adopters of this business model are Wal-Mart and Target.
Often times the answer is ultimately up to each individual business. But for supply chain heads, this should not be a convenient excuse to distance oneself from the dilemma and try to get some other department to deal with it.
The truth is this is one conundrum that entire corporations and supply chain networks should tackle together. That goes from the supplier of raw materials all the way to down to the customer-facing front.
To better illustrate, here are three general areas where the quality-versus-quantity question needs to be considered, evaluated, assessed and quantified when auditing your supply chain.
Let’s start with the most obvious area. Are you one of those companies who stamp words like “100% Pure Beef” or “100% Free Range” on your items? In a layman’s eyes, it might just be fluffy advertising. But for a supply chain manager, it is a bold and serious claim that comes with very real responsibilities.
Let’s remember that we live in an age where clickbait and brand-damaging rumors can spread like wildfire on the internet. Firms like McDonald’s wouldn’t be spending large chunks of their advertising budget dedicated to dispelling these rumors.
That said, you should have the means to meet the very objective standards of quality when it comes to raw materials. Do you have the right professionals who can assess this quality? Are you certain the materials you have sourced are verified with the proper certifications? Do you properly understand the cost and value drivers in your supply chain?
Perhaps the next time you go into a store and see something with a “100%” label, take a moment to reflect on how the producing company might have nailed down the right suppliers and/or the right systemization or processes to be able to confidently stand by their claims.
The next obvious area is the connection between quantity and demand. As evidenced by the still never-ceasing consumption of instant coffee and other similar products, there can be high demand even when the perceived quality is low.
On the other hand, it can also be high even when said quality is high. Look at Starbucks. Despite many other coffee contenders, the company’s transformation of its supply chain practices in the face of demand is still a success story worth telling.
The best way to strike the right balance between quantity and quality is to use this as an attribute to segment your target market. In that area, demand-driven analytics and big data crunching will prove critical as only the most real-time data will translate into the effectively lean production, that allows the accurate forecasting that produces the right amount of the right quality product to satisfy each of your target markets requirements.
For example, how many stores do you have to open in order to create meaningful growth? Will your supply chain be able to handle the new demand for products and materials for every new branch opened? What are the actual numbers when it comes to delivery time? What is the definition of quality according to most of your customers?
Some would first think that big data analytics doesn’t necessarily have anything to do with balancing quality and quantity in production. But in reality, it does so in more ways than one!
Lastly, it’s a trap to ignore the connection between the quality-quantity balance and the paradoxes of value.
Simply put, if most of your customers are finding your product more and more expensive, then this is because they don’t perceive that your product is maintaining it’s value.
It can be because you have yet to innovate ways to produce larger quantities without sacrificing quality. It can also be because the quality of the product itself is no longer worth the price you ask.
All of these have to be taken into consideration because they can be the result of any disruption or inefficiency within your supply network.
So, overall, it is a mistake to think that answering the question of quantity over quality is more easily delegated than in the past. The only difference between now and then is that you have more information to process and there’s a larger impact due to a larger, global marketplace. Best start innovating your supply chains now, because striking the balance between quality and quantity is only going to be more challenging. In the world today, the expectation is high quality, high volume and it’s the challenge of our supply chains to deliver this consistently, reliably and globally to boot!