How Are Your Contractors Doing With Human Quality Control?

One of the more intriguing concepts for understanding a production or development cycle is the "Quality Triangle." Picture a triangle with its sides labeled "fast," "good," and "cheap." The rule that has applied for so many years is that you could have any two of the three. If you wanted something fast and good, it wouldn't be cheap. If you want something fast and cheap, it wouldn't be good.

Lately, I have been rethinking this rule as it applies to accelerated production cycles, where technology has increasingly automated processes at fixed costs while sacrificing jobs formerly carried out manually.

For companies that have shifted their manufacturing to foreign countries, labor costs seem to be so low that quality and supply demands can now be met in a way that the Quality Triangle axiom no longer holds. It appears that we can get products fast, good, and cheap. I thought of the term "quality" with regards to "quality of life," and I thought that maybe, for volume production operations, this triangle has morphed into a rectangle with a fourth side labeled "humane."

With employees numbering in the hundreds of thousands, Foxconn Electronics Inc. , the world's largest contract manufacturer, has been in the news lately. There have been allegations that its workers are poorly compensated. Demoralizing working conditions and the dangers they present to employees' physical and mental health have come under scrutiny and generated calls for immediate improvements.

With advanced automation technologies, it seems we can have products that are produced quickly, cheaply, and at high quality, but possibly at the expense of decent treatment for the people in the trenches building the products.

Machines have a fixed operating cost. That means the optimal cost of operating and maintaining the equipment has already been achieved. High-volume materials have the lowest cost possible, because of the competitive nature of the supply chain. Once a supplier has hit close to the mark where it is selling at the lowest margins allowable to capture the volume business, it just can't go any lower and stay in business. That leaves labor as the last bastion of cost cutting.

The philosophy of turning people into automatons or robots, so they can be "costed out" like any other CNC (computer numerical control) machine or assembly equipment, is the product of a mass mind mentality. When that philosophy is foundational not just to a company, but to an entire political or belief system, then wholesale change should not be expected anytime soon. In literary terms, this is Big Brother. In Star Trek terms, this is the Borg collective. In human terms, this is a nightmare.

So I propose the "Quality Rectangle" axiom. You can have something fast, cheap, and good, but that will mean inhumane treatment of the factory workers. You can have it fast, good, and not so cheap, but the workers will be treated more humanely. Now the question is whether consumers are prepared to pay a bit more, and whether an OEM and its shareholders will be willing to accept a lower sales margin, to help guarantee better treatment of the workers.

I don't think we can ever go back to the traditional triangle. We have to consider the rectangle as our new geometric pattern for quality. Maybe the long sides of the rectangle, representing the more important emphases, would get the "good" and "humane" labels. This is not to minimize cost and speed, but it puts the value of the human being on par with the quality of the product.

I envision Apple Inc. (Nasdaq: AAPL) as the company in the white hat that sets the stellar example and stretches my rectangle into a trapezoid, with the longest edge being humane treatment for all its supply chain workers. It has enough economic clout to say to its foreign factories, "We would like to have an Apple Quality Team present in all of your facilities where our work is being performed." Every contract manager that I ever engaged for volume production has invited and welcomed a team from my company to "live" at the contractor's facility to oversee line operations.

I propose that we add "working conditions" as a checkbox on our Supplier Quality Audits. Before we do business with any contract manufacturer, we should examine how it treats its employees -- in particular, the line workers. If all US and international companies incorporated this quality check before doing business with any foreign factory, we would create a new expectation for our suppliers and a better life for their workers. Apple can't do it alone, but it can get things off to a running start.

If you can't get behind this, then "you will be assimilated."