Lean vs Cheap: The Decline of Appliance Quality

Do you remember the Maytag Man, that 50-something gent in the blue uniform? The ads portrayed him as lonely, a result of the quality of Maytag appliances and few service calls. I fear the old mascot would not be able to keep up with the requirements of the new world of appliance quality, and his replacement a year ago with a younger, more energetic model is perhaps a subconscious indicator of the job’s new requirements.

Even the slogan changed, from ‘Built strong to last long’, to ‘What’s inside matters’.

Hmm. I reflect on these changes as I settle up the bill on the second breakdown of our 2012 Maytag refrigerator. The first, a few months ago, was to replace a faulty drain hose that led to ice building up in the bottom of the freezer – cost $234. The new hose was a redesign to prevent this from happening again in the future. The second problem led to a complete breakdown, as the control panel circuit board faulted out. This time the fridge was down over a week while we waited for parts – cost $316.

Our initial thoughts were that we must have bought a lemon, that low-percentage product that somehow made it through the quality control process and ended up in our kitchen. How else could we end up with $550 in repairs on a 2 ½ year-old product that cost $2,000? As I spoke to various service technicians, however, and did some broader research, the picture that emerges is very different.

Service technicians appear shocked that we didn’t buy the extended warranties on our appliances (by the way, we have had two service calls on our dishwasher as well; knock on wood for the stove). There is a proliferation of websites and forums, giving people a voice on poor appliance quality or helping them diagnose or fix the appliances themselves (e.g. http://www.appliancejunk.com). LG is simplifying their repair service, by offering a ‘One-Price’ flat-rate program, where consumers know ahead of time that any service call will only be, say, $110, regardless of the cost of parts. In one particularly troubling example, a technician told a story of touring a manufacturing plant for refrigerators as part of his training with that company, and seeing product being discarded at the end of the assembly line. When he asked, the company representative indicated that if a fridge fails the quality check, it isn’t worth fixing, so they recycle it.

So how did we get here? I like to say that the world is flat – globalization has happened. What that really means is that your organization is competing with other firms from around the world, and your customers have access to those same companies. That increased competition over the last 25 years has forced every industry through significant levels of change; firms who didn’t change perished. This is nothing new.

Whirlpool (parent company of Maytag) launched a Lean campaign back in the 1990s as part of their strategy to combat increased competition from European and Asian manufacturers. Their progress through that initiative is well documented, highlighting the good (waste reduction), bad (mass layoffs) and ugly (plant closures). Authors such as Kevin Meyer and others have illustrated the disconnect between true ‘Lean’ and Whirlpool’s cost-cutting mandate. For me, lean has always been about value, and not the cheapening of products or services (See Lean and the Duct Tape Conundrum). If value is about providing what the customer really wants and needs, then the difference between Whirlpool’s initiative and lean couldn’t be more stark.

This is an industry ripe for disruption. With declining quality across the board (when asked, the technicians indicated that Bosch and Miele out of Germany were better than most, and the Koreans tried hard to at least make repairs reasonable), someone is going to figure this out. I would happily pay a bit more for a product of quality from days gone by (remember those fridges that lasted 20 years? You may still have one in the basement, cottage or garage. Hang on to it!), or for effective and supportive after-sales service (think of Bose, Lexus and others). Manufacturers need to treat the design and engineering process as in other industries; provoke early failure in prototypes and virtual models and solve that issue before launching volume production. And, while offshoring is a fact of life, without support from corporate quality, supplier development and engineering, any offshore supplier will struggle, leading to some of those quality misses we witness here at home.

Most importantly, while the organization deals with poor quality, why not build in an extended warranty? An effective service response and resolution will in fact build customer loyalty and enthusiasm, despite the fact that the situation started with a break down.

Lean is about value, and your customers determine what value really is. Appliances may be about lifestyle to some degree, but they really are supposed to just operate well and stay in the background. Focus on quality, simplicity and duration, and this dialogue moves off the table.