I happened to have a conversation with a Senior Partner of a company which is into manufacture of Filaments for GLS lamps. I profusely congratulated him when he said that he has been able to save considerably in manufacturing cost by using Steel as the material for the mandrel in place of Platinum which is the industry standard. However my elation was short lived when I found out that the rejection rate of the filaments had increased to 30 % when steel is used instead of the usual Platinum. There was more in store. He nonchalantly told me that he is not worried since he had found customers who accepted the rejected materials at a little lesser rate as second grade products. This in fact, he said, is more profitable for him since the reduction in price of filaments offered by him much less compared to the savings due to differential cost between the platinum and the steel. The shock, however, was when he said there is further rejection from these second grade products which also are sold as third grade at further discounted rates.
I have come across people boasting about improving quality of products, reducing rejection rates and cutting down on costs by material substitution. But this was the first instance of the Top Management adopting substitution of materials to reduce cost and deliberately produce more of lower grade of final product!
But wait, the final blow was when he said he is certified to ISO 9001 !! At last some original and innovative thinking (from India)
Click for # 001 Click for # 012
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