Process Control at Polaroid

Process Control at Polaroid

EXECUTIVE SUMMARY

The Polaroid case emphasizes the importance of quality and process control procedures. Materials represented the majority (2/3) of manufacturing costs at the R2 plant. This fact alone reflects that quality control, yield maximization and minimization of scrap were crucial at the plant and for Polaroid as a whole. Undoubtedly, internal failure costs (scrap, rework, process failure) and external failure costs (customer complaints, product return, lost sales) can be extremely significant in this industry. By 1984, there was intense pressure to limit and reduce costs, thus giving rise to the implementation of Project Greenlight. The objective was to reduce quality monitoring costs, while maintaining or improving product quality. By instituting statistical process control procedures, production would be capable of manufacturing product within specifications and of a more consistent quality. Results of sampling identified an issue with finger height process average. Under the project, this would call for shut down, maintenance/recalibration and new control limits. While it can take some time for all personnel to develop the proper skill set and trust of fellow employees to fully utilize SPC, the end result will provide less scrap, higher yields and more consistency of product.

ANALYSIS & CASE QUESTIONS

1. What is the magnitude of cost of quality problems at the R2 plant? How effective were its past procedures for quality management?

Expensive materials represented about two-thirds of the cost of manufacturing at R2. Cost of quality issues are only magnified because of the nature of this particular manufacturing process and the dollar value associated with QC and the scrap created. For example, in 1984 sampled scrap accounted for $540,000, operator-sampled scrap another $740,000, and rejected finished product an additional $2 million. Results in the case showed a defect rate 10 times higher...