Cost of Quality - The Case of Suzlon's Blade Recall

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Case Details:

Case Code : OPER101
Case Length : 10 Pages
Period : 2007-2011
Organization : Suzlon Energy Limited
Pub Date : 2012
Teaching Note :Available
Countries : India, USA, Global
Industry : Wind Power, Engineering

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Quality Problems - Cost of Aggressive Growth?

There were reports in the press in 2008 regarding cracks in the blades on turbines sold by Suzlon in the US Midwest. It was reported that the cracking was because of extreme gusts in the region. The reports also pointed out other problems like lower availability of turbines, incompatibility with the US electricity grid, and breakdowns due to cold weather in the wind farm projects managed by Deere and Co., one of the largest customers of Suzlon in the US with 250 Suzlon turbines. While Suzlon took time to analyze the problem, a number of views and opinions were being circulated in the media. An article in Forbes India citing this as a tale of caution for those going global said that consumed with commercial interest, Suzlon had by-passed the crucial life cycle and destructive tests on blades...

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Suzlon's Response and the Impact

In March 2008, Suzlon announced that it had taken up a retrofit program to solve the blade cracking problem in the S88 turbines sold in the US. The company said a provision of Rs.1 billion was being made in the 4th quarter of F2008. It announced that the retrofit involved structural strengthening of 1,251 blades of which 930 were installed and the balance were in inventory or transit. The announcement resulted in the Suzlon stock crashing by 24% in a couple of days. Tanti said that cracks had been found in 45 blades out of a total of 1,251 and the cause was blade surface stiffness at the location of the cracks...

The Way Ahead

Andy Cukurs, Chief Executive Officer, Suzlon, reported the completion of the retrofit program and said that the company had kept its commitment to its customers. David A. Drescher, Vice President - John Deere Renewables, expressed happiness with the completion of the replacement program by Suzlon...

Exhibits

Exhibit I: Suzlon's Product Range
Exhibit II: Suzlon's Integrated Supply Chain
Exhibit III: Global Wind Turbine Market 2009 (Market Share in %)
Exhibit IV: Share Price of Suzlon at Bombay Stock Exchange (BSE), India

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