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

Abstract:

Suzlon Energy Limited (Suzlon), engaged in the manufacture and sale of wind turbine generators, grew from a start-up in 1995 to become the third largest global player in the global wind energy market at the end of 2009. The company exploited the opportunities in the market by filling the demand-supply gap in the global wind energy equipment market and by offering cost-effective solutions. It offered a wide range of products and developed a vertically integrated supply chain for components. From a strength of 22 people in 1995 the company expanded to 14,000 by 2011. Suzlon followed an aggressive acquisition strategy to expand its technology base and product range. In its quest for rapid growth, the company hit an obstacle in the form of defects in the wind turbine blades supplied to customers in the US.

The issue received wide coverage in the industry circles and generated substantial negative publicity for the company. Though Suzlon was able to promptly address the issue and come out with a solution, the incident created a dent in its reputation and impacted the inflow of orders adversely.

The case discusses the happenings following the above incident and the implications to the company in terms of cost. It also discusses the steps the company took to address the problem. The case can be used in introductory as well as elective courses in Operations Management and Quality Management at the post graduate level to teach cost of quality, quality processes, quality management, root cause analysis, and related concepts.

Issues:

» Cost of Quality: External failure cost, components of cost of quality - tangible and intangible
» Quality Processes: Process control and quality control in manufacturing, special processes, testing for quality
» Quality Management: Quality management system, quality assurance, quality control in new product development, contract review
» Root Cause Analysis: Identifying causes, fish bone diagram

Contents:

Keywords:

Quality Management, Cost of Quality, Root Cause Analysis, Fish Bone Diagram, Quality Assurance, External Failure Cost, Process Control, Wind Mill, Wind Turbine Generators, Suzlon, Product Recall, Product Failure, Customer Satisfaction, Customer Feedback, Market Share, Growth Strategy

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