The rework for 5 million poor quality iPhones will cost Foxconn RMB 1.0 to 1.6 billion.
The QC department in Foxconn used to be very powerful to stop bad quality products from shipping out. The QC system is loosen up after many production workers committed suicide for unable to meet quality and workmanship standards.
I visited one of Foxconn manufacturing plants in Shenzhen and was told they recruited a few hundred thousand workers in very short period to meet iPhone crazy demand. I have nothing to say except to compliment Foxconn is a super factory at that time.
Anyone in production line will know training for new workers is a massive engineering work. In my past experience, bring in 3000 qualified production workers in 12-month is already an uphill task.
How big is big? Foxconn industrial zone is like a big city in Malaysia, the worker population is bigger than Seremban or Ipoh. The total headcount during the peak is 1.2 million, a number beyond my comprehension !.
The production ramp-up is too steep and on-the-job training for workers is insufficient also. The hidden problems of over expansion are finally unearthed and haunted the company a few years later.
Foxconn fired two quality heads and its CEO himself slept in the factory floor wound not help to solve the pertinent quality problem.
Foxconn has to pay for the hefty price of poor quality management.
GE production system with self-directed team concept is still the best to cope with quality and production challenges. A GE factory in Malaysia already ventured in part per billion concept when Motorola was still talking about 6 sigma concept of 3.4 PPM in late 80s. Thus, Motorola is out and GE is still fit to compete globally.
Samsung Seremban safeguarded its cell production line like a top secret which was used by GE at more than 30 years ago. Actually this is Samsung’s main weapon to ramp up its Galaxy phone production without compromising quality.