Remember the Yugo? It was a popular car in the 1980s, imported from the former Yugoslavia. It was really cheap too, selling for about $3,900. I guess many of you will not recognize the name Yugo because it was manufactured so long ago, but as you can tell since they aren’t around anymore, this car was not a hit.
The standard joke was “It’s called a Yugo because when it breaks down, the driver and the passenger argue over who is going to walk to the nearest phone to call for help. You go. No, you go!” This shows there were a lot of quality control problems that caused the vehicle to break down a lot, which is clearly why they aren’t around anymore.
Many people initially bought Yugos because they were cheap and they were advertised as a reliable vehicle. Who could resist a reliable car that was priced so much lower than the competition? What a dream come true! But there was a reason they were so cheap: because they were made with no attention to detail or quality. This very poor buying decision left many people stranded at the side of the road at the worst times, like when they actually needed to get somewhere in a hurry.
I see a lot of these types of decisions made in my industry, which is machining and manufacturing. I also see this occur in other industries we frequently work with, such as the sawmill industry. Companies purchase components and equipment based solely on price, because it’s so much lower than the competition. There seems to be some mandate out there that says price is everything, and performance and quality are things that can take a backseat.
Yet the very same people who make these decisions at work make totally different purchasing decisions in their private lives. They don’t buy cars like the infamous Yugo! They prefer a higher quality car that is far more reliable for getting to work and back safely. They would not even consider the Yugo no matter how cheap it was, since they want something that doesn’t need to be fixed all the time. The Japanese car industry, for example, is based on quality and reliability. The same people that are buying high-quality, reliable vehicles for their own use are in turn buying Yugo-like products to run their business, just because they’re cheap. Where’s the logic in that?
Using these low-quality Yugo-like items actually ends up reducing the quality of the products your company is manufacturing. They also cause a lot of downtime and other issues, which results in lost productivity and revenue. I bet you can give me more that 10 separate instances where your company, or you personally, have bought a Yugo-like product because you believed you were getting a great deal. “Of course the quality is the same,” you told yourself, “It’s just a really fair price.” No one seems to question why these products are at such a low cost in the first place. They just go ahead and buy and then suffer the consequences later. Many of the companies who have repeatedly made these types of decisions are no longer in existence because of this.
There were 141,000 Yugos sold in the United States. So it took a little while for people to realize that they were of poor quality (hence the joke at the beginning of this article.) People began to realize that these low cost vehicles were not worth the hassle or expense of constant repair, and sales dwindled down to nothing. Many industries today continue to buy only on price. A lot of damage is done because of this, as they do not question if they’re going to get the same quality as a higher-priced product. The lack of quality components inside your machinery can cause a lot of things to go wrong. It can also cause a company, or an entire industry, to be destroyed.
So remember the lesson learned by many people in the past when they bought a Yugo because of its attractive price. They suffered for their decision. The same applies to the purchasing decisions of companies and industries today. Make sure you select quality first instead of price. You will not regret it and it will save your company both efficiency and cold hard cash in the long run!
Author: Udo Jahn
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