Forum for Innovation — Choose Esmaltec's Quality Fix Under a Delivery Constraint

A four-round, advanced operations-and-innovation simulation set inside Esmaltec Sul S.A., a Joinville (Santa Catarina) maker of enameled steel and ceramic-coated home and building products — R$720 million revenue, 12.5% EBITDA, one plant with four lines running near a hard 2.1M-units/year ceiling. The defect rate has crept to 4.2% (best-in-class ~1.5%), cost of quality runs at 9% of revenue (R$64.8M/year — more than two-thirds of EBITDA), and on 18 March 2026 the firm's largest customer CasaForte (24% of revenue, R$173M) issues an ultimatum: cut the defect rate on its lines below 2.0% within two quarters or it dual-sources 50% of the volume (R$86.5M at risk, a further R$120M if the reputation spreads). As the VP Operations, advised by Esmaltec's university-industry Innovation Forum, you (1) diagnose the defect Pareto and cost-of-quality structure to tell a process-limitation root cause from an execution-variation one; (2) choose the innovation project inside a R$22M envelope among process innovation A (electrostatic enamel + in-line vision, R$19M, gets defects to ~1.6% but a 6-month install removes ~180,000 units of peak-season capacity), product innovation B (a premium nano-coating extension, R$14M, revenue upside but raises near-term defect risk on the watched lines), and continuous-improvement C (Six Sigma DMAIC + SPC, R$4.5M, fast and low-downtime but plateaus around 2.8%) — or a feasible combination; (3) set a balanced quality scorecard rather than a single defect-rate target that invites gaming cycle time and cost of quality; and (4) sequence the rollout to protect CasaForte's peak volume while a mid-project trial underperforms — phasing installs, overtime, temporary outsourcing or renegotiating the deadline. The math rewards reframing quality spend as an investment against the R$64.8M cost-of-quality bleed, matching the intervention to the Pareto root cause, focusing the budget instead of spreading it thin, a balanced scorecard, and phasing the install around the capacity ceiling — and punishes the five classic errors: revenue before stability, ignoring downtime, thin spreading, single-metric tunnel vision, and treating the project as pure expense. Final KPIs track Defect Rate %, Cost of Quality % of revenue, CasaForte Delivery, and Innovation Pipeline value.