It Really Isn’t a Tradeoff
Cost, quality and time are not the opposing choices we long believed they were.
For a long time it was a commonly accepted belief that cost, quality and time were opposing choices. The belief was that they traded off against each other because good quality took lots of time, speed increased cost, and costs had to be higher if you wanted the quality right.
Strangely enough these beliefs were surviving folklore from the craftsman era. For example, back then the belief was that creating a handmade leather saddle took extra time and cost extra money in order to possess the high quality expected of a custom saddle. In that world this is still true.
Most of us don’t live in the one-off world anymore. Most products we buy and services we use are provided en masse. Even if they are customized to our needs, as a Starbucks cup of coffee is, most products and services are still mass produced.
What’s important about understanding this misunderstood issue is that the path to higher quality products and services is actually paved with less time and lower costs. It’s not an either/or choice—it is a yes, yes and yes choice.
For example, if the door on a customer’s new Toyota doesn’t fit right when it is first attached, no value is created by the assembly workers spedning an extra five minutes adjusting it. The customers won’t pay more for that extra work, but Toyota will have to pay because time is indeed money.
Any routine work process that doesn’t flow seamlessly – any process that requires adjustments, rework, error correction, or even inspecting – is a process that has inherent quality problems. Quality problems require time to fix and time adds costs.
These trade offs may not seem important until you look at it from the big picture perspective. Studies have shown that most organization’s processes are full of flaws, which add a lot of cost. The typical manufacturing company has process waste in the neighborhood of 25-to-30 percent of its costs going to activities that add no value, activities no customer would be willing to pay for directly. In service businesses it is 30-40 percent and in government its 50-60 percent.
This does not mean the people doing the work are lazy or even that they are doing sloppy work. It means they are doing unnecessary work — and that is not a people problem but a process problem.
Management needs to understand that the tradeoff between cost, quality and time isn’t a tradeoff at all. It’s an opportunity to make things run better.
As you look at the routine process your team works with every day, can you see places where those processes breakdown and add time and cost. If you start looking there, you can start to make cost, quality, and time work to your advantage.
Lean Process Improvement – Video Blog Post by John Bernard