Monday, 12 August 2024

Don’t fall for the myth of picking Quality, Cost or Delivery

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There are many myths in the world, ranging from Bigfoot to bumblebee's defying the laws of physics (they don't) and of course the Loch Ness Monster (who is just shy and wants to be left alone).

It seems that myths are still very real in the world of work as well. Work-life balance is impossible, remote working is inefficient, workplace conflict cannot be constructive and of course the topic of our post, the quality, cost or delivery dilemma. The recurring myth is that you need to pick 2 out of the 3 as you can't have them all.

The Origins of the Myth

Like all good myths there is an origin story to this one and it comes from the world of project management back in 1968. (At the time of writing this blog, that's 56 years ago!) It was given the name of the triple constraint, or sometimes called the iron triangle, and it was designed to explain why projects run over, either in time or cost.

From a project management viewpoint, the thinking was that the quality of the project (and it's outcomes) is driven by the scope of the project, how much time you have to achieve that scope and how much money you want to spend.If you have scope creep then it will take more time and cost more, if you don't want to spend more or take more time, then you have to sacrifice quality or constrain your scope. If you wanted the project to come in on time and on scope but do it cheaper, then you needed to sacrifice quality. You see the trend here, it's a constant trade off. The term, pick 2 of 3 was directly from here.

The aim of this approach was to try and force people into fully defining the scope of a project and hence understand the time and the costs. If they wanted to change the scope that is Ok, but it must be met with an increase in time and ultimately cost. In the world of project Management and construction projects it' kind of feels like it should work right? We'll come back to that.

The Adoption of the Myth

Over the years the triangle has found it's way into service and manufacturing environments who have conveniently dropped the scope and now talk about Quality, Cost or Delivery – pick 2 of 3. Again, based on Quality takes time and costs money, which like all good myths on the surface, they sound plausible but poke at it a little bit and you start to wonder if it really is or has the myth purely been adopted to cover up or accept poor performance? Either knowingly or unknowingly, have people propagated the myth of only being able to achieve 2 of the 3 key principles of business because they don't really know how to do it? To be fair it's in part propagated by universities and business coaches as part of the 'common law of business balance' approach (which is basically you get what you pay for) which dates all the way back, to over 100 years ago in fact, to 1914.

Think about what it's really saying. If I want higher quality, then I need to increase cost and/or delay delivery. If I want faster delivery then cost must go up and/or quality must go down, I want it cheaper, quality needs to come down and delivery may need move as well. That's the idea of the triple lock.

The Cost of (poor) Quality

If we think about the cost linked to higher quality what does that really mean? Imagine you ordered 100 red widgets from a manufacturer, and you wanted them all in 4 weeks. If they came to you and said look you can have 70 units in 4 weeks and the remaining 30 in about 6 weeks, if you actually want all 100 in 4 weeks, I'll need to make 120 because our quality is so poor that we know a % will drop out so I'll need to charge you more. Would you accept that? It's exactly what the triangle is saying.

Let's imagine you say, nope I won't pay more, and the quality needs to be perfect, I expect 100 good ones, then following the triangle your delivery is going to move from 4 weeks to say 6 or 7 weeks. The reason? The process is so poor it can only deliver 70% good red widgets, they have a run rate of a little over 17 per week. That means they need to build around 120 widgets to get 100 and it'll take about 6 weeks in total. If they rework the widgets then they can build less but the rework time factors in so it'll probably still take extra and cost more.

What the triangle is saying is that poor quality costs.

For every poorly made item you need to either pay someone to fix it, which also ties up their time that they could be doing something else which adds value, or you need to make a replacement and put the faulty one in the bin. All of which requires more raw materials and hence more costs.

The issue then is you have a quality problem, not a delivery or a cost problem. They are side effects of your underlying quality problem. That quality problem is sitting there within your processes and systems that you use to run your organisation.

If your quality is great and you still can't deliver on time then you have a blockage in your flow, something is causing your product or service to stop within the process. In lean we call it waste, and it's typically things like waiting time where the item is available to work on but doesn't have a person or a machine available to do the work, so it waits, frequently with a lot of other items (due to making too many which is called overproduction), there are more but that's another blog post!

Be a Circle, not a Triangle

Continuous improvement is often called a virtuous cycle or circle, the more you do, the better you get and the more improvements you can find.

The process is simple, plan out the improvement you want to make, do the improvement, check to see if it gave the result you wanted, adjust what you did and then plan out the next improvement.

Leave history in the past and don't limit yourself to only 3 options, and don't disappoint your customers. Drive some continuous improvement within your organisation and banish the ancient myth of choosing only 2 of the 3 options of quality, cost or delivery.