Fail Points

Every system has Fail Points- they are unavoidable. Nobody, from the corner malt shop to NASA, can afford to engineer every single fail point out of a system. The key is to put them in places they are least likely to do damage, and are easily monitored and accounted for.

I recently visited an organization that had inexperienced, just-above-minimum-wage staff at the beginning of their process. The green staff was then tasked with generating product at a very aggressive rate. While management loved the margins on their products, as labor costs were very low, they couldn’t understand their big variance in quality. The front-line workers also struggled to keep to the schedule, costing the company both cash costs in overtime and opportunity costs in production delays.

A giant Fail Point had been placed at the front of the production line- the process clearly exceeded the staff’s ability to produce a quality product. The result was that high skill (and high-wage) staff further down the production chain spent time fixing the quality issues that were initiated by the cheap, inexperienced staff. But in a classic “garbage in-garbage out” example, not all of the issues can be fixed down the line. The garbage is baked in.

Customers notice the varying quality of the final product. These inconsistencies will always limit the products potential in the marketplace, especially compared to its peers. The long-term growth of the company is hindered, too.

But the product delivers a fat margin, so everything is fine, right?

Right?

Peter

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