NBOP National Board of Operations Professionals

Part one. The CostLesson 4 of 15

Six pickles

The recipe says four. Nobody counts. The variance is invisible per unit and enormous per year.

The instrument Portioning variance

0:54. Captions on by default. Everything said here is also written on this page, so nothing is only in the video.

Read the transcript

A standard says four pickle slices. Under pressure the person assembling puts on six, because six looks generous and four looks mean and nobody has ever been told otherwise. Per unit the difference is a fraction of a cent and no reasonable person would spend a meeting on it. Across a year and a large enough volume it is material, and it appears nowhere, because it is not a decision anybody made. The pickle is not the point. The pattern is: a standard exists, nobody measures adherence, the deviation always runs the same way, and the aggregate is invisible because no single instance is worth noticing. The version in a service business is scope. Pick one standard, count adherence in twenty real instances, and multiply by volume.

A standard says four pickle slices. Under pressure the person assembling puts on six, because six looks generous and four looks mean and nobody has ever been told otherwise.

Per unit the difference is a fraction of a cent and no reasonable person would spend a meeting on it. Across a year and a large enough volume it is a material number, and it appears nowhere, because it is not a decision anybody made and not a line anybody reports.

The pickle is not the point. The pattern is: a standard exists, nobody measures adherence, the deviation is always in the same direction, and the aggregate is invisible because no single instance is worth noticing.

The version in a service business is scope. The statement of work says two rounds of revision. Nobody counts. The average is three and a half, and the practice is fifteen percent less profitable than the model says.

The instrument is a spot count rather than a system. Pick one standard. Count actual adherence in twenty real instances. Multiply the deviation by volume. You will either find nothing, which is worth knowing and takes an afternoon, or you will find the number that explains the gap between your model and your accounts.

Watch for the direction. Deviation from a standard is almost never symmetrical, because the pressure that causes it points one way.

Two things worth doing, neither of which costs anything

Read the standard in full, free and in the open, before you pay anything or give anyone an address.