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Can Supply Chain Management Achieve the ‘Better, Cheaper, Faster’ Ideal?

Supply Chain Video
by Gray Rinehart

 

I first heard the phrase “better, cheaper, faster” when I was in the Air Force, and it seems to me that the “better, cheaper, faster” ideal can provide a useful way of looking at how to optimize a supply chain. Our supply chains, after all, could be optimized primarily on the basis of quality, without regard to cost or speed; they could be optimized on the basis of cost; or they could be optimized on the basis of delivery speed. By extension, they could be optimized based on some combinations of the factors.

I recall one commander in particular who insisted that everyone work toward solutions that were simultaneously better, cheaper and faster, but in my experience we never quite achieved that ideal. Things that were better and cheaper rarely existed, much less came faster; things that were cheaper and faster were almost never better; and things that were better and faster were always more expensive. So I came to believe that “better, cheaper, faster” is a myth, and I maintain that it is realistically possible to achieve only two of the three items at the same time.

If that is the case, what would be the business objectives that would best match the two-place combinations: better and cheaper, or cheaper and faster, or better and faster?

Is our quest to get the latest version of the product on the market as quickly as possible, in the way that many smart phone manufacturers continually turn out new models that are anything but cheaper? Is the quest to provide customers with the highest possible quality, soonest, regardless of price, or to provide good quality at the lowest price*?

Since money is always an object when it comes to business — we have to make a profit in order to survive — to pursue supplies that are better and come faster makes the most sense if paying the extra cost can be made up on the back end by charging more for the final product. Alternately, strictly minimizing costs can only lead to maximized profits if quality stays consistent and returns stay low.

With cost as a factor that we nearly always want to control, the question really turns on whether reliability in terms of the supply chain is more important than speed, i.e., whether it is more important for the materials and subassemblies we need in our manufacturing process to arrive reliably on time and in good condition, or whether some other factor is more important in the business decisions that (relate to our buying decisions. How we answer these questions will determine which of the “better, cheaper, faster” factors we will emphasize, or if we will try to achieve what, in my experience, is an unreachable ideal.

What do you think? Is “better, cheaper, faster” a myth, or is it a worthy goal when it comes to your supply chain?

 

Escher's Visions


Is “better, cheaper, faster” as impossible as an M.C. Escher stairway? Image: “Escher’s Visions,” by Corrado Disegna, from Flickr under Creative Commons.)

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*That is to say, from a purchasing standpoint, the lowest cost, before being turned into price in the process of making the final item and selling it to the customer.

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Other Items of Interest:

– Public comment period on the second public draft of NIST Special Publication 800-161, Supply Chain Risk Management Practices for Federal Information Systems and Organizations, ends 18 July 2014

– Article: Supply Chain Analytic Technology Continues to Advance

– Article: This Year’s Recall ‘Pileup’ Is a Supply-Chain Nightmare for Automakers.

Meet the Author

Gray Rinehart

Gray Rinehart spent 20 years in the U.S. Air Force, during which he refurbished space launch facilities, fought rocket propellant fires, commanded the Air Force’s largest satellite tracking station, and did other interesting things. Gray spent 6 years with the North Carolina MEP Center, and has been a contributing editor for Baen Books since 2007. He is an author of fiction and nonfiction, and his web site is http://www.graymanwrites.com. Connect with Gray on LinkedIn at http://www.linkedin.com/in/grayrinehartor on Twitter at http://www.twitter.com/GrayRinehart.

2 responses to “Can Supply Chain Management Achieve the ‘Better, Cheaper, Faster’ Ideal?”

  1. Cheap, fast, or good–pick two! You can’t have them all at once! The problem is that when you start cutting corners by going after the cheap and fast game you sacrifice a lot of things within your supply chain. And the supply chain touches so many parts of your business that a faulty supply chain can wreck havoc on your company.

    • Yes, sir, I think you’re exactly right! To me it’s much the same as the age-old tension between efficiency and effectiveness, as an over-emphasis on one often leads to sacrificing the other.

      Thanks!
      G

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