Words in the news: trade-off


Breaking the Trade-Off Between Efficiency and Service

What if a manufacturer had to deal with customers waltzing around its shop floor? What if they showed up, intermittently and unannounced, and proceeded to muck up the manufacturer’s carefully designed processes left and right? For most service businesses, that’s business as usual. In a restaurant or a rental car agency or most of the other service companies that make up the bulk of mature economies today, customers aren’t simply the open wallets at the end of an efficient supply chain. They’re directly involved in ongoing operations. The fact that they introduce tremendous variability—but complain about any lack of consistency—is an everyday reality.

Dealing with that variability is a central challenge in making a service offering profitable. But little in managers’ conventional training or tool kits equips them to deal with it effectively. Operations management theory, rooted in the manufacturing context, typically has only one thing to say about variability: It must be eliminated. Any educated manager learns to recognize it as the enemy of quality.

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The trade-off means the act of balancing two things that are opposed to each other.

1. There has to be a trade-off between quality and quantity if we want to keep prices low.

2. There is a trade-off between the benefits of the drug and the risk of side effects.

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