Trade-off Models

seesaw balance

The conventional trade-off model states that unless there is some slack in the system, improving any one of the four basic manufacturing capabilities - Quality, Dependability, Speed and Cost - must necessarily be at the expense of one or more of the other three. In the short term this seems to be the case. The picture often used is of a balance or a see-saw (above).


Professor Nigel Slack (of Warwick Business School) has pointed out that there is an alternative to disturbing the balance and that is to raise the fulcrum or balance point, thus (in the example above) simultaneously reducing cost and increasing speed. In this example the fulcrum would be either Quality or Dependability. This ties in well with Ferdows and De Meyer's "Sand Cone" model described below.


The Sand Cone Model

The Sand Cone model suggests that although in the short term it is possible to trade off capabilities one against the other, there is actually a hierarchy amongst the four capabilities.

To build cumulative and lasting manufacturing capability, management attention and resources should go first towards enhancing quality, then - while the efforts to enhance quality are further expanded - attention should be paid to improve also the dependability of the production system, then - and again while efforts on the previous two are further enhanced - production flexibility (or reaction speed) should also be improved, and finally, while all these efforts are further enlarged, direct attention can be paid to cost efficiency.


Most of the traditional management approaches for improving manufacturing performance are built on the trade-off theory. Ferdows and de Meyer suggest the trade-off theory does not apply in all cases. Rather, certain approaches change the trade-off relationship into a cumulative one - i.e., one capability is built upon another, not in its place.


Applying this model requires a long term approach, tolerance and patience. It requires believing that costs will eventually come down.



sandcone pyramid 1



The conventional illustration is shown above, however a representation that more accurately reflects the model, which implies that each lower layer must be extended in order to support any increase in any higher layer, is shown below.


sandcone pypramid 2




  • Ferdows, K. & De Meyer, A., Lasting Improvements in Manufacturing Performance: In Search of a New Theory. Journal of Operations Management, 1990, Vol. 9, No. 2, pp 168-184.


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