The defect rate is 2%. Capacity behaves like 90%.

A firm getting it right 98 times out of 100 can still be chronically short of capacity, and the arithmetic explaining why rarely appears anywhere in the accounts.

By Steve 5 min read
Abstract bridge artwork for The defect rate is 2%. Capacity behaves like 90%.

A business gets it right ninety-eight times out of a hundred. By any reasonable standard that is good work. And yet the schedule is permanently three weeks behind, the senior people are working Saturdays, lead times have crept out, and the last two hires bought less relief than expected. Nobody can point to where the capacity went, because on paper it hasn’t gone anywhere. It went into the two. Rework is not the same work done twice The intuition that a 2% error rate costs 2% of capacity assumes a…

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