Bonnell's Fine Texas Cuisine is an outstanding local restaurant in Fort Worth TX that focuses on local food and wild game. Chef Jon Bonnell is highly rated and is written up in many publications.
One article posted on the restaurant wall listed this tidbit:
Worst business decision
“Too many times, I've gone with the lowest bidder.”
It seems that the chef has learned, on his own, a lesson that Dr. Deming used to preach all the time: don't choose a supplier based on price alone. It's often true that you get what you pay for and the cheapest might provide such poor quality that it harms your business or ends up raising overall costs.
Let's say that you buy cheap produce, but the quality is so poor that you have to spend time sorting the produce (taking up time and increasing costs) and throwing away half of it — this increases the effective “cost per good strawberry” for example.
It's better to consider value and quality — not just the unit cost of an item, whether you're buying food ingredients for a restaurant, hiring subcontactors for a business, or purchasing airplane components.
Is this a lesson you've learned the hard way in your own business or in your personal life?
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Mark Graban
Mark Graban is an internationally-recognized consultant, author, and professional speaker who has worked in healthcare, manufacturing, and startups. His latest book is Measures of Success: React Less, Lead Better, Improve More. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. He also published the anthology Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also a Senior Advisor to the technology company KaiNexus.
Mark;
Couldn’t agree more! Quick story…I’m in the process of getting a new van adapted with a 10inch lowered floor, ramp and adaptive driving controls. The Office of Rehab. needs to do 3 bids. Funny thing is that one of the best vendors is less than 30 miles away, yet, I might get stuck traveling further to get inferior quality. In schools, we use lowest “responsible” bidder, but many times, that low price is tempting to school boards. Deming was indeed very insightful!