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Predictions You Can Count On --Dickeson

June 2003
We know that we cannot predict the national deficit, the stock market, our sales, the weather for more than a few hours, the fingerprints or blood genomes of an individual, and almost any sequence you can name.

Oh yes, poetically, you can predict that the sun will rise in the east tomorrow. But, actually, what precise second and where is east? The world is not linear and never has been. For centuries we assumed it was for the sake of rounding-off conveniences. The computer brought a screeching halt to that idea in the last half of the 20th century according to scientists in all disciplines.

With computers, we stopped rounding Pi to 3.1416 and began carrying it out to thousands, or millions of decimal points. That's what dumb computers get paid to do in micro-fractions of a second. The world of convenience rounding gave way to a surprising non-linear world where straight lines don't exist.

Variation is the rule of life. Some called this fractal reality; others termed it chaos. Very small changes in starting or operating conditions have, we discovered, profound impacts on output. This is the law of fractal life.

Lessons From the Past

We learned this, but we didn't adapt with the knowledge that came to us. Job cost is a linear system. It starts with linear budgets that are impossibilities in our fractal world. We learned this in the late '80s and early '90s.

We vainly tried to predict the number of hours we could charge to jobs in every work center a year in advance. Impossible budgets were divided by foolish chargeable hours to arrive at a Budgeted Hour Rate. Topping that, many of us added contrived allocations of sales and administrative costs to the budgeted rates! We took the linear impossibility to a ridiculous extreme.

How did we use this rate? We then multiplied it by "standard" hours: predicted hours for pricing and loading and actual hours for post-mortem analysis. But there are Five Feuding Families in our printing process: a) people, b) machines, c) materials, d) environment and e) sequence. Small variations within, and among, these Five Families always cause non-linear variation in hourly outcome dollar values.

Standards are linear predictions, while actual hours are linear outcomes. Then we impose on these the Voice of the Customer, seeking linear demands of quality attributes and delivery schedules—budgets or goals—that we can only incompletely fulfill.
 

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