A story about olives

I heard this over 20 years ago. I cannot remember the numbers, so I’m going to paraphrase it a bit, in order that the main point is apparent.

A man joins British Airways in some kind of cost management exercise. On his first project, he decided to look at the meals that were served on the long haul flights. He was quite detailed and when he looked at one of the salad meals, he noticed that the Mediterranean salad had olives in it. He looked deeply into it and asked about the cost of the olives and how many of them were in each salad. The olives were a fairly expensive part of that meal, and on enquiry, he found that there were 7 olives in each salad. On the long haul flights, this particular salad was the most popular, with at least 5% of people on each flight having it. The man put forward a suggestion that the olives in the meal were to be reduced from 7 down to 4. Because of the thousands of Mediterranean salads that were served each day on the flights, he had saved the company over £60,000 per year. As his salary at the time was £15,000, he had, in this one exercise which took him about a month to complete, managed to saved the company his salary for the next 4 years, within his first month of working for them. Naturally, the company loved his work, gave him a raise, and asked him to continue to look at the expenditure.

Why have I mentioned this? Well with the thread about reliability of BMW’s, and them having a lot of faults which may be related to either their batteries, or using thinner electrical wire, or something similar (credit to National Treasure I believe in highlighting that), the olive story came to mind. I wonder if someone at BMW has decided to use “less olives”. Well, something to the equivalent, maybe a slightly cheaper & thinner wire, or slightly cheaper supplier of battery that may have less plates in it, or a slightly cheaper regulator/rectifier, or thingymabob. Whilst I’m probably mentioning the incorrect components, I’m sure you get the drift, that a seemingly insignificant cut to manufacturing expenditure in one factor, that may save BMW a lot of money, is actually costing them disproportionately more elsewhere.

I’ve just remembered where I heard the olive story. At school, first or second year of secondary school.

If you talk to any mechanic they will tell you that biked today are made at a much lower standard.

Just last week a garage I go to mentioned that even the Japanese manufacturers like Yamaha have dropped quality evident in the MT series wheels (I nodded even if I have not had experience of them)

Cost engineering in action.

I’ve seen it happen in many places to the detriment of the company.

Case in point, size of creme eggs. They make them smaller and more expensive every year, while the customers keep buying them they’ll keep doing it. See also the amount of crisps in a packet.

This is capitalism.


Ah that is shrinkflation