Six Sigma Pricing > Define: Set Pricing Team Roles and Responsibilities, Create Goals Properly Aligned with Your Business
This is the second in a six part blog series on how manufacturers and distributors can apply Six Sigma methodology to the pricing function to generate repeatable margin gains. This blog covers what to consider in defining pricing team members roles and responsibilities and setting properly aligned goals.
All pricing practice leaders know a disciplined process is needed to create and maintain Pricing Excellence.
As we covered in the first blog in the series, applying Six Sigma to pricing is clearly a better way to go to make pricing processes the best they can be – but… How do we get there from here?
The first step requires defining what needs improvement thoughtfully, completely, and in alignment with your business goals.
Before you can begin to set up processes to measure, analyze, control, and continuously improve your pricing processes, one must define what the problem is without stating the solution.
A starter list of what you will need to define follows:
- What is goal for setting up a pricing team?
- What part of the pricing process needs to improve?
- Can you identify the root problems from a numerical perspective?
- How often does the problem occur?
- What will the pricing team structure be?
- Where will the pricing team reside in the organizational chart?
- What roles are needed on the pricing team?
- What responsibilities will each team member have?
- What level of experience and skill sets are needed?
- Do we look internally for team members or source from outside?
SPA’s Six Sigma training drives real results focused on profitable growth and continuous improvement.
“Basic human processes are 4 Sigma at best … 99% good is just not good enough.”
Greg Preuer – Former Pricing Director at and Cooper Lighting and General Electric
Per Wikipedia Six Sigma …
“…. seeks to improve the quality of the output of a process by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes. It uses a set of quality management methods, mainly empirical, statistical methods, and creates a special infrastructure of people within the organization, who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has specific value targets, for example: reduce process cycle time, reduce pollution, reduce costs, increase customer satisfaction, and increase profits.”
A Pricing Process founded on SPA’s Six Sigma Program includes the following:
- Negotiating strategy and tactics
- Value-based pricing
- Automated decision making tools
- Customer Profitability improvement plans
- Sales team selling value
- Pricing strategy and leadership
- Consistent and fair pricing architecture
- 2 to 4% growth in GM%
- Pricing based on customer sensitivity
- Continuous improvement focus
Six Sigma Master Blackbelt Greg Preuer, of SPA has created the first course designed to apply time tested Six Sigma methodology to pricing. Those who study with Greg will learn not only how to drive the pricing process but how to sustain the gains and automate the process. They will become Six Sigma experts (Blackbelt) in business process with a focus placed squarely on price management.
Graduates from this course will learn to chart a clear path to pricing improvement. They will learn each of the following steps:
- How to design and design goals which are consistent with their company’s pricing strategy.
- How to measure and identify characteristics critical for pricing success.
- How to analyze the current situation and steps along the way.
- How to design an improved alternative which moves closer to the desired result.
- How to verify that actions taken create the right results.
To learn how you can realize the benefits of SixSigma Pricing, contact SPA today at email@example.com or 216.455.1545.
The following are the four areas we will dive into in the remaining articles in this blog series that will help illuminate the path to Six Sigma Pricing Excellence.
- Measure: build correct measurements and incentives for each person
- Analyze: use reporting tools to find opportunities to grow or challenges to fix
- Improve: build processes, systems and tools to assist teams and create reporting tools to track improvements
- Control: set and enforce pricing authority levels and repeat previous steps as continuous improvement never stops
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