six sigma

Six Sigma Pricing – 99% Good is Just Not Good Enough!

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“Basic human processes are 4 Sigma at best … 99% good is just not good enough.”

Greg Preuer – Former Pricing Director at Cooper Lighting and General Electric

 

The Power of the Last 1%

One glaring example follows about healthcare related mistakes. Using a standard process performance at 3.8 Sigma (99%) nets 200,000 wrong drug prescriptions per year. At 6.0 Sigma (99.99966%) the number is reduced to only 68 per year.

Use the following link to access a short video that highlights why 99% is just not good enough!

https://youtu.be/HWhOy2xfTkY

 

Why Six Sigma Pricing Training?

In short – graduates will improve margins by making better pricing decisions…with better processes and decision making tools. Graduates from this course will learn to chart a clear path to pricing improvement.

They will learn each of the following steps:
1) How to design and design goals which are consistent with their company’s pricing strategy.
2) How to measure and identify characteristics critical for pricing success.
3) How to analyze the current situation and steps along the way.
4) How to design an improved alternative which moves closer to the desired result.
5) How to verify that actions taken create the right results.

Click here to access more details and download our Six Sigma Pricing White Paper.

To learn how you can realize the benefits of SixSigma Pricing training online or on-site go here https://spasigma.com/pricing-mastery

 

Upcoming SPA Events

Set You and Your Team Up to Win Better Agreements at Battle For Margin

Your organization’s profits depend on the individual and collective negotiation skill of your employees – from sales to purchasing. The Battle for Margin negotiation intensive is a rare opportunity to dive deeper into negotiation strategy that will immediately drive for more profitable agreements. Don’t you and your team deserve to be set up for success? Don’t miss the Battle for Margin.

It will be held June 8-9 at the Mandarin Oriental in Las Vegas, NV.

Get negotiation intelligence you’ll find nowhere else:

Revolutionize how you and your team view negotiation. Give your organization the tools and knowledge to drive more profit than ever before with compelling and eye-opening case studies, critiques, and group exercises. Instill knowledge fast. The day will fly by because our seminars are purposefully entertaining and educational; people learn more when they’re having fun.

Attendee Testimonials

Here what our clients have to say about the power of strategic pricing tools from SPASigma Negotiation Training Seminars.

“SPASIGMA breaks the standard mold of slow pace seminars. It’s engaging, fun, and interactive in a setting that feels warm and comfortable.”

     — Mitch Koepp, Marketing Manager, All World Machinery

Other SPA Events

Click here for other SPA event dates and times including our upcoming webcasts.

Follow SPA

To easily keep up with the latest SPA announcements, events and resources you can follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.

SPA Featured in The Distributor Channel article “Applying Black Belt Principles to the Pricing Process”

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SPA was featured in a recent The Distributor Channel article, “Applying Black Belt Principles to the Pricing Process”, which discusses how distributors can apply Six Sigma methodology to the pricing function to generate repeatable margin gains and why a solid pricing process is an essential part of any strategic initiative.

Excerpts of the article follow.

“Initially, Black Belts worked entirely within the manufacturing process”

One person saw the advantage of putting the same principle to work on the pricing process.  Enter Greg Preuer of SPASigma.  Greg was certified as a Master Black Belt DMAK by General Electric.  He saw an opportunity to apply the same Black Belt methodology to the pricing used by companies.

The goal:  better pricing programs.

“Pricing is a big deal”

In an age when most companies find themselves facing competitive pressures, pricing policies have fallen into disrepair: special pricing abounds, discounting has grown rampant and operating margins have been pushed and squeezed.  Here’s where Six Sigma (Black Belt) efforts come into play.  Black Belts work to understand and leverage each specific customer’s willingness to pay a price slightly different from their peers.  Simply put, they focus on already existing price sensitivity variances between customers.

Most companies rely heavily on their sales teams for what little direction they may have.  But the reality of the situation is very few sales teams have the proper training or tools to determine price.  Because they place priority on closing the order at any cost (or price,) they tend to underestimate the proper price level.  With this approach in mind, it’s no wonder that pricing has fallen in to disarray.  What sales teams crave is an advanced scouting report on what each specific customer would be willing to pay for every (specific) product in the portfolio; real data that kills the guessing game they currently must play.

“One wholesaler described pricing in his organization as a visit to the wild west.”

Lone Ranger salespeople set pricing for their customers mostly without firm understanding of costs associated with handling or servicing the customer.  Gross margin numbers are used for the same customer regardless of order size or difficulty in providing the products.  Reviews of the pricing used by hundreds of distributors reveals sell prices using familiar numbers which predictably end in zero or five.  Profitability suffers.

“Quoting Greg Preuer:”

“While most formal Black Belt training uses case studies pulled from academia, we apply exercises using the student’s own company’s data.  We’re talking about real actions with real people and dynamic environments.  It’s not just busy work to flesh out the course material, our exercises are tasks developed to make an impact on your companies pricing organization.”  The Black Belt makes a real impact even before certification is achieved.

Click here to read the complete article.

About SPASigma Six Sigma Pricing Training

“Basic human processes are 4 Sigma at best … 99% good is just not good enough.”

Greg Preuer – Former Pricing Director at Cooper Lighting and General Electric

Click here to learn how manufacturers and distributors can apply Six Sigma methodology to the pricing function to generate repeatable margin gains.

Click here to read an interview of Greg about developing a program for training others in a Six Sigma Black Belt of Pricing program. Greg applied the same concepts while successfully serving as the Director of Pricing at Cooper Lighting.

Click here to learn how you can realize the benefits of SixSigma Pricing training online.

To learn how you can realize the benefits of Six Sigma Pricing Training on-site for your team, contact SPA today at info@strategicpricing.com or 216.455.1545.

 

Upcoming SPA Events

Set You and Your Team Up to Win Better Agreements at Battle For Margin

Your organization’s profits depend on the individual and collective negotiation skill of your employees – from sales to purchasing. The Battle for Margin negotiation intensive is a rare opportunity to dive deeper into negotiation strategy that will immediately drive for more profitable agreements. Don’t you and your team deserve to be set up for success? Don’t miss the Battle for Margin.

It will be held June 8-9 at the Mandarin Oriental in Las Vegas, NV.

Get negotiation intelligence you’ll find nowhere else:

Revolutionize how you and your team view negotiation. Give your organization the tools and knowledge to drive more profit than ever before with compelling and eye-opening case studies, critiques, and group exercises. Instill knowledge fast. The day will fly by because our seminars are purposefully entertaining and educational; people learn more when they’re having fun.

Attendee Testimonials

Here what our clients have to say about the power of strategic pricing tools from SPASigma Negotiation Training Seminars.

“SPASIGMA breaks the standard mold of slow pace seminars. It’s engaging, fun, and interactive in a setting that feels warm and comfortable.”

     — Mitch Koepp, Marketing Manager, All World Machinery

Other SPA Events

Click here for other SPA event dates and times including our upcoming webcasts.

Follow SPA

To easily keep up with the latest SPA announcements, events and resources you can follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.

Six Sigma Pricing > Control: Set and Enforce Pricing Authority Levels and Repeat Previous Steps

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This is the final article in our 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 the importance of setting and enforcing pricing authority levels and repeat previous steps as continuous improvement never stops.

spa-6-sigma-pricing-ppt-slide-image

As a quick review, here is the Six Sigma Process as described by Wikipedia:

“Six Sigma seeks to improve the quality output of process by identifying and removing the causes of defects (errors) 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 (“Champions”, “Black Belts”, “Green Belts”, “Yellow Belts”, etc.) who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified value targets, for example: reduce process cycle time, reduce pollution, reduce costs, increase customer satisfaction, and increase profits.”

As we covered in our last article on this topic, it is crucial that you build processes, systems and tools to assist teams and create reporting tools to track improvements and implement real-time visibility into business processes defects to ensure you are focusing your improvement efforts in the right areas.

In the Control phase, our job is to make sure the improvements we have put in place – stay in place. To achieve this you want to chart performance against upper and lower control limits. Run charts show single values plotted over time and indicate trends of process & shifts in process performance.

The key to success it to continuously monitor performance and measure against the control limits via Control Charts which allows you to:

  1. Study process variation over time
  2. Monitor and improve process performance
  3. Maintain “In-Control” processes

Additional benefits of The Six Sigma Pricing Control phase include:

  • Developing an effective “Control Plan Audit Process”
  • Identifying opportunities for improvement in processes, tools, and or behavior
  • Establish a “Pricing Authority Matrix”
  • Develop “Profitability Improvement Plans” for every customer
  • Developing Change Management strategies and plans

The following are the five areas we covered in this blog series that will helped demonstrate a proven pa to Six Sigma Pricing Excellence and links to additional blogs and other content.

  1. Define: set roles, responsibilities, and goals for the team in alignment within the business
  2. Measure: build correct measurements and incentives for each person
  3. Analyze: use reporting tools to find opportunities to grow or challenges to fix
  4. Improve: build processes, systems and tools to assist teams and create reporting tools to track improvements
  5. Control: set and enforce pricing authority levels and repeat previous steps as continuous improvement never stops

Six Sigma Pricing related articles:

Six Sigma Program Overview

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.

“Over time we discovered the most critical part of moving the pricing process forward came in helping people deal with change. Establishing a plan for the human reaction to all change is incredibly important.”

– Greg Preuer

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.

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

To learn how you can realize the benefits of SixSigma Pricing, contact SPA today at info@strategicpricing.com or 216.455.1545.

 

SPA Events

Click here for other SPA event dates and times including our upcoming webcasts.

Follow SPA

To easily keep up with the latest SPA announcements, events and resources you can follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.

Six Sigma Pricing > Improve: Build Processes, Systems and Tools to Assist Teams & Create Reporting Tools to Track Improvements

Posted on

This is the fifth 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 the importance of driving incremental improvements through building processes, systems and tools to assist teams and create reporting tools to track improvements.

All pricing practice leaders know a disciplined process is needed to create and maintain Pricing Excellence – to effectively drive incremental improvements your team must focus on these four areas:

  1. Build process, systems & tools to assist team in exceeding their goals. (Automate at all cost)
  2. Hire based on foundational skills versus experience
  3. Train teams on key foundational skills that they will need to exceed their goals.
  4. Create reporting tools to track improvements

Processes, Systems, and Tools

As we covered in our last article on this topic, it is crucial that you implement real-time visibility into business processes defects in the Analyze phase to ensure you are focusing your improvement efforts in the right areas.

Other key elements of this phase include:

  • Base lining your current pricing performance helps to understand what the potential improvement can be.
  • Benchmark your goals and objectives based on the leader in your industry to drive toward World-class performance.
  • Creating playbooks allows you to go from identifying to rectifying deficiencies in your pricing process.
  • Implement automated deal tools so you can play offense or defense when appropriate by being able to make dynamic pricing decisions.

Hiring and Training

The real key to long-term success and to achieve Pricing Excellence – people. Always choose character over experience. Pricing is hard and you will train them to make excellent pricing decisions but they must have some core traits. Leadership, communications skills, and an analytical mind are the three most important traits. Quantitative, numbers driven decision makers such as former military academy grads, quantitative undergrad (Finance, Accounting, Physics, etc.) majors who also participated in a team sport, and yes even select sales people in your own company make great pricers.

To achieve long-term success, an effective and robust training program must be developed. It must include everything pricers will need to be successful and must be geared towards developing a proactive approach to identifying improvement opportunities in margin, market share, etc.  They must be constantly driving change – the ability to make decisions faster and more accurately is a major competitive advantage.

Reporting

Reporting tools to track performance in all areas are a must to drive profitable growth in your business and to drive discipline in the revenue side of your business.

Automated tools are needed to make effective decisions based on analytical scorecards. Answers to 95% of the questions about a deal should be at hand in near real-time and in a clear and concise format.

Creating Standard Operating Procedures are also key and must detail who does what in each step of each process and how decisions are made to eliminate confusion over price setting and approval authority, etc.

Six Sigma Program Overview

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.

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

To learn how you can realize the benefits of SixSigma Pricing, contact SPA today at info@strategicpricing.com or 216.455.1545.

The following is the remaining area we will dive into in a future article in this blog series that will help illuminate the path to Six Sigma Pricing Excellence.

  1. Control: set and enforce pricing authority levels and repeat previous steps as continuous improvement never stops

Upcoming SPA Events

Set You and Your Team Up to Win Better Agreements at Battle For Margin

spasigma-blog-footer-800-by-300-pixels

Your organization’s profits depend on the individual and collective negotiation skill of your employees – from sales to purchasing. The Battle for Margin negotiation intensive is a rare opportunity to dive deeper into negotiation strategy that will immediately drive for more profitable agreements. Don’t you and your team deserve to be set up for success? Don’t miss the Battle for Margin.

It will be held in Miami at February 9-10 at the Grand Beach Hotel Surfside.

Get negotiation intelligence you’ll find nowhere else:

Revolutionize how you and your team view negotiation. Give your organization the tools and knowledge to drive more profit than ever before with compelling and eye-opening case studies, critiques, and group exercises. Instill knowledge fast. The day will fly by because our seminars are purposefully entertaining and educational; people learn more when they’re having fun.

Attendee Testimonials

Here what our clients have to say about the power of strategic pricing tools from SPASigma Negotiation Training Seminars.

“SPASIGMA breaks the standard mold of slow pace seminars. It’s engaging, fun, and interactive in a setting that feels warm and comfortable.”

     — Mitch Koepp, Marketing Manager, All World Machinery

Other SPA Events

Click here for other SPA event dates and times including our upcoming webcasts.

Follow SPA

To easily keep up with the latest SPA announcements, events and resources you can follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.

Six Sigma Pricing > Analyze: Identify and Understand Opportunities to Grow Margins and Create Reporting Tools to Identify Defects

Posted on

This is the fourth 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 the importance of effective analysis of the right measurements and metrics to identify the root causes of defects in your pricing process.

All pricing practice leaders know a disciplined process is needed to create and maintain Pricing Excellence – effective defect analysis must cover these five areas which can be major sources of variation across commercial processes:

  1. People
  2. Information
  3. Tools / Systems
  4. Environment
  5. Methods

This crucial step leverages the measurements and metrics you have mindfully constructed to identify what needs improvement and what/where are the sources of defects in the process.

A company must properly analyze anything that impacts pricing performance and then use these insights and data to make meaningful improvements that will help you achieve your business goals. The following lays out some effective methods for the analysis phase.

Cause and Effect Analysis:

  • Diagram the relationship of the 5 sources of variation
  • Build a Cause and Effect Matrix to quantify impact of each process step
  • Select key sources of variation throughout the process
  • Capture 2-3 potential root causes from diagram
  • Dig deep into controls and compensation
  • Ask why multiple times

Process Map Analysis:

  • Diagram the process and hunt for bottlenecks or other defects of each process step
  • Chart metrics to see if the process appears stable or not
  • Use Pareto Charts, Histograms, Box plots, Scatter Plots, etc. to visually determine data distribution and variation

Six Sigma Program Overview

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.

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

To learn how you can realize the benefits of SixSigma Pricing, contact SPA today at info@strategicpricing.com or 216.455.1545.

The following are the two remaining areas we will dive into in future articles in this blog series that will help illuminate the path to Six Sigma Pricing Excellence.

  1. Improve: build processes, systems and tools to assist teams and create reporting tools to track improvements
  2. Control: set and enforce pricing authority levels and repeat previous steps as continuous improvement never stops

Follow SPA

To easily keep up with the latest SPA announcements, events and resources you can follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.