Six Sigma Certification – The Bottom Line

Six Sigma Training and Certification will teach you that everything to do with your business revolves around the processes that you have and how effective they are in operations. The ultimate goal of Six Sigma is to provide a defect ratio of 3.4 defects per million, which is a very high standard for any business, and especially for one that is facing problems with customer dissatisfaction or loss of sales because of ineffective processes. However, when you are properly trained in the principles and policies of Six Sigma, you will be much better able to understand how the process works, how it can benefit your business and how it affects your bottom line every single time.

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With Six Sigma Methodology, the bottom line is that the bottom line is all that matters. When you focus on anything other than customer satisfaction and achieving profit goals, you will lose sight of what your business is designed to do. No matter how much you enjoy owning a business you have to look at the leger side of things every once in awhile to make sure that your business is serving its intended purpose, and meeting the goals that it needs to be meeting. It’s a lot of fun to be a business owner, and it is always important and interesting to learn new ways to appeal to your customers.Customers are the focus? I thought the bottom line was the focus.In order to achieve successful results in your profitability, you have to have satisfied customers that are committed to shopping with your company or paying for your services. That’s all there is to it. You cannot have an effective business or a solid bottom line if you don’t have a stable and constantly growing customer base to work with. Keep all of this in mind and your business will be much more successful in the end.

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When it comes to having an efficient business and a profitable bottom line, there are many different choices that you can make as to how to handle the situation. However, if you take the time to embrace Six Sigma Methodology and use it to your best advantage, you can often make the process improvement projects that you embark on much easier to manage. By using factual data you will get more relevant and actualized results than with any other method of problem solving that you work with.

4 Ways Pallet Handling Can Impact the Bottom Line

The bottom line is ultimately why you are in business. You don’t go into business with the intention of losing money. You go in because you want to turn a profit. This means that you have to look at the different ways that the bottom line is being impacted – and pallet handling is a significant one. There are four ways that handling your pallets can damage your bottom line and knowing these will help you be on the lookout for better solutions.Damage to the PalletsThere may be damage to the pallets during any kind of pallet handling. You have to look at the different ways that the pallets are being damaged in order to train your employees more effectively as well is to know when it is time to purchase new pallets. There may be issues with the way that the pallets are being loaded and packaged and there may be issues with the pallets themselves, such as missing wood beams across the top of the pallets or damage to where the forklift goes in.

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There have been issues where employees are not familiar with driving a forklift and they cause all of the damage to the pallets on their own, simply because they are trying to lift it up. If the forklift does not slide into the wooden slots of the pallet the first time, the metal rods of the forklift may be actually damaging the pallet – and this is a problem. You could be damaging the inventory as well as the pallets, costing you more money.Improper Labelling of PalletsIf they pallet is labeled improperly, it is likely going to get filed away improperly. It may even get delivered to the wrong customer, which would require you to go pick it up and then delivered to the correct customer. This happens more frequently than you can imagine. Such a mistake could end up costing you a significant amount of money, which is taking away from your bottom line.Disorganization of PalletsThe disorganization of pallets can be a significant problem. If you don’t have a specific system as to where pallets are being stored, they may be dropped anywhere. This makes inventory substantially more difficult. It doesn’t have to be this way. There can be organization with the pallets, but it may not be as a result of your warehouse employees. A third party can be hired to provide reverse logistics, and various other warehouse services.Poor Unloading of Pallets

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Pallets are being unloaded poorly, it can also hurt your bottom line. Pallet handling needs to be done efficiently from beginning to end. The moment your employees begin to unload the pallets, they need to focus on balancing the weight, recycling the packaging materials, and labeling everything sufficiently. The labor spent on unloading pallets can be much more than it should, because there is a lack of productivity.You may be experiencing one or more of these problems and that can be a significant issue. You don’t want to throw money away and this is why can be advantageous to work with a logistics company that will handle the management of your warehouse.

How Following Directions Translates to the Bottom Line For Management

In business, following directions is very important. When directions are followed correctly, there is an implied understanding that the person was engaged in actively listening or reading and the end results are successfully achieved meaning on time and budget. However, if directions are not followed this may cause significant problems for management.Effective decision making requires higher order thinking skills that are vanishing in the business world as rapidly as the Dodo bird. The consequences of this situation is higher costs because of re-do’s, more stress within the organizational culture causing health costs to increase and productivity to decrease.Here are four examples of not following directions that I have observed during the last couple of weeks:The first example was an email I sent to my U.S. elected representative asking him for a simple yes or no response. He did return the email, but did not follow my directions and wrote several paragraphs without answering the question.

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Example number two was in the social media site, LinkedIn. A discussion was started with the directions to “list one word” regarding the primary expectation or quality of a leader. Yet many of those responding could not follow this simple direction. For those who used more than one word, some had to write an entire paragraph explaining their choice or further elaborating on someone else’s word choice.A visit to one of the full service local grocery stores revealed that employees do not follow directions in their employees’ handbooks or within the union contract. Handbooks and contracts are really direction documents indicating what you need to do or not do as you perform your work-related tasks. In this case, the direction was “Do not chew gum.”The fourth example involved not following up on sales leads. Sales research suggests that almost 50% of all leads are left to whither on the vine. Through my experience as a sales manager and with my sales coaching and small business training coaching clients to my speaking engagements, I can confirm this statistic and it really probably much higher. Many sales professionals be them inside or outside receive leads, are asked to follow up (direction) and then either do not or make one small effort and then go find another lead.When analyzing each of these examples, there are two major obstacles beyond the critical thinking skills. The first obstacle is one of values or what some call ethics. In all cases, the value of respect was being ignored or diminished.

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Obstacle number two was the inability to change. Alan Deutschman in his book Change or Die revealed that only one out of ten people would change even when confronted with facts, fear or force. Conditioned behavior is very strong in all individuals. It is much easier to do what I as the individual have always done such as not follow directions than to follow directions.By not following directions, the behaviors negatively affected the bottom line because a lot more time was spent on not doing it right. If management wishes to grow the business, everyone may need to assess how well the organization is following directions because this is a very real problem and can be directly tied to behaviors. Remember behaviors or actions create results. To change results begins by looking at the beliefs (foundational thoughts and experiences) because they drive the actions.

Managing the Bottom Line

Managing a business is not as simple as one might think it is. As a matter of fact, in order for your business to succeed, one must exert extra effort. Also, you must always monitor the current condition of your business. In order to know how well your business is doing is by monitoring the monetary flow of your business. When we say “monetary flow” or more known by many as “cash flow”, it represents the entire gross sales and revenues. Also, you must always keep track of your net income or “net profit” so as to know how to enhance the performance of your business.One of the essential factors in making your business successful is by creating a financial scheme and periodically checking its status against certain particulars that will pop up monthly. If certain problems are encountered, it is essential that you must solve the problems immediately. Listed below are some of the actions that you must take so that your business will run smoothly and for it to succeed eventually:

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Design a financial scheme. Estimate the profit that you expect to earn on a monthly basis and calculate your expenses.Also, bear in mind that the profits that you have lost can not be recovered. Once businessmen assess their estimated calculations to the actual calculations and discover that the profits are much lower than they expect it would be or the expenses are higher than projected, they would normally decide to “make it up later”. The truth is that, on each month or months when the projections are either too low or too high – low for profit and high for expenses -, that month is gone and can not be regained.Take immediate action. In an event when the profit or revenues are much lower that the projection, take immediate actions by increasing efforts in the sales and marketing aspects. Better yet, it is essential that you find means to raise your rates. Cut your overhead costs if you think that they are too high. Most of the businesses these days do that in order to become more profitable.

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Be “money wise”. It is very important that you must consider various consequences before spending. If you are taking into consideration another business expense – this includes the marketing and sales aspect of the business -, it is important that you must assess the increased profits that you projected against the expense before you proceed.Measure the success of your business based on its profits not on its revenue. Remember, the success of a business is not based on how much money you are bringing in monthly if the expenses of your business are much higher. This is one of the main causes why numerous businesses these days have gone bankrupt.

5 Tips for Improving Margins and the Bottom Line

There are really only 4 ways to increase profits – sell more, improve margins, cut costs or do all three. Costs always have a habit of creeping upwards over time. So, periodically, it pays to take a hard look at them and then eliminate the things we can live without. But there’s a limit to the extent to which we can cut costs before we hurt our company’s long term growth potential. To get steady, incremental increases in profit we have to sell more and improve margins.There are only 2 ways to sell more – add new customers or increase sales to existing customers. In my experience, when we talk about selling more we tend to put the focus on adding new customers. But we know that it costs at least 6 times more to sell to a new customer than to an existing client. That’s not hard to understand when we consider the “acquisition” costs – e.g. advertising, telemarketing, etc.So, the first tip is to avoid losing your least expensive prospects – existing customers. They must be convinced that we do a great job; otherwise they wouldn’t buy from us. Every business loses some customers over time, but when customers leak away, replacing them with new ones cuts into profits. The key is to focus on our “retention rate”. We need to have a process that alerts us when a customer stops purchasing from us. And we must find out why exactly they’re leaving – not simply make assumptions. Keeping customers satisfied is better for your bottom line than replacing them.The second tip is to remember that all customers are not created equal when it comes to profitability. Pareto’s rule tells us that 80% of our profits will come from 20% of our customers. But, how many of us slip into the situation, over time, of treating all customers as equally important? That actually hurts our profits because we waste money using the same marketing and selling techniques on everyone and treat them the same way when they contact us.

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So, how do we recognize the 20% of customers who give us 80% of our profits? They are the companies who buy from us regularly and understand the value of what we do for their business. They focus on quality and reliability rather than price and they pay on time. Because they are successful in their field, they have the potential to grow, allowing us to grow with them. They may even refer potential clients to us. These are our “A” customers. Can you identify yours?Tip number 3 – it makes good business sense to treat “A” customers differently than the others. Everyone in the organization should know who they are. So, when they talk to them on the phone or face-to-face, answer their email, make product for them or pick their orders, these “A” clients get the most prompt, attentive, efficient service we can give. We should market differently to them too. Stay closely in touch personally and via email, e.g. send them our newsletters, and develop the relationship by figuring out how we can help them respond to the changes in their industry.Next tip – watch the customers who offer some, but not all, of the benefits of our “A’s” very closely. They still focus on quality and reliability but may not have been around as long as “A’s” and so may not buy as regularly and/or as much. These are our “B” customers, and apart from what they do for our bottom line today, they have the potential to be the “A’s” of the future. Identify them and build a strong relationship with them. They may get fewer face-to-face visits than the “A’s” but they do get regular calls from our internal sales staff – a very effective but much less costly method of maintaining contact. They are also on our email database.Then there are customers who buy smaller amounts consistently but who have very little potential for further development. These customers – our “C’s” – are solid contributors to the remaining 20% of our profits but the ones who may be most likely to drift away. Our sales and marketing strategies are designed to maintain these relationships in a cost effective way. Primary contact is via regular (but less frequent than for “B” clients) calls from internal sales and email contact about the products or services they buy.The final group is easy to recognize – they complain most and buy small quantities of our products irregularly. That’s because they are focused on price and discounts. They buy from us only when we’re cheaper than our competitors – they have no loyalty. When they do buy from us, they are abrupt, demanding, they always need delivery immediately and people hate dealing with them. Processing their orders requires our staff to drop everything else and get them to the front of the line. They are our “D” accounts. Dealing with “D’s” can be so disruptive that occasionally they even cause us to make mistakes with the orders for the profitable customers.

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So, the fifth and final tip is to “fire” your “D” accounts. That’s correct, if orders from “D” customers are profitable they’re at the bottom end of the margin scale and the amount of resource required to get them out the door wipes out anything we were going to make. Yet we all have “D” accounts – why don’t we just get rid of them? We don’t have to be rude, simply play them at their own game – quote high prices or long lead times. They’ll make the decision not to deal with us. Do it often enough and they’ll stop calling.Focus on your “A” and “B” customers and you’ll improve your margins. Match your sales and marketing resources to customer type and get rid of your “D’s” and you’ll improve the bottom line. Make retaining “C'” customers a priority; work hard at turning your “B” accounts into “A’s” and get your sales staff focused on understanding your “A” accounts’ business – then you’ll not only sell more but you’ll make more profitable sales.To share your experiences, to take issue with anything I’ve said or to get some insight in how to execute send me an email jimstewart@profitpath.com or call me at 416-258-9610.© Copyright ProfitPATH, a division of JDS & Associates Inc., 2007