There was little warning of the tsunami that wreaked havoc in the Indian Ocean this week.
With technology doubling in power and halving in price every 18 months (Moore's Law), there's a series of technological waves hammering your business every few months.
Do you have an early warning system for your business that detect changes in sales, cash flow, defects, and delay? If not, isn't it time to create one?
The December 20th BusinessWeek covers "The Warranty Windafall."
While service contracts are only 3-4% of sales, they may represent 45-100% of profits at electronics stores.
You don't need a service contract on most electronics because of the U-shaped Wiebull curve: Electronics either fail early (covered by the basic warranty) or not for 300,000 hours or more.
By the time they do fail, there will be newer models with more features available at cheaper prices.
PCs, for example double in performance and halve in price every 18 months.
What does BusinessWeek suggest getting service contracts on?
Anything that runs hot: laptops and plasma TVs.
Save money by skipping the service contract and use it to buy the next generation.
Studies of nursing homes have shown a 38% drop in chronic pain rates nationwide according to David Schulke, executive vice president of the American Health Quality Association. In Colorado, rates fell from 1-in-7 patients reporting pain, to 1-in-14.
It's all part of the National Nursing Home Quality Initiative.
Who said Big Hairy Audacious Goals (BHAGs) aren't achievable in clinical care?
Employees of 3M filed suit against the company charging age discrimination because the leadership targets people under 45 for Six Sigma training. See this news article for more information:
http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20041221005517&newsLang=en
Maybe 3M thinks it just can't afford to train workers who will retire in a decade or two before their investment in Six Sigma can pay off. Customers using the Six Sigma Simplified approach can easily achieve dramatic improvements in six months or less.
Another recent release from employees in Caterpillar sited Six Sigma as a way to dumb-size jobs, slash wages, and reward leaders and investors.
Ouch!
This week's Business Week cover speaks to manufacturing's need to meet the "China price" which is often 30-50% lower than U.S. prices. Is it even possible to meet or better this price in the U.S.?
Sure, if you embrace the essential principles of Lean and Six Sigma.
Lean thinking can reduce lead times by 90%, inventories by 90%, errors by 50%, and increase productivity by 100%. The actual time required to produce a product or service is only 5% of the total elapsed time, there's lots of opportunity to accelerate productivity and reduce costs. Stalk and Hout, authors of Competing Against Time, say that every 25% reduction in cycle time will double productivity and reduce costs by 20%.
Every team I've ever worked with has reduced cycle time by 75% or more. If that saves 60% of the costs for that activity, think how much you can save across an organization. Who cares about the China price; can you meet the America price?
Six Sigma can help business find and fix the 4% of any business that is creating 50% of the defects, rework, scrap, and associated costs. The Juran Institute says that a typical business is wasting 25-40% of every dollar spent. Cut that in half and you're getting close to the China price.
So, before you offshore to take advantage of the China price, make sure you've got your own processes in order. Tom Devane, author of Integrating Lean Six Sigma and High-Performance Organizations (Pfeiffer, 2003) says "The irony is this: If a company gets the process into tip-top shape before moving it, it may find that it doesn't need to go offshore after all."
Insights for systematically reducing defects and delay while boosting your bottom line by 25-50%.
I work with companies that want to plug the leaks in their cash flow and people who want to master the mysteries of the mind.
