Question for the Inner Circle
Ok, it has been supposed that small business owners really have no need for Lean / Six Sigma.
Velocity Marketing (my first company) employed 55 sales reps and 7 installers. As your typical small business owner I have constructed tables as the one below.
Question: Which job do you take? Supposing the burden rate per hour is the same for each resource (the materials cost is calculated in the burden rate per hour).
For 100 items
Job A hrs. required Job B hrs required Job A req’s Job B req’s
Resource X 7 5 700 500
Resource Y 3 6 300 600
Resource Z 8 7 800 700
Sales Value $100 $125 $10,000 $12,500
After everyone has had the opportunity to comment I will post another blog
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Comments
I simply stated that most small business owners will not implement Six Sigma because they see no need for it and because it involves math.
Now for the proposed question. Honestly, I don't know what you are asking for with your data. If both jobs above are profitable you take them both. If your resources cannot be stretched to handle both jobs you need to figure out if the job can be done profitably with sub-contracted labor. As long as you are making money on the deal, whether by doing it yourself, having your crews do it or handing it off to someone else for a finders fee it is a good job. The key factor is profit net, net, net.
Also, there are too many variables at play that need to be considered that is not covered by a simple math equation. Maybe doing a job that is not "Optimum" by my formula is necessary in order to secure a follow-on job or to cement my relationship with a contractor. Maybe it is part of a national contract or I need to keep my people busy and on the payroll. Maybe I want to take a loss on a job to hurt my competitor.
Six Sigma is a cool tool and a neat philosophy with which to approach business. Thinking in a lean and efficient manner is a key business strength. It is just that in the end it is just a tool.
Steve Chambers
Sales Trainer and Coach
" although your reaction is typical of the Six Sigma Black Belts and Green belts I know."
So do you always poke sleeping bears in the eye for fun? :-)
I will post a picture of all the information I sifted through for those two blogs, you had me digging through lecture after lecture, book after book. It was rather fun now that I think about it.
Michael Christian Neumann
Six Sigma and Lean Consulting
When I was in the Navy I was once asked if I treated all superior officers that way. I responded that I never met a superior officer, just officers that were senior to me.
I can go into more depth about anecdotal experiences I have had where reliance on Six Sigma has had a bad effect on sales and has destroyed business and ruined customer relationships. In the interest of time (mine) I will not go into detail here. We can discuss over a Single Malt sometime.
Steve Chambers
Sales Trainer and Coach