Lean Six Sigma Pricing
Many of our clients have undertaken Lean or Six Sigma initiatives. Pricing is a process that can be improved by using one or a combination of these methodologies, because it has elements that are very similar to manufacturing, purchasing, or order fulfillment. As such, it can be measured and improved.
The Level 1 and Level 2 processes are often the place to start gaining control. The concept of DMAIC (Design, Measure, Analyze, Improve and Control) is an effective way to improve the pricing process. Work in Process (WIP) can be reduced as the pricing team tackles flow times and throughput in an effort to satisfy its customers more quickly and effectively. Pricing Solutions challenges pricing managers to think of a process defect as any price that has been executed but does not conform to guidelines. Pricing is a data-rich process, and the statistical rigor of the Lean Six Sigma discipline can help eliminate unnecessary discounting, uncover master data errors, and speed up bid response time.
As our clients become more proficient in Lean or Six Sigma methodologies in pricing, the next stage is to apply the concepts to Level 3 and Level 4 processes, such as new product pricing or dynamic value measurement.