The book starts off with an illustration of impact of correct pricing on profitability compared to cost reduction and increase in sales volume. This is complemented by several examples of price leaks in different industry verticals. An interesting case study of the application of Six Sigma pricing at a global manufacturer of industrial equipment concludes the Part I of the book.

The next part presents a process view of the pricing function. It is followed by a brief contextual introduction of Six Sigma along with various tools used during its application. In Part III, authors explain the details for applying Six Sigma Pricing. It begins with how to select a pricing project and take a deep dive in to each process step with an example. The last part covers the aspect of enterprise-wide deployment of Six Sigma pricing. Two of the takeaways from this book are really noteworthy viz. a) Improving Prices Is Better than Cutting Costs and b) Sales Is the Lifeblood, but Price Is the Oxygen.

It is a must read for Sales professionals and Six Sigma practitioners who are keen to experiment with Six Sigma in some untraditional way.

Details:
Six Sigma Pricing
by ManMohan S. Sodhi; Navdeep S. Sodhi
Publisher: Financial Times Press

The dabbawallahs deliver home-cooked food to their customers daily in the city of Mumbai, India. They transport an astounding 200,000 Tiffin boxes daily from each customer’s home to office and back.

It is worth mentioning that in 1998, Forbes Global magazine, conducted a quality assurance study on the Dabbawalas’ operations and gave it a Six Sigma efficiency rating of 99.999999% accuracy. This means that the Dabbawalas made only one error in six million transactions.

A case study on the dabbawallahs by ICFAI highlights that “Their six sigma performance put them on the list of Six Sigma rated companies, along with multinationals like Motorola and GE. Achieving this rating was no mean feat, considering that the Dabbawalas did not use any technology or paperwork, and that most of them were illiterate or semiliterate. Apart from Forbes, the Dabbawalas have aroused the interest of many other international organizations, media and academia”.

Tim Solso highlighted in his presentation during the 87th Annual Meeting of Shareholders that “Six Sigma is one of the best things we have ever done. Last year we saved $340 million and completed 2,200 projects. Since the inception of the program in September 1999, we’ve saved or avoided spending a total of $1.4 billion, completed 7,500 projects and trained 6,000 belts with almost a million hours of training”.

Cardinal Health, Inc. had signed a multi-year distribution agreement in December 2004 with Eli Lilly to distribute their products to hospitals and pharmacies nationwide.

Cardinal Health, Inc. had started their Six Sigma journey in 2004-2005. They reported in their 2005 Annual Report, “We are gaining efficiency through the implementation of lean six-sigma processes, common quality systems and shared sourcing initiatives”. Their Q2 FY2006 report states, “The company is on-track to train nearly 300 “black belts” during 2006 to manage company-wide lean six-sigma initiatives within manufacturing, distribution, administration, sales and marketing”.

Eli Lilly Six Sigma program also started in 2004. Their 2006 Annual Reports mentions, “Through the end of 2006,we have deployed 400 Six Sigma “Black Belts” and 700 “Green Belts” across the company. We exceeded our goal of $250 million of benefit from Six Sigma in 2006 and that is on track to double in 2007”.

Earlier in April 2007, it won the award for “Best Defect Elimination in Service & Transaction” category in the IQ Six Sigma Excellence Awards at London. The award was given for the improvements achieved in Cross Selling of Payment Protection Insurance. The Six Sigma IQ Excellence Awards honour, recognise and promote Six Sigma projects that demonstrate the true best practices and to expand and increase the uptake of Six Sigma methodology globally. Six Sigma IQ is a division of IQPC.

Firstsource Solutions Limited received honorary mention in Six Sigma IQ award under “Best Six Sigma Project in Healthcare” category for achieving improved accuracy of non-keyable claims. The award was announced in January 2007.

Firstsource Solutions Limited, formerly ICICI OneSource Limited, is the first BPO to achieve COPC-2000 CSP certification for back office processing. It follows the Six Sigma framework to deliver continuous improvement in our Quality Assurance Program.