Six Sigma SPC - Statistical Process Control

Ask The Customer - VOC (voice of the customer)
Six Sigma SPC - 2070 W. Washington St. #5 Springfield IL 62702  Ph: 217.698.0063
6 Sigma Statistical Process Control (SPC) Software for Windows 95/98/NT/2000/XP/ME

Home Search Capability Studies Links
Products Services
Prices FAQ
About Support
Contact Quality Control Dictionary and Glossary Free Desktop 6 Sigma Calculator Forum
Quality Books Six Sigma and SPC Articles Free Online 6 Sigma Calculator Free Newsletter
These articles are from the Six Sigma SPC Newsletter and other publications. All articles written by Jim Winings

Nov. 2000 Newsletter


I helped a company once that was having a problem meeting deliveries. The reason was because one of their suppliers was late and inconsistent in supplying a component in time to meet their shipments. This was causing a secondary problem in that it was hindering them from breaking a million dollars in sales per year. There were not hundreds of suppliers to supply this particular component. I will change the names of the actual companies in this piece to protect the guilty.

The company with the supplier problem was a company that makes a SCUBA diving apparatus that I mentioned in a previous newsletter. The supplier with the problems was a supplier of small engines. We will call them Big & Slow. The B&S engines were not even that reliable, so even when they did get a shipment in, some didn't work.

I had remembered from one of my Six Sigma classes a story about a couple of salesmen talking about how they were losing sales to a Japanese company. The salesmen were form B&S and they were talking about Hound, another company that makes small engines, (as well as cars, etc.). With this in mind, I ask why the company didn't just switch suppliers from B&S to Hound. They said that the Hound engines were too expensive, about $300 more per unit. I said, well what I would do is to offer your customer a choice. This enables you to meet more of the consumer's customer requirements. B&S or Hound, and just add to the unit price the difference you pay for the Hound engines. I said that.

  • Your profit margin will still be the same by charging only the 'Out Of
    Pocket' for the Hound engine.
  • For every customer that takes a Hound engines, you will have one more B&S engine for other customers that do not
  • Overall quality will improve with the Hound units.
  • You will be able to meet shipments.
  • You will also increase your product line.

So they did just that. Offered their customers a better unit with a Hound engine for the difference in the price they paid for the B&S engine. Each sales called they received, they would ask the customer if they would like a better engine for the price they paid for the Hound engine. Sure enough, a lot of their customer had an extra $300 and was more than happy to pay the difference for a better quality product and went with the Hound engine. These days most of their sales are of the Hound engine models. This put them over the million dollar sales goal, and made their customers happier, and probably safer. It didn't cost them any more money, because their profit margin was the same. Sometimes it pays a lot to just ask your customers what they want. Believe me, the customer may NOT always tell you without asking.

 


Copyright � 2005 Six Sigma SPC / Jim Winings All Rights Reserved
Privacy Statement - Disclaimer - Copyright - Site Map

Last Updated: Saturday, 15-Apr-06 19:47:50 PDT