JULY 29, 2020 | BLOG
Growing manufacturing profits based on Six Sigma methodology
For decades, the Six Sigma methodology for quality management has helped manufacturers improve performance by getting quality standards under a very tight range of product variability. Just imagine if you could apply that same rigor to managing the profitability of all the products your firm manufactures. Profit Velocity lets you do just that!
Naturally, quality is very important to investors. This explains the popularity of Six Sigma in manufacturing. But what really gets investors excited is how fast production facilities are churning out manufacturing profits. If you can’t carefully manage profit generation on a product by product basis, our team at Profit Velocity would venture to say you’re not in control of your manufacturing business at all.
The goal of Six Sigma in manufacturing is to identify and eliminate process defects to diminish product variability and improve quality consistency. It’s all about reducing the statistical variability of each product so that you always produce things as they were designed – with little to no variance. Every unit needs to have precisely the right dimensions, weight, color and so forth.
What Profit Velocity does (and the reason why investors love our solution) is we narrow the range of ‘profit variability’ for all of the SKUs you produce. Our data analytics platform is able to take this on because it does something no other tool can – it tracks the speed with which every product you produce generates profit. Better yet, it generates charts that let you examine your wide-ranging profitability – so you can identify and eliminate the defects!
When you put our time-based analytics platform to work, for the first time ever you’re able to see what a huge range of profit speeds your products are generating. Some products may generate just $1 per hour or be costing you money to produce. Others might earn $50 or $100 per hour. You may even have some that are generating $2500 per hour.
Once you’re equipped with this knowledge, our ‘what if’ planning functionality makes it easy to manage profitability by making your range of profit production more consistent. To increase profitability on your low-earning products, you can adjust productions costs, pricing or the quantity of the products you produce.
The sophistication of our solution will surprise you. Right away, you’ll be able to identify supply chain needs and fix issues with your current product mix and customer mix. You may also find that reducing your price for a certain product line may enable you to increase your sales quantity and greatly improve your speed of profitability. Our tool might suggest you either raise your price on another product or consider discontinuing it.
By implementing the Profit Velocity solution, you’ll gain control over the variability at which you’re making money in precisely the same way as the Six Sigma methodology helps you manage quality variability.
This is a huge breakthrough for every manufacturer out there. Why? Because up until now, it’s been impossible for manufacturing firms to measure how fast they’re making money. And, as the saying goes, “if you don’t measure it, you can’t manage it.”
With Profit Velocity, your firm can begin making precise measurements of the rate that money is flowing through your machines in just a matter of 2-3 weeks. Better yet, you’ll be able to measure your speed of profitability by product, customer, factory, sales rep, customer or any other variable you want to control.
By narrowing the range of profit variability in each of these areas, you can vastly improve your product mix, customer mix and so forth. There is simply no better tool for gaining control over how you can maximize manufacturing profits.