We've seen a large percentage of companies reporting better-than-expected earnings. However, the earnings reports were not always compared to last year.

There is yet another factor, actually the most important factor that generates profits, and that key factor is sales. Without sales, the bottom line (net profit) remains stagnant.

Companies have slashed payrolls and expenses and that increased the bottom line for a time. However after all of this is over, the bottom line doesn't improve until sales improve.

Continue reading Sales -- the key to the bottom line -- are still in the dumps

Sales -- the key to the bottom line -- are still in the dumps originally appeared on BloggingStocks on Fri, 14 Aug 2009 13:30:00 EST. Please see our terms for use of feeds.

Six Sigma Pricing: Improving Pricing Operations to Increase Profits by M. and N. Sodhi should be required reading for everybody in business, whether in finance, sales, or marketing. This is the most accessible, non-jargon-filled explanation of Six Sigma processes I have read. Using case studies, the authors prove that, just as Six Sigma procedures can be used to define, analyze and reduce defects or deviations in manufacturing processes, these same procedures can be applied to the complicated realm of pricing to examine and then reduce "defects" or fluctuations in pricing. Using Six Sigma methodologies company-wide will help everyone involved in setting and abiding by published prices understand that repeated, unnecessary, unauthorized differences between list prices, discount prices, invoice prices, and realized prices have a direct and usually negative impact on a company's bottom line.

Pricing consistency and control is internal to a company to a large extent. Deviations from list prices do happen primarily because different people in different departments have different goals: greatest profit for people in finance, market share for those in marketing, volumes of sales (and sales bonuses) for salespeople. The authors argue that companies need to build cross-functional pricing teams so that representatives of all groups involved with pricing can have input into how and why pricing is set the way it is for maximum company profitability.

Even readers unfamiliar with basic statistics can benefit from this book. Chapter 7 includes a basic nontechnical overview of the statistical tools involved in Six Sigma analysis. The point of this book is not to teach HOW to implement Six Sigma procedures in pricing processes, though Chapter 6 provides enough basic information to get a team started. Rather, the authors prove WHY companies should implement Six Sigma methodologies to stem "profit leaks." Numerous graphs, tables, and flow charts provide visual reinforcement of the information in the text. Each chapter contains a brief summary. Chapter 13 provides a useful checklist of steps to take, and in what order, to deploy Six Sigma thinking across nonmanufacturing processes in order to better control the outcome.

Book review: Six Sigma Pricing originally appeared on BloggingStocks on Sun, 30 Sep 2007 10:10:00 EST. Please see our terms for use of feeds.