The answer is no, not yet, at least that I have seen. So we need a process ...
I have a process for making sure that we are never without toilet paper in any bathroom. Yes, it is a process. Toilet paper rolls do not just magically appear under the sink.
I use a 2 bin system.
Whenever the last roll is taken from the cabinet underneath the sink, leaving just the roll on the holder – that is the signal to retrieve 2 more rolls from storage and put them in the cabinet.
And, here’s the really complicated part. When you remove the last rolls from storage, this is the indication to put “toilet paper” on the shopping list. And the shopping list, of course, is in its standard location with pen for easy, quick additions. (So don’t move it or take the pen.)
Now this process is simple and elegant BUT despite that, it still does not work 100% of the time.
So what does a Theory of Constraints expert do when a process is not working? We collect the reasons why. We then use the biggest occurrence of why’s to improve the process.
The most frequently occurring why I’ve collected so far is “I’m too busy to go replenish toilet paper at the time I pull the last from under the sink.”
So to continue down the process improvement path we have to figure out how to deal with this biggest disruption to our toilet paper supply.
What are your ideas?
This is an example of a Theory of Constraints POOGI process, a Process of On-Going Improvement. And it is a critical part of any system. We use it in the Velocity Scheduling System (our scheduling program for custom job shops).
How can you apply this to one of YOUR processes?
Share your comments, feedback and suggestions by leaving a comment on this post. Really -- I want to hear from you!
Wishing you success,
Dr Lisa
President, Science of Business
P.S. FOR CUSTOM JOB SHOPS ONLY: The next Velocity Scheduling System Coaching Program for custom job shop scheduling and machine shop scheduling starts on Monday June 6.
P.P.S. Ready to increase sales? Need a Mafia Offer? The ON-LINE Mafia Offer Boot Camp is open for registration!
2011 Copyright, Science of Business. All rights reserved.
Saturday, May 14, 2011
The Toilet Paper Roll--Does It Change Itself? (A Theory of Constraints Lesson)
Saturday, February 5, 2011
Theory of Constraints Lesson on Evaluating an Idea
This text is from a county emergency manager in Minot, North Dakota
Now for the Theory of Constraints lesson …
If you were in charge of emergency management for your county how would you prepare?
In Theory of Constraints, one of the things we use to prepare is the phenomenal human ability to find anything and everything wrong with an idea. We call it the “yes, but”.
Whenever we are presented with an idea or solution that did not originate in our own heads, we think and sometimes say “yes, but …”.
We are saying yes to part of the solution, BUT we have a concern about another part of the solution or about a negative that we think could result.
And in some cases the “yes, but” could be the result of our misunderstanding of the solution.
But in any case, and in many company cultures saying it out loud is frowned upon, at least depending on whose idea it was. So many “yes, buts …” never get verbalized.
What a shame and what a missed opportunity!
We use the “yes, buts” technique in the Velocity Scheduling System and our Mafia Offer Boot Camp.
“Yes, buts” can clear up miss understandings, improve already good solutions and help you to find a solution for what seems like an impossible situation.
So if you were in charge of emergency management, would you encourage “yes, buts”? Would you follow every potential negative to see where it leads and determine if it’s worth being prepared for?
I think you would. So why not do that as you're making decisions in your company? Why not make voicing “yes, buts” a positive thing?
Let me know what you think, by leaving a comment on this post.
And you may also want to check out this related article:
http://drlisamaxprofit.blogspot.com/2009/12/theory-of-constraints-poogi-part-53-yes.html
Dr Lisa Lang
President, Science of Business
2011 Copyright, Science of Business. All rights reserved.
Wednesday, January 19, 2011
Job Shop Scheduling Secret Revealed!
In this new article recently published by Roll-Kraft, Dr Lisa reveals the secret to scheduling a custom job shop or machine shop. She explain where shops typically go wrong and specifically what to do differently. If you follow these instructions, expect improved due date performance and reduced lead times.
Check out that new article here: Job Shop Scheduling SECRET
Thursday, July 29, 2010
Theory of Constraints Handbook Chapter 22 Mafia Offers
Chapter 22 of the Theory of Constraints Handbook is my chapter. It's titled Mafia Offers: Dealing with a Market Constraint.
Here's the Amazon description:
"Spend just two hours reading this chapter and if you don't get at least one good idea for your business, contact me and I will give you a refund!" Dr Lisa Lang That's a Mafia Offer and it's real. The purpose of this chapter is to introduce you to the Mafia Offer-the Theory of Constraints (TOC) marketing solution. The chapter progresses from the discovery of what a Mafia Offer is, to the guidelines for creating an offer, to how to present an offer, and ends with how the reader can create their own Mafia Offer. A Mafia Offer delivered correctly, can give you better control over your sales. What's better control? How about closing as much as 80 percent of your opportunities?
Because this chapter is on marketing, I thought that a good marketer should get their book to #1, otherwise you're not really practicing what you preach. So after a little marketing campaign, Chapter 22 is still number 1. During the campaign we reached #1 in two categories, but as of today July 29, 2010, here is the current ranking:
#1 in Kindle Store > Kindle Books > Business & Investing > Management & Leadership > Quality Control
Click here to get the BEST price for the Theory of Constraints Handbook! (this is for the whole book)
Click here to get the BEST price for Chapter 22 on Mafia Offers! (this is for the DIGITAL version of Chapter 22, there is not a printed version of just Chapter 22).
--------------------------------------------------
Here are the 4 reviews for Chapter 22 that have been posted on Amazon so far:
5.0 out of 5 stars Business can now rise way above the Blah Blah Blah, July 17, 2010
By Casinero - See all my reviews
Amazon Verified Purchase(What's this?)
This review is from: Mafia Offers: Dealing with a Market Constraint (Chapter 22 of Theory of Constraints Handbook) (Kindle Edition)
At last! Someone has written a superbly useful methodology for anyone in any situation to rise above the crowd. A must read for anyone who wants to sell "ANYTHING" including themselves, and hey! who doesn't want to sell themselves.
Fabulous job Dr Lisa.
1 of 1 people found the following review helpful:
5.0 out of 5 stars Appreciating the Master: Dr Lisa, June 29, 2010
By Jeff 'SKI' Kinsey (Hilton Head Island SC) - See all my reviews
Amazon Verified Purchase(What's this?)
This review is from: Mafia Offers: Dealing with a Market Constraint (Chapter 22 of Theory of Constraints Handbook) (Kindle Edition)
Dr Lisa once again brings real value to the market. There are about a thousand Constraints Management folks that know how the tools work at some level that brings value to their clients. Then, there are a small handful of true experts that have applied the tools so often as to become the de facto standard bearer. When it comes to unrefusable offers (UROs) also known as Mafia Offers, Dr Lisa is a group of one. Period. I am pleased to add this chapter to my iPod touch.
5.0 out of 5 stars Great chapter on Mafia Offers, July 3, 2010
By Mr. C. J. Ching (a kiwi in Scotland) - See all my reviews
Amazon Verified Purchase(What's this?)
This review is from: Mafia Offers: Dealing with a Market Constraint (Chapter 22 of Theory of Constraints Handbook) (Kindle Edition)
This is a nice little read covering the essentials of what a mafia offer is, how it differs from other marketing approaches, and how to construct one.
Buy this chapter: it's a very small bet which could have a huge financial payoff for your business.
5.0 out of 5 Summary of Unrefusable Offers, July 16, 2010
By Lane Kagey - See all my reviews
Amazon Verified Purchase(What's this?)
This review is from: Mafia Offers: Dealing with a Market Constraint (Chapter 22 of Theory of Constraints Handbook) (Kindle Edition)
This is a good summary of unrefusable offers. It defines them and then gives some simple examples of what they look like and how to build them. It is a nice introduction to the topic.
--------------------------------------------------
Click here to get the BEST price for Chapter 22 on Mafia Offers! (I can't believe I did all that work and shared by best stuff for this thing to sell for between $5.56 and about $9 depending on where you are in the world!)
Here's to YOUR Mafia Offer,
Dr Lisa
P.S. A special thanks to James Cox and John Schleier for the effort in making this project a reality. And thanks to our publisher McGraw Hill.
Tuesday, July 6, 2010
Subject: Theory of Constraints 2 Laws of Leadership (Part 2)
In Part 1 I covered the Theory of Constraints first Law of Leadership -- “Don’t be a sissy!” And I have to admit I was holding my breath as I clicked the send button. I was direct (as I tend to be) and I wasn’t sure what your response would be.
It stirred up a lot of response. My heart rate increased as the first responses starting showing up within 10 minutes! Here are just a few of the first responses I received:
“Liked this one a lot!”
“I really love this – I talk to “just do it” all the time in my work (it’s in a frame on my desk). Adding “don’t be a sissy” is fantastic.”
“Amen”
“Great mail Lisa!”
“Agreed and amen!!“
So now that you know how not to be a sissy and you’ve decided what you are going to go do. Just do it!
“Just do it” does NOT mean steam rolling your people (but at the same time don’t let THEM be sissies!), it means to focus and get it done NOW.
Use the Theory of Constraints buy-in and “yes, but …” processes to get agreement on what you want to do and why you want to do it. These processes also serve to clarify what exactly you’re going to go do and usually the solution improves in the process.
Then, if you have someone who just doesn’t want to do it -- do it anyway. Ask them if they are willing to try (really try) it. If so, then get on with it. If not, it maybe it’s time to replace that person with someone who is.
Don’t make excuses as to why you can’t start now. If there are other things going on, and those things are NOT your biggest most important project (yes singular) – stop doing them. You can start them again if they become your biggest priority.
There are really only 2 Theory of Constraints “Just Do It” measures:
1) Reliability – did you do what you said, when you said you’d do it. Whatever the something was you decided to do that we talked about in Part 1 – did you do it on-time? If you are unreliable you didn’t. If you are reliable you did it and finished when you said you would. Due date performance is a type of reliability measure.
2) Effectiveness – you didn’t waste time being distracted on other things and/or doing things you shouldn’t have been done. Ineffectiveness is the biggest cause of unreliability and “not doing”. If you’re doing things you shouldn’t, typically you are making it very difficult to be reliable and get done what you should. Inventory is a type of ineffectiveness measure – if you have produced something ahead of when it was needed in order to be efficient or to save money.
Being ineffective is really a focusing issue – both not working on the right things and working on too many things at one time.
So get really clear on what you’re going to do and what you’re NOT going to do and then get it done.
And to me, that takes care of leadership. There are only 2 things you need to do:
1) Don’t be a sissy!
2) Just do it!
One of the best leaders I’ve interacted with recently was one of my Velocity Scheduling System clients – Tanya DiSalvo, President, Criterion Tool. Her team was struggling with buying into VSS but she held firm (definitely not a sissy) and then focused on doing it. And doing it right, not some watered down version of what the group was first willing to do.
Here’s the payoff she and her team got:
And I received this email update from Tanya on June 6, 2010:
“Welp it’s Criterion’s one year anniversary with the VSB (Velocity Scheduling System) and WE STILL love it!
A few major projects went thru our building: new product launch in Oct- Dec, another new product launch currently under way, reduction of staff thru attrition and increase in work, and in most cases we came thru with flying colors.Wishing you unsissified success,
Attached is our score card. :)”
Dr Lisa
P.S. Make sure that you click on the links above. They link to additional information and some really good stuff.
P.P.S. If you run a custom job shop and are frustrated with scheduling -- check out the Velocity Scheduling System Coaching Program http://www.velocityschedulingsystem.com/
P.P.P.S Download the "9 Challenges to Scheduling Your Job Shop and Why Your Schedule is Dead on Arrival" special report here: http://www.velocityschedulingsystem.com/ebook/
Sunday, August 30, 2009
Theory of Constraints Tips
Follow Dr Lisa on Twitter and get daily Goldratt Theory of Constraints (TOC) Tips.
http://twitter.com/TOCExpert
Wednesday, August 26, 2009
A Process Of On-Going Improvement (POOGI) - Part 42
We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints. {This series was co-written with Brad Stillahn.}
Maximizing Profits in Uncertain Times with Goldratt Theory of Constraints
Dr. Lisa Lang presented “Maximizing Profits in Uncertain Times” at the recently completed NTMA (National Tool and Machining Association) annual conference in California. (To review the presentation slides and/or view the complete presentation, check the link mentioned below at the end of this article).
Using the famous Theory of Constraints (TOC) analogy of a chain, “Dr. Lisa” described how the weakest link of a chain determined its ability to achieve its goal of holding weight. Any increase in the strength of any link—except the weakest—had no effect on the overall goal.
Similarly, the goal of a company is to make more money now and in the future. The weakest link in our company process—the constraint—determines the performance of the company: how much money it can make. So, we must focus on and leverage the constraint.
In this economy, the constraint your company is dealing with may have shifted. For many companies, the constraint has been in operations. You have been busy, trying to get out as much as possible, and were probably dealing with long quoted lead-times and poor due date performance because of the internal constraint.
Now, in these uncertain times, many companies are faced with not enough sales. In companies used to dealing with an internal constraint, the management team frequently lacks processes and intuition for dealing with lack of sales.
Dr. Lisa presented how to address lack of sales with a “Mafia Offer”, an offer so good your customers can’t refuse it, and your competitors can’t or won’t offer the same.
A Mafia Offer typically requires that you do something different (make operational improvements) to actually deliver something un-refusable to your customers and something that your competition can't or won't do because they are not willing to or don't know how to make the same improvements.
Most companies offer solutions that solve their customers various problems or symptoms. With a Mafia Offer we are addressing our customer’s core problem.
When you have a good Mafia Offer and you deliver it correctly, your close rate can increase to above 80%. If you close 80% or more of your prospects -- you have control over your sales. This control makes it easier grow and invest in your business while maintaining the ability to deliver the offer.
Mafia Offers are developed by analyzing 3 things:
1. What are (or could be) your internal capabilities compared to your competition,
2. How does your industry, you and your competitors sell what you sell, and
3. Understanding how your clients are impacted by your current capabilities (which are usually the same as your competitors) and how you sell.
To protect the confidentiality of machine shops that have already developed their own Mafia Offer, she used an example from the printing industry. Using the TOC scheduling methodology, this printer had reduced their lead-time to two days, relative to two weeks for competition. The printer worked with clients that reordered products infrequently, in order to minimize purchase price, due to the price-quantity curve used by all printers. Because they had to forecast future usage in order to determine the quantities to order, customers invariably had too much inventory of some SKUs while they stocked out of others.
With the caveat that no company that is in the tooling and machining industry should think this Mafia Offer work for them, she told the audience the printer’s Mafia Offer:
“Mister customer, don’t give me orders. Your orders are based on your best guess of what you might need. Instead tell us every day what you used. We will guarantee on the one hand that you will not need to hold more than 2 weeks of inventory so you have more marketing flexibility and less risk for obsolescence, and at the same time we will also guarantee that you will never run out. If we ever stock you out, we will pay you $500 per day per SKU.”
That’s a Mafia Offer – best of all worlds for your customer and the printer will not pay a penalty because it only takes 2 days to replenish. The competition can not offer the same thing because they can not consistently deliver in less than 2 weeks and they could not risk paying the penalty.
The remainder of the presentation was devoted to describing the operational and mind-set changes required to have such a powerful Mafia Offer. Dr. Lisa described how Drum-Buffer-Rope scheduling works, and how “Buffer Statistics” guides ongoing improvement by pointing process weaknesses that Lean and Six Sigma tools can quickly fix.
She also described how the Mafia Offer challenged prevailing assumptions about “set-up cost”. The offer would require many more set-ups, but the printer had significant excess capacity. So, in reality, there was no additional set-up cost. Yes, there was additional set-up time, but all the people were already paid for in that period. And by knowing the importance of set-ups to delivering their Mafia Offer, the printer used Lean tools to dramatically reduce set-up time.
To view Dr. Lisa’s presentation, go to the Velocity Scheduling System page and get on the waiting list -- you'll have instant access. .
...to be continued.
Here's to maximizing YOUR profits!
Brad Stillahn
(c)Copyright 2009, Dr Lisa, Inc. All rights reserved.
Friday, August 7, 2009
Stompernet Mafia Offer Presentation by Dr Lisa
If you want the PowerPoint slides from my Stompernet Live 8 (SNL8) Mafia Offer presentation, just click here: Dr Lisa Mafia Offer Stompernet Presentation
For more on our private or group Mafia Offer Boot Camps, please visit http://www.mafiaoffers.com/
For more on our ON-LINE Mafia Offer Boot Camp, please visit http://www.mafiaofferbootcamp.com/
A couple links that you may find of interest that Brad Fallon covered in his Stompernet Live 8 presentation:
Video overview on Critical Chain Project Management -->Critical Chain Overview
Report on how to do the T/CU calculation Brad Fallon did at the event -->http://www.informationoverloaddestroyer.com/
Books Mentioned:
The Goal by Eliyahu M Goldratt
It's Not Luck by Eliyahu M. Goldratt
The Choice by Eliyahu M. Goldratt
Critical Chain by Eliyahu M. Goldratt
Dr Lisa's Vistage speech, Achieving a Viable Vision (find out about T, I and OE)
Monday, June 29, 2009
Job Shop Scheduling / Machine Shop Scheduling
We are getting ready to start our 4th Velocity Scheduling System Coaching Progam. Three groups of machine shops and jobs shops have already seen big results.
The Velocity Scheduling System is based on Goldratt's Theory of Constraints (TOC) and drum buffer rope. We modified the "off the shelf" TOC for highly custom job shops and machine shops.
To find out more, check out this special report on "The 9 Challenges to Scheduling a Job Shop and Why Your Schedule is Dead on Arrival".
Our 4th Velocity Scheduling System Coaching Program starts on July 14, 2009. For more information, testimonials, and to sign up please visit Job Shop Scheduling. This program is limited to the first 10 companies, so don't delay!
Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2009, Dr Lisa, Inc. All rights reserved.
Wednesday, May 6, 2009
Theory of Constraints Mafia Offer + Sales Process Engineering = Explosive Growth Equation
Justin Roff-Marsh and Dr Lisa Lang
discuss what happens when ...
A Mafia Offer Meets 10 Times the Volume of Sales Appointments
Here’s a limited opportunity to participate in a test Webinar featuring a conversation between Dr Lisa and Justin Roff-Marsh.
Justin gets asked (almost) daily if our approach to sales (Sales Process Engineering) complements Dr Lisa’s approach to marketing (Mafia offers). Dr Lisa finds herself regularly answering the same question.
Of course, the answer’s yes: philosophically we’re both coming from the same (TOC) place, so how could our approaches possibly be in conflict?
But the practical implementation – and integration – of these two approaches is the really interesting subject to explore. And that’s the purpose of this Webinar.
This is a test event – our first one. This means that we are only promoting this event to the TOC community.
If you like to be first to discover new ideas and you don’t mind if this event isn’t as polished as we hope it eventually will become, please reserve you seat now.
We are going to accept 20 registrations for 14 spots. So sign up now, and arrive early to make sure you get in.
The format of this event is simple. Dr Lisa and Justin will each present an overview of our approaches – and, after each overview, the presenter will be interviewed by the other.
While this is occurring, we’ll be assimilating questions from delegates and, to conclude the Webinar, each of us will pose delegates’ questions to the other.
It should be fun, and informative!
Tuesday, March 10, 2009
A Process Of On-Going Improvement (POOGI) - Part 37
The Simple Company makes just 2 products: Pens and Quills. The goal of the company is to maximize profitability. The company has 4 resources that are not interchangeable: Abby, Bobby, Christi and David. The work week is 40 hours (meaning each resource is available for 2,400 minutes per week).
Unlike reality, the environment of the Simple Company has perfect information. Everything is fixed, and every piece of data is precisely known. There is no scrap, no set-up, no worker breaks or absenteeism, no downtime; this is just an idyllic company. We have removed all the uncertainties. Our marketing department is the best, and we know the exact weekly demand for each Pen and Quill.
Operating expenses are $6,000 per week. These are all the fixed costs which include labor, benefits, utilities, interest, SG&A expenses, etc. Labor is paid at the rate of $10 per hour for all resources but remember that labor is included in the $6,000 of operating expense. The raw material (RM) costs and processing times are shown in the diagram of the production process of the Simple Company below.
What is the maximum net profit (or minimum net loss) the Simple Company can earn in 1 week with the current demand?
Sunday, July 15, 2007
Blue Ocean Strategy Review on its way ...
I'm currently reading Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim and Renee Mauborgne.
After several people coming up to me after speeches and telling me that my mafia offer idea sounds a lot like the blue ocean strategy, I have decided that I better determine for myself if that is true.
So far, let's just say it is NOT exactly true. But, I will do a full review once I finish. If any of you have any comments on the topic, please drop me a line.
I'll be back after I complete my review.
Here's to maximizing YOUR profits!
"Dr Lisa" Lang
P.S. Next GROUP Mafia Offer Boot Camp is Aug 29, 30, 31 in Denver. More information at http://www.mafiaoffers.com/
All rights reserved. ©2007 Dr Lisa, Inc.
Wednesday, June 20, 2007
Mafia Offer Boot Camp Schedule
We just completed another successful Mafia Offer Boot Camp. This was a group boot camp with 4 companies in attendance. We developed 4 very nice mafia offers. The group dynamic is always very interesting because other companies provide feedback on your offer.
We just set the schedule for the rest of the 2007 GROUP boot camps:
- August 29, 30, 31 - Denver, CO
- September 26, 27, 28 - Denver, CO
- October 24, 25, 26 - Denver, CO
- TBD Nov/Dec - Sydney, Australia
- TBD Nov/Dec - Auckland, New Zealand
"We participated in a Mafia Offer Boot Camp in May 2007. It was a great 3 days! There's a lot of passion that "hey we can do this" and the offer we developed is so much more powerful than where we started! We are looking forward to the follow up calls and to getting started!"
Bob M, General Manager of a small division of a fortune 100 company
Here's to Maximizing YOUR Profits!
"Dr Lisa" Lang
P.S. I'm on vacation next week on a week long bicycle ride through Colorado. I'll be back at the first of July.
Sunday, May 27, 2007
Mafia Offer Boot Camp Season
I did not write last week. We were doing a boot camp in Kansas City plus a speech for a TEC/Vistage retreat in Michigan. It's Mafia Offer Boot Camp Season. This is a good time of year to do a Mafia Offer Boot Camp because budgeting and preparation for next year are right around the corner. What better way to prepare?
- To have a mafia offer to strategically drive your organization!
- To answer the question why change!
- To sell the improvements you made this year! (If you uncover capacity or increase efficiencies, but don't sell them -- what bottom-line impact have you had?)
- To have a specific plan on how to substancially increase sales AND profits!
We have a group boot camp coming up June 13, 14, 15 in Denver. If you need to decide what next year will bring and the plan to do it, you should consider attending. Drop me a line if your interested in the details and if your company is a good fit. See also www.mafiaoffers.com
And, if you're ready for a break from HUMIDITY then you are also ready for a visit to Denver, Colorado! Did I mention we were in the midwest this week?
Thursday, May 17, 2007
Pricing using Theory of Constraints Part 5
For the products that are well above the T/CU you need to look into the following things:
- what is your close rate on these items, is it low?
- have your customers/prospects told you that you were over priced?
- do you want more of this type of business?
The products that are slightly above the T/CU you calculated are probably fine. And some of them that are well above the T/CU are probably OK too. But the ones that you would like to sell more of, but are not, due to too high pricing, these are the ones you should consider lower the price on.
...to be continued...
Here's to maximizing YOUR profits!
"Dr Lisa" Lang
(c)Copyright 2007, Dr Lisa, Inc. All rights reserved.
Sunday, May 13, 2007
Pricing using Theory of Constraints Part 4
Let's look at the products that are currently priced below the mininum T/CU that you calculated. You can have some products priced below your min T/CU because the weighted average just needs to be at the minimum. To determine if this is one that should be below the minimum or raised you need to take into account the following:
- where is the competition priced?
- does selling this product, help you to land higher T/CU products with the same customer?
- typically you have more than one of your constraint -- like have multiple printing presses. Does this particular product run on one of your more loaded ones or does it run on a less loaded one?
...to be continued...
Here's to maximizing YOUR profits!
"Dr Lisa" Lang
(c)Copyright 2007, Dr Lisa, Inc. All rights reserved.
Friday, April 6, 2007
Increase Throughput to Increase Cash Velocity
Continuing our cash velocity discussion started on March 16, 2007
Increasing Throughput
Throughput (as defined in Goldratt's Theory of Constraints Throughput Accounting) is sales revenue minus truly variable costs. Therefore we can increase your throughput by either 1) increasing sales, 2) increasing our selling prices, or 3) decreasing our truly variable costs.
Let’s start with the last one, first. To decrease our truly variable costs we can:
- Negotiate a lower price with raw material suppliers
- Negotiate a lower price with outside services, freight suppliers, or with any other truly variable cost vendors that we have
- Decrease the sales commission we pay to our sales people
There is a limit to how much we can reduce our costs. If our costs go to zero, then we are no longer in business. Therefore, we want these costs to be in line, but this is not where we want our focus.
... to be continued ...Here's to maximizing YOUR profits!
"Dr Lisa" Lang
(c)Copyright 2007, Dr Lisa, Inc. All rights reserved.
Friday, March 23, 2007
Goldratt's Theory of Constraints Demand Pull
Continuing our cash velocity discussion started on March 16, 2007
Side Bar for Wednesdays March 21 post:
To minimize the amount of materials we have on hand, we should examine our purchasing policies. Many times we purchase in large quantities to save money. If we purchase in large quantities, we can often receive a quantity discount, and we also can spread the transportation cost over more items. This savings in raw materials and logistical costs are a mirage, because we have to store what we don’t use and we are at risk for inventory obsolescence. If instead, we replenish our materials based on the Demand Pull / Replenishment systems, then we can minimize what we have on hand while ensuring that we have what we need. In addition, our cash position is stronger. We will have only spent/invested what was necessary.
Here's to maximizing YOUR profits!
"Dr Lisa" Lang
Thursday, March 22, 2007
Mafia Offer Podcast
I'm taking a break from our cash velocity discussion today to make you aware of my second podcast. In this podcast Jeff "Ski" Kinsey probes with some interesting questions regarding mafia offers and our Mafia Offer Boot Camp.
The newest podcast is available here: http://tppress.blogspot.com/2007/03/dr-lisa-podcast.html
My first podcast on mafia offers is here: http://www.podcasternews.com/programs/87/better-process-podcast/3574/?A=1 This one has had well over 1000 downloads just since Feb 7, 2007.
Here's to maximizing YOUR profits!
"Dr Lisa" Lang
Here is one of the very interesting questions and the answer:
QUESTION: Confirm for us, please, why a "hands on" boot camp approach is so much more valuable than other techniques.
ANSWER: When most of us are presented with a concept, particularly if it is not one we developed we have this wonderful ability to think of all the reasons why it won’t work. So if someone told you your mafia offer or you read about the process to create one … you would simply do what we all do—come up with all the reasons why it won’t work for you.
During the boot camp YOU and your team build your mafia offer. You know your company, your competitors, and customers best. We combine your knowledge with a solid process to facilitate and guide you to develop the offer that is unrefuseable to your customers but something your competition can’t or won’t do. We usually know we are on track when YOUR team is worried about being able to deliver the offer. This happens because we first develop the offer, assuming we could do anything and setting aside all our current assumptions, reasons why we can’t change and current way of doing things.
We start over, with fresh eyes and a fresh look at your business – and this is something you can’t read about or someone just tell you about.
Tuesday, March 6, 2007
Why should I buy from you?
If I am one of your best prospects, what would you say to convince me to do business with you? If you didn't write down your answers yesterday, do it now BEFORE you read on.
Here is a list of the typical answers:
§ We provide great customer service
§ Our quality is outstanding
§ We innovate and/or help our customers to innovate
§ We have great employees
§ We deliver results
§ We have a very knowledgeable staff
§ We are responsive to our customers’ needs
§ We have a great reputation
§ Our customers trust us
Don’t your competitors say the exact same thing? All good companies have these qualities or they wouldn’t be in business for long. I call this the "blah, blah, blah" answer because that’s what it sounds like to your customers and prospects.
A mafia offer is NOT a list of strengths, a cliché, subjective, or offered by the competition. In addition, it is sold differently. When you have a mafia offer, you are making a business proposal. Everything changes.
"Create a market offer so good, that your customers can’t refuse it and your competition can't or won't offer the same – that’s a “mafia offer”!” -- “Dr. Lisa” Lang
