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Transcript of 1 © 1995-2006 The Paul Selden Companies, Inc. Sales Process Engineering A Systematic Approach to...
© 1995-2006
The Paul Selden Companies, Inc.1
Sales ProcessEngineering
A Systematic Approach to Improving Sales, Marketing &
Customer Service
© 1995-2006
The Paul Selden Companies, Inc.2
Introduction & WelcomeIntroduce Yourself Name
Company’s Products and Sales Channels (OK to brag here)
Personal Background in engineering, ISO, TQM, SPC, etc. related to topic today
Instructor’s Background
© 1995-2006
The Paul Selden Companies, Inc.3
About Paul Selden Business Experience: Founded Performance Management,
1978; board member, 3 related companies Six Sigma / DOE related experience: GE,
AlliedSignal/Honeywell, others Project Track Record: $100+ M sales Education & Cert.: Instructional Design, Large Scale Systems
Implementation, Behavioral Psychology, Certified Quality Engineer, Certified Performance Technologist
Author: Sales Process Engineering Researcher: 500+ tested sales & marketing factors on file Email: [email protected] Voice: 269-343-3700 x101
© 1995-2006
The Paul Selden Companies, Inc.4
Definition What is “Sales Process Engineering”?
© 1995-2006
The Paul Selden Companies, Inc.5
Sales Process Engineering: Definition The systematic application of scientific and
mathematical principles to better serve the practical goals of a particular sales process.
Who is a sales process engineer? A very smart and energetic sales person A manager who is also a builder and leader An internal or external consultant
© 1995-2006
The Paul Selden Companies, Inc.6
New vs. Old View
Old View: Too focused on discrete, one-time transaction New View: Must include repeat sales and entire process, not
just “closing the deal” Old View: Engineering only works in manufacturing and product
development New View: Systematic approach works in most any field, such
as information flow, biology, sales, marketing, customer service
Old View
© 1995-2006
The Paul Selden Companies, Inc.7
Engineering Gurus Agree On One Key Point
15%85%
More than 80% of problems in a process are dueto the systems, usually in management’s control.
IndividualSystem
If you fix the system, a lot of what you thinkare “people problems” are reduced, as well.
Sales Process Engineering focuses on structure first.
© 1995-2006
The Paul Selden Companies, Inc.8
Workshop GoalsMAIN GOALS Learn a systematic approach to improving
sales, marketing, and customer service Learn tools Apply ideas to your own business Stimulate the imagination!
* Throughout, we speak of “sales” as outputs of a system or systems, not as a single “department.” Our focus will be on sales, marketing, and customer service systems.
© 1995-2006
The Paul Selden Companies, Inc.9
Agenda Bienvenidos and Introductions The “DMAIC” Method of Improvement Define: Process Mapping The Big Picture Measure: Using “SPC” With Sales Data Analyze: Simulating the Steps and Using Cause-
Effect Logic to Find Greatest Constraint Improve: Brainstorming & Testing Improvements Control: Holding the Gains Summary and Adiós
© 1995-2006
The Paul Selden Companies, Inc.10
Other Expectations? Ask As Other Issues Arise During Workshop We’ll Try to Cover With Only Two Days, We May Need to Put
Some on a “Parking Lot”
© 1995-2006
The Paul Selden Companies, Inc.11
Agenda Bienvenidos and Introductions The “DMAIC” Method of Improvement
© 1995-2006
The Paul Selden Companies, Inc.12
The Steps of “DMAIC”
Made popular under the name “Six Sigma” Useful general method for process
improvement We will use the DMAIC sequence to show
when to apply tools of Sales Process Engineering (other steps are also possible)
Define Measure Analyze Improve Control
© 1995-2006
The Paul Selden Companies, Inc.13
DMAIC and Our Agenda
Define Measure Analyze Improve Control
StatisticalProcessControl Statistical
ProcessControl
ProcessMaps
Simulation
Theory ofConstraints
Cause-EffectDiagrams
BehavioralPsychology
Flowcharting
Brainstorming
Design ofExperiments
© 1995-2006
The Paul Selden Companies, Inc.14
Discussion
© 1995-2006
The Paul Selden Companies, Inc.15
Agenda Bienvenidos and Introductions The “DMAIC” Method of Improvement Define: Process Mapping The Big Picture
© 1995-2006
The Paul Selden Companies, Inc.16
DMAIC and Our Agenda
Define Measure Analyze Improve Control
StatisticalProcessControl Statistical
ProcessControl
ProcessMaps
Simulation
Theory ofConstraints
Cause-EffectDiagrams
BehavioralPsychology
Flowcharting
Brainstorming
Design ofExperiments
© 1995-2006
The Paul Selden Companies, Inc.17
Dr. Deming’s Map – Business As A System
Materials&
Equipment:Suppliers
A
B
C
D
Receive&
TestMaterials
Produce,Assemble& Inspect Distribute
Consumers
Tests of Processes, Machines,Methods, Costs
ConsumerResearch
Design andRedesign
- Source: WE Deming, 1982
© 1995-2006
The Paul Selden Companies, Inc.18
Process Models: Ballistic System
Input Output
Process
No adjustment per feedback
Supplier Customer
Note: Six Sigma calls this the “SIPOC” model
© 1995-2006
The Paul Selden Companies, Inc.19
Process Models: Guided System
Input Output
ProcessingSystem
(Adapted from Brethower)
Can correct output
© 1995-2006
The Paul Selden Companies, Inc.20
Process ModelsAdaptive System
Input Output
ProcessingSystem
Customer:Receiving System
(Adapted from Brethower)
Output
Can correct output and adjust goal per shifts in customer needs
© 1995-2006
The Paul Selden Companies, Inc.21
Business to Business Sales Acquisition Process
Leads
ContactAnalyzeNeeds
PresentDevelopProposal
CloseEnterOrder
Service
Follow-up
© 1995-2006
The Paul Selden Companies, Inc.22
Repeat Business Process
ClientNeeds
AnalysisAdvise Agree
EnterOrder
Service
Invoice
Repeat Business ModelGoal: Profitable Ongoing & Increasing Sales
© 1995-2006
The Paul Selden Companies, Inc.23
Sales Management Process
Attract,Select
MakeOffer,Hire
Train &Equip
SetGoals
Coach Evaluate Reward
Promote
LetGo
Retire
© 1995-2006
The Paul Selden Companies, Inc.24
Customer’s B to B Buying Process
DetectMkt
Needs
ContactPotentialSuppliers
RevealNeeds/Wants
GenerateRFPs
CompareProps/
Sign Deal
Use &Maintain
Item
© 1995-2006
The Paul Selden Companies, Inc.25
Checklist: Is Your Process Well Managed? Accountable process owner Well defined process boundaries Clear internal communication and responsibilities Documented procedures & training requirements Measurement & feedback close to activities
performed Customer-related measurements and targets set Known standards Know how well they perform against standards Know how to change/improve when needed
From Harrington
© 1995-2006
The Paul Selden Companies, Inc.26
Tool:Flowcharting
SurveyLead
Qualified?
Passto Rep
Yes
No Pass toReferral
Plan
Portionof Telemarketing
LeadScreeningProcess
© 1995-2006
The Paul Selden Companies, Inc.27
Flowcharting Flowchart: picture of steps in a process Variation: Functional flow chart (shows ownership of
steps) Common symbols: diamond (decisions) and
rectangles (procedures); many others Define boundaries of process under study Assemble true experts in flow to diagram Each process block should have definite input from
previous operation Each block should deliver output to next step or
operation downstream
© 1995-2006
The Paul Selden Companies, Inc.28
Checkpoint
© 1995-2006
The Paul Selden Companies, Inc.29
Activity - Mapping Your Sales Process Small groups - by company or in pairs
(consultants split up) Break your own process into 5 to 7 sequential
blocks representing MAIN sub-processes Details not important now, just big picture Draw decision diamonds between sub-
process blocks even if not sure what to put into decision diamonds for now
© 1995-2006
The Paul Selden Companies, Inc.30
Mapping Your Sales Process
© 1995-2006
The Paul Selden Companies, Inc.31
Discussion
© 1995-2006
The Paul Selden Companies, Inc.32
Agenda Buenos Dias and Introductions The “DMAIC” Method of Improvement Define: Process Mapping The Big Picture Measure: Using “SPC” With Sales Data
© 1995-2006
The Paul Selden Companies, Inc.33
DMAIC and Our Agenda
Define Measure Analyze Improve Control
StatisticalProcessControl Statistical
ProcessControl
ProcessMaps
Simulation
Theory ofConstraints
Cause-EffectDiagrams
BehavioralPsychology
Flowcharting
Brainstorming
Design ofExperiments
© 1995-2006
The Paul Selden Companies, Inc.34
Visualize Output Of Selling System As a Stream Over Time
Time
OurMeasure
(e.g.,Sales)
© 1995-2006
The Paul Selden Companies, Inc.35
The Eternal Decision-Making Dilemma
Quarter
Revenue
Stay The Course or Take Extreme Measures?
© 1995-2006
The Paul Selden Companies, Inc.36
The Quote Closing Experiment
© 1995-2006
The Paul Selden Companies, Inc.37
Closing ScorecardQuarterQuarter
RepRep
TotalTotal
1 2 3 4
AverageAverage
TotalTotal
© 1995-2006
The Paul Selden Companies, Inc.38
Examining the RecordAs a real life manager, which reps would you:
… send on the annual President’s Club trip?
… encourage to try harder?
… pat on the back for improving the most?
… fire? Is there a better way to make decisions than
this?
© 1995-2006
The Paul Selden Companies, Inc.39
Scorecard Revisited
© 1995-2006
The Paul Selden Companies, Inc.40
Need To “Filter Out” False vs. Real Alarms
False Alarm #1
Reacting to a normal outcome as if it were unusual
False Alarm #2
Failing to act on a genuinely unusual outcome
© 1995-2006
The Paul Selden Companies, Inc.41
Source of the Filter: Natural Process Behavior
Time
OurMeasure
(e.g.,Sales)
Concept:Use “Like” Subgroups as Filter to
Detect “Different” Subgroups
© 1995-2006
The Paul Selden Companies, Inc.42
Alarm Zones Set Empirical Triggers on Financial Data
Time
Upper Alarm Zone
Lower Alarm Zone
OperatingMargin
© 1995-2006
The Paul Selden Companies, Inc.43
Four Cautions for Setting Up Basic Filter
1. Subgroup data “rationally” - like with like
2. Never dump all the data together and use “standard deviation” for the filter
3. Standardize measurement gathering procedure; stick to it
4. Follow the rules for selecting and interpreting charts
© 1995-2006
The Paul Selden Companies, Inc.44
Calculating & Applying the FilterSee Worksheet
“It Is More Important to
Take the Right Action
Than to Find the Right Number”-- Don Wheeler
© 1995-2006
The Paul Selden Companies, Inc.45
Plotting the Performance
5 10 15 20
10
5
15
20
RevenueRevenue
SequenceSequence
© 1995-2006
The Paul Selden Companies, Inc.46
Testing For SignalsSee Handout
© 1995-2006
The Paul Selden Companies, Inc.47
When Process is “In Statistical Control”Only random causes are presentVariation occurs around a consistent meanBeing in statistical control is based on
observations and calculations
Upper Natural Process Limit (UNPL)
Lower Natural Process Limit (LNPL)
Average
Time
Revenue
Chart - With Operationally Determined Limits
© 1995-2006
The Paul Selden Companies, Inc.48
Operational Definition of ChangeWhat is an “operational definition?”Specifying the operation by which
something is done or assessedAllows for repeatable decision-making and
action Typical Management Graph
Revenue
Time
© 1995-2006
The Paul Selden Companies, Inc.49
Two Strongest Alarm SignalsDesirable When performance trips alarm on the “good” side, it is vital to
detect it so that the factors causing it can be replicated or enhanced more consistently.
Undesirable It is just as or more critical to detect alarms on the “bad” side, so
the factors causing it can be prevented from recurring.
Good
Bad
© 1995-2006
The Paul Selden Companies, Inc.50
Operational Definition of “Predictable”
Quarter
UNPL
LNPL
ServiceLevel
© 1995-2006
The Paul Selden Companies, Inc.51
Meeting Quotas -- Or Tossing Dice?
Upper Alarm Zone
Lower Alarm Zone
Time
Revenue
Goal
Zone of EmpiricallyPredicted
Result
An Objective Definition of Need to Change System
© 1995-2006
The Paul Selden Companies, Inc.52
Uses Credit and Collections Forecasting Performance Appraisal System Improvement Monitoring Service Levels Inventory and Stocking Goal Setting Setting Baselines Before Conducting “DOE” Other?
© 1995-2006
The Paul Selden Companies, Inc.53
Discussion
© 1995-2006
The Paul Selden Companies, Inc.54
Agenda Bienvenidos and Introductions The “DMAIC” Method of Improvement Define: Process Mapping The Big Picture Measure: Using “SPC” With Sales Data Analyze: Simulating the Steps and Using
Cause-Effect Logic to Find Greatest Constraint
© 1995-2006
The Paul Selden Companies, Inc.55
DMAIC and Our Agenda
Define Measure Analyze Improve Control
StatisticalProcessControl Statistical
ProcessControl
ProcessMaps
Simulation
Theory ofConstraints
Cause-EffectDiagrams
BehavioralPsychology
Flowcharting
Brainstorming
Design ofExperiments
© 1995-2006
The Paul Selden Companies, Inc.56
Process Engineers Identify Two Types of Problems Sporadic problems: feedback detects, then
troubleshooting, fixing, and preventing reduces chance of recurrence
Systemic: ordinary feedback loop not sufficient, must change very nature of system or inputs; careful diagnosis, careful remedy testing, and implementation needed
ChronicProblems
in allProcesses
Sporadic
© 1995-2006
The Paul Selden Companies, Inc.57
Approaches to Analyzing Cause-Effect Previous Studies Cause – Effect Mapping Simulation
© 1995-2006
The Paul Selden Companies, Inc.58
Causes of Low Sales
Talk to Wrong Prospects
Lack of Contacts
Not Enough Names
Not Getting RightDecision-Makers
Coffee Drinking
Staring Into Space
“Cheating on Time”
Turnover
Poor Presentation
Poor Pricing
Poor Proposal
Tracking Orders
Paperwork
Travel to Client
Sales
Entry Errors
Late Delivery
Claims
Tim
e/P
eop
le
© 1995-2006
The Paul Selden Companies, Inc.59
Top Ten Sales Process Problems - Selden1. Failure of marketing to find and capitalize on
existing information
2. Insufficient qualification of leads prior to passing to sales
3. Blind use of field sales to perform all types of contact
4. Absence of presentation impact analysis
5. Non-uniform and incomplete customer needs analysis
© 1995-2006
The Paul Selden Companies, Inc.60
Top Ten Sales Process Problems (cont’d)6. Pricing policies and systems for complex
items
7. Labor intensive quote and proposal generation
8. Lack of ability to understand and adjust close to true customer motivations
9. Order entry errors
10. Broken implicit and explicit service commitments
© 1995-2006
The Paul Selden Companies, Inc.61
Cause and Effect Diagram
LowerSales
Example: Causes for Lower Than Desired Sales
BargainShoppersDon’t LikeOur Price
Used Merchandise
Competes
No UniqueSelling
Proposition
“Politics”Influence
Decisions ToPut on Shelves
CustomersHave
Many Choices Poor SupportFrom Own
Staff
CustomerBuying
Season Short
Not RequiredTo Buy
Our Brand
© 1995-2006
The Paul Selden Companies, Inc.62
Cause & Effect Diagrams Diagram of relationship between outcome and
potential controlling factors (from Ishakawa) Layout resembles “fishbone,” “stream and river” or
“branch and limb” appearance Effect is main trunk, causes are branches, main
causes can be boxed at branch ends Ask “5 Why’s;” don’t stop until all final “root” causes
exhausted Effect, or symptom of problem, must be clearly stated
or group will be confused Does not demonstrate true responsibility between
one cause and others
© 1995-2006
The Paul Selden Companies, Inc.63
Checkpoint
© 1995-2006
The Paul Selden Companies, Inc.64
Activity - Surfacing Cause and Effect Examine your process maps. Circle a portion you are having trouble with. Draw a cause and effect diagram exploring
“reasons why”
© 1995-2006
The Paul Selden Companies, Inc.65
Why Simulate?Find gaps in understandingLess expensive than trial and errorMistakes don’t hurt you as in real lifePinpoint place(s) to improve with greatest
paybackOther?
© 1995-2006
The Paul Selden Companies, Inc.66
Activity: Sales Process Simulation
Unit Sales Total SalesQuantity Yield Cost Cost
Input Names 4000 0.25 -2 -$8,000Qty, Yields Contacts 1000 0.2 -10 -10,000Costs Presentations 200 0.4 -250 -50,000
Estimations 80 0.8 -300 -24,000Proposals 64 0.135 -400 -25,600Closes 8 1 -500 -4,000
-$121,600Value per close $100,000Sales 800,000
% COGS 70% -560,000Gross Margin 240,000
%G&A 15% -120,000Sales Cost 15% -121,600GSA -241,600
Operating Income -$1,600
Operating Margin 0%
© 1995-2006
The Paul Selden Companies, Inc.67
Activity: Simulating The Sales Process Pretend you can definitely improve two things, + or – 10% Write them down (up to 10% each).
a.Change __________ to _________
b.Change __________ to _________ Let’s try them out! Note the results here:
a.______________________________
b.______________________________ Which seems to be most optimal combination of settings?
a.Set _____________ at ___________
b.Set _____________ at ___________ Are you positive these are the best?
Note: This simulation does not include variability as a factor.
© 1995-2006
The Paul Selden Companies, Inc.68
The Penny Simulation How Variability Effects Output
© 1995-2006
The Paul Selden Companies, Inc.69
Discussion
© 1995-2006
The Paul Selden Companies, Inc.70
Lessons of a Wavy Pipeline
Bottlenecks Shift
SuboptimizationOccurs
Perspective isEssential
Here’sthe real
problem!
Here’sthe real
problem!
© 1995-2006
The Paul Selden Companies, Inc.71
TOC’s Thinking ProcessCompany Is
Not Selling ToMaximum
Potential (UDE)
Company IsNot Selling To
Maximum Potential (UDE)
SomeHQ DirectionsAre Conflicting
(UDE)
SomeHQ DirectionsAre Conflicting
(UDE)
Some FactorsVital To
Increase SalesAre Unclear
Training ProgramIgnores
Certain ImportantSkills
Some CostlyOper’al Mistakes
Are Occurring(UDE)
Some CostlyOper’al Mistakes
Are Occurring(UDE)
Some Reps SellBelow Full
Market Potential Mgmt DeploysSome Ineffective
Tactics andStrategies
Some ClientsAre Less
Forgiving ThanOthers
© 1995-2006
The Paul Selden Companies, Inc.72
Activity: Theory of Constraints Where are your biggest bottlenecks? Review your cause and effect diagram What factor within your control causes most of the
other factors to happen? Add to, or re-draw your diagrams, accordingly.
© 1995-2006
The Paul Selden Companies, Inc.73
Discussion
© 1995-2006
The Paul Selden Companies, Inc.74
Agenda Bienvenidos and Introductions The “DMAIC” Method of Improvement Define: Process Mapping The Big Picture Measure: Using “SPC” With Sales Data Analyze: Simulating the Steps and Using
Cause-Effect Logic to Find Greatest Constraint
Improve: Brainstorming & Testing Improvements
© 1995-2006
The Paul Selden Companies, Inc.75
DMAIC and Our Agenda
Define Measure Analyze Improve Control
StatisticalProcessControl Statistical
ProcessControl
ProcessMaps
Simulation
Theory ofConstraints
Cause-EffectDiagrams
BehavioralPsychology
Flowcharting
Brainstorming
Design ofExperiments
© 1995-2006
The Paul Selden Companies, Inc.76
Once The Causes for the Problem Are Found… Time for solutions Brainstorming: Common method – easy but
not often done well! Many other “Idea Generation” systems
© 1995-2006
The Paul Selden Companies, Inc.77
Brainstorming Brainstorming: voicing, listing ideas in group No criticism permitted; no censorship Unconventional, wacky, outrageous ideas
encouraged Expanding, combining, adding to ideas encouraged Capture many ideas in short time Warm up with neutral ideas and examples of
discouraging comments to avoid Explain issue involved clearly; use facilitator Analysis may be next, but is separate
© 1995-2006
The Paul Selden Companies, Inc.78
Checkpoint
© 1995-2006
The Paul Selden Companies, Inc.79
Activity: Brainstorming Solutions Look at your cause and effect diagrams Brainstorm solutions that may overcome
undesirable, negative causes
© 1995-2006
The Paul Selden Companies, Inc.80
Discussion
© 1995-2006
The Paul Selden Companies, Inc.81
Caution! Brainstorming and creativity are great when
generating ideas Finding whether the ideas work requires
testing
Aha!
IDEA
“I think”
Aha!
IDEA
“I think”
Look!
TESTING
“I can show”
Look!
TESTING
“I can show”
© 1995-2006
The Paul Selden Companies, Inc.82
Test Methods Simple Methods Using Statistical Process Control Design of Experiments (DOE)
© 1995-2006
The Paul Selden Companies, Inc.83
Simple Method For Testing: Pre-Post With Control Group
Sales
Time
Group
Test
Control
(adapted from Selden)
Pre Post
© 1995-2006
The Paul Selden Companies, Inc.84
Simple Method For Testing: Multiple Baseline
Sales
Time
Group
A
B
C
(adapted from Selden)
Pre Post
© 1995-2006
The Paul Selden Companies, Inc.85
Using SPC to Test for ChangeDid our solution really work?
Measure new “recipe”ChartCalculate control limitsUse 8 Rules to determine whether change “is
real” or “just noise”
Leads Appts Proposals Orders
© 1995-2006
The Paul Selden Companies, Inc.86
Activity: Using SPC to Test Change
Sequence
5 10 15 20
© 1995-2006
The Paul Selden Companies, Inc.87
Why DOE?
What If We Need To TestThe Individual Impact of
Many Ideas At Once?
© 1995-2006
The Paul Selden Companies, Inc.88
Challenge: Find “Sweet Spot”
Find Optimal Combination
In Complex Mix of Policies and Tactics
PricePromotion
Placement
Product
© 1995-2006
The Paul Selden Companies, Inc.89
DOE vs. Simple Methods To tell which factor in the “cluster” is the
“active ingredient,” or which combination of factors is best, more formal designed experiments are needed
Special training in “DOE” (Design of Experiments) required
Simple test methods can tell differences between one “cluster” of factors and another
We’ll learn those now
© 1995-2006
The Paul Selden Companies, Inc.90
DOE Can Quickly Find Key Factors and Best Combinations
FrostingNo
Frosting
Cake
NoCake
No Sale! $
$ $$$$
© 1995-2006
The Paul Selden Companies, Inc.91
What to Test: Guidelines1. Factors tested must be controllable
Try: media choice, tagline, commission plan, training, mailing list used, price location, size, frequency
Tougher: presentation “style,” greeter “enthusiasm” 2. Factors should be affordable
Use: factors already in budget More costly: building new warehouses, plants, or
computer systems as a “test”3. Factors should be easy to introduce quickly4. No impossible or dangerous combinations
“Impossible:” Text Color: Yellow + Ad Type: Radio Dangerous: ideas that could seriously alienate good
clients
© 1995-2006
The Paul Selden Companies, Inc.92
Looking At Results: GuidelinesResults should be:1. Measurable with known accuracy. 2. Measurable with sufficient accuracy not to obscure
results.3. As directly related to end goal as possible.4. Set up to provide an index of variation within each
recipe.
Examples
Easier: Sales, Time, Cost Savings, Refunds, Warrantee Claims, Reservations, Attendance
Tougher: “Attitude,” “Willingness to Refer a Friend,” Focus Group Outcomes
© 1995-2006
The Paul Selden Companies, Inc.93
Regions of Impact
Factor Level (e.g., Advertising Frequency)
Effect(e.g.,Sales)
Region of RelativelySmall
Change
Region ofGreatestImpact
Region of RelativelySmall Change
Implication: levels chosen forcontrast must be sufficiently
“Bold” (widely spaced) toenable detectable difference
© 1995-2006
The Paul Selden Companies, Inc.94
Familiar Method For Testing: A/B or Split Test
Sales
Time
Method
A
B
Limitation:Only tests one cluster of factors vs. another cluster (A vs B). Can’t
distinguish what factors are
responsible for the success of each
cluster.
A = Current Price, Product, Placement, Promotion, etc.B = New Price, Product, Placement, Promotion, etc.
© 1995-2006
The Paul Selden Companies, Inc.95
Beauty of Screening Designs
How many balanced groups of two can we create from one sample?
Envelope: White Envelope: Cream
Copy:Long
Copy:Short
ReturnAddress:
Use
ReturnAddress:
None
ReturnAddress:
Use
ReturnAddress:
None
ReturnAddress:
None
ReturnAddress:
Use
ReturnAddress:
None
ReturnAddress:
Use
© 1995-2006
The Paul Selden Companies, Inc.96
Displayed Another Way
Copy
- -
Run
+ -
- +
+ +
1
2
3
4
EnvelopeReturn
Address
-
-
+
+
- -
+ -
- +
+ +
5
6
7
8
-
-
+
+
Since we need eight runs for three factors, why not “saturate” the design space further?
© 1995-2006
The Paul Selden Companies, Inc.97
Secret of Multi-Factor Balanced Designs …Example: Seven Factor, Eight Run Two Level
Fractional Factorial (below)
(Assume Only Factors A and G “Work,” Contributing Additive Impacts To Results)
A B C D E F G Results-1 -1 -1 1 1 1 -1 -121 -1 -1 -1 -1 1 1 12-1 1 -1 -1 1 -1 1 81 1 -1 1 -1 -1 -1 -8-1 -1 1 1 -1 -1 1 81 -1 1 -1 1 -1 -1 -8-1 1 1 -1 -1 1 -1 -121 1 1 1 1 1 1 12
Sum of +'s 8 0 0 0 0 0 40 0.0 MeanSum of -'s -8 0 0 0 0 0 -40Sum 0 0 0 0 0 0 0Difference 16 0 0 0 0 0 80Effect 4 0 0 0 0 0 20
Run
1
2
3
4
56
7
8
Factor
12
12
-8
-8
8
© 1995-2006
The Paul Selden Companies, Inc.98
… Allows Each Factor to Express Itself, Across the Others
The balanced nature of this class of designs allows active factors to show their impact across the other factors, when genuinely present. Each level is used an equal number of times.
A B C D E F G Results-1 -1 -1 1 1 1 -1 -121 -1 -1 -1 -1 1 1 12-1 1 -1 -1 1 -1 1 81 1 -1 1 -1 -1 -1 -8-1 -1 1 1 -1 -1 1 81 -1 1 -1 1 -1 -1 -8-1 1 1 -1 -1 1 -1 -121 1 1 1 1 1 1 12
Sum of +'s 8 0 0 0 0 0 40 0.0 MeanSum of -'s -8 0 0 0 0 0 -40Sum 0 0 0 0 0 0 0Difference 16 0 0 0 0 0 80Effect 4 0 0 0 0 0 20
Run
1
2
3
4
56
7
8
Factor
-12
-12
8
8
-8
Factor A’s “Effect” = (8/4 “plusses”) – (-8/4 “minuses”) = 2-(-2) = 4
© 1995-2006
The Paul Selden Companies, Inc.99
Examples of Factors Companies Are Testing Today Business to Business Sales: Contact Rate,
Proposal Detail, Meeting Location, Demo Style Wholesale Net Margins: Telemarketing, Sales
Planning Time, Factory Tours, Warranties, Commissions, Promotional Pricing
Internet Sales: Banner Ads, Tagline, Product Price, Logo Size
Direct Mail: Coupon, First Class, Refund Offer, Use of Color, Post Script, Reply Interval
Print Advertising: Background, Credit Promotion, Paper Type, Celebrity Endorsement
© 1995-2006
The Paul Selden Companies, Inc.100
DOE Checklist1. Define opportunity & measurable effects
2. Create (brainstorm) list of possible causes
3. Narrow list (see “What to Test” guidelines)
4. Decide on “experimental unit”
5. Design, conduct, learn from screening test
6. Design, carry out, learn from refining test
7. Confirm and optimize
8. Implement on wider scale (if successful)
9. Repeat 1-8- Adapted from Kraber, Whitcomb & Anderson; Montgomery; Wheeler
© 1995-2006
The Paul Selden Companies, Inc.101
Easy Screening RecipeSeven Factor, Eight Run Two Level Fractional Factorial
Resolution III (Main Effects Confounded With Two-Factor Interactions, others)
For example: [A] = A + BD + CE + FG + BCG + BEF + CDF + DEG
[B] = B + AD + CF + EG + ACG + AEF + CDE + DFG
Std Order
Run Order Block A B C D E F G
1 1 1 -1 -1 -1 1 1 1 -12 4 1 1 -1 -1 -1 -1 1 13 5 1 -1 1 -1 -1 1 -1 14 7 1 1 1 -1 1 -1 -1 -15 3 1 -1 -1 1 1 -1 -1 16 2 1 1 -1 1 -1 1 -1 -17 6 1 -1 1 1 -1 -1 1 -18 8 1 1 1 1 1 1 1 1
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Case (From “Crash Course”): Response Rates and Yields Handout
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Test and Pilot, Then Roll Out Test in controlled settings first
Try to get consistently good results Pilot with another small group
Work out the “bugs” Roll out one group at a time
Fine tune as needed for each group
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Checkpoint
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Activity: Ideas to TestList three ideas you could test to see if they could improve your system.
1.
2.
3.
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Discussion
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Agenda Bienvenidos and Introductions The “DMAIC” Method of Improvement Define: Process Mapping The Big Picture Measure: Using “SPC” With Sales Data Analyze: Simulating the Steps and Using
Cause-Effect Logic to Find Greatest Constraint
Improve: Brainstorming & Testing Improvements
Control: Holding the Gains
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DMAIC and Our Agenda
Define Measure Analyze Improve Control
StatisticalProcessControl Statistical
ProcessControl
ProcessMaps
Simulation
Theory ofConstraints
Cause-EffectDiagrams
BehavioralPsychology
Flowcharting
Brainstorming
Design ofExperiments
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What Helps People Embrace New Methods? Discussion
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To Change Behavior, Change Training, Policies, Rewards, and Feedback Loops
Most agree that it is more difficult to try to directly control people’s behavior by force
Instead, principle is to control instructional and motivational factors – let the behavior follow
“Don’t control the people, control the system.”
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Include Five Elements In Your Plan For Change People must be able to use new approach or
it will fail Planning: anticipate and prevent problems
early Awareness-Building: internal “PR” to reduce
resistance to change Documentation: to make clear how things
must be done and to aid memory Training: % trained x % skills needed = ROI Ongoing Coaching: to prevent natural decay
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Implementation Sequence
Element
StagePre-
Launch
Planning/Design
Awareness-Building
Documentation
Training
OngoingSupport
LaunchPost-
Launch
(adapted from Selden)
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Checklist for Holding the GainsLook at your flowcharts and ask yourself. . . Have I explained the benefits to my people and the
customers? Can I answer the honest questions my people may
ask? Does my customer experience the improvements? Have I set up a system to ensure prompting and
rewarding the desired behaviors?” Have I trained my people in the new methods? Have I adjusted the reporting and evaluation system
to track the new behaviors I expect? Am I training my people in continuous improvement?
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Discussion
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Use Control Charts To Help Warn of Sliding Backwards
Income
0
Average Order Size
Time
100
64.60
44.01
85.19
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Agenda Bienvenidos and Introductions The “DMAIC” Method of Improvement Define: Process Mapping The Big Picture Measure: Using “SPC” With Sales Data Analyze: Simulating the Steps and Using Cause-
Effect Logic to Find Greatest Constraint Improve: Brainstorming & Testing Improvements Control: Holding the Gains Summary and Adiós
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Involve Everyone In DMAIC With “Kaizen”
Define Measure Analyze Improve Control
StatisticalProcessControl Statistical
ProcessControl
ProcessMaps
Simulation
Theory ofConstraints
Cause-EffectDiagrams
BehavioralPsychology
Flowcharting
Brainstorming
Design ofExperiments
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Kaizen - Continuous Improvement Kaizen = Gradual, Never Ending Improvement Kaizen means setting and achieving standards that
are always increasing Improvement is gradual, not dramatic Results can be very impressive nevertheless An attitude - relentless, enthusiastic, not satisfied with
letting problems continue or the status quo Involves everyone from top to bottom All successful cultures do this informally, but very
popular in Japan as a system
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Innovation plus Kaizen
Time
Innovation
KAIZEN
(adapted from Imai)
KAIZEN
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Any of These Tools May Help! Drawing process maps Charting sales results using SPC Creating a simulation Drawing cause-effect diagrams Identifying largest constraint Brainstorming ideas for improvement Testing if ideas work, using SPC and DOE Adjusting the system of measurement, rewards,
training and coaching to hold the gains Having the mindset of continuous improvement!
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What Ideas Are You Taking Home?
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Thank You, and Adiós!
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References Statistical Process Control
Don Wheeler, Bill McNeese Theory of Constraints
Bill Dettmer, Eli Goldratt Design of Experiments
Mark Anderson, Pat Whitcomb, Doug Montgomery Theory of Inventive Problem Solving
Ellen Domb, Darrell Mann, Genrich Altschuler, Behavioral Psychology
Paul Selden