Defects occur in every industry, including the finance industry. And Six Sigma is about reducing defects to 3.4 for every million opportunities. That may seem ambitious, but Six Sigma makes it possible. And for an organization’s finance department, where the margin for error needs to be small, it is a highly desirable outcome.

When it comes to handling matters involving money, there’s a need for a high degree of accuracy and precision. Organizations have been thrown into disarray over a single rounding error. Because of this, people have lost their jobs and stakeholders have been penalized and/or taken to court, among other undesirable outcomes.

With such grave consequences tied to financial errors, it is not hard to see why Six Sigma is perfect for an organization’s finance department. Here are the biggest benefits that Six Sigma brings to finance.

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Keeps the Organization Financially Healthy

The financial health of the organization is what determines if it will survive in the long term. But how does the finance department determine it?

They can look at the cash the organization has or brings in, but that wouldn’t be enough to give them an accurate picture. This is because cash alone does not say anything about the financial processes of the organizations that actually keep it financially healthy.

Six Sigma emphasizes that organizations must measure performance at all levels. The financial department can use Six Sigma tools to identify Key Performance Indicators (KPIs) and measure the organization’s financial performance. And by monitoring the KPIs, they can identify patterns that signal the occurrence of a financial problem and help the organization prepare for it.

Doing this ensures that the organization remains financially healthy into the foreseeable future.

Saves Time and Effort

A major part of doing Six Sigma is the streamlining of processes. That means a process should be carried out with the least amount of steps and resources (e.g money, people, and information).

The problem with many financial departments is that they collect more data than they need. This needlessly conflates the amount of time it takes to complete a single financial process. By streamlining the data collection process, the financial department can focus only on collecting what they need.

This means they don’t have to process a lot of useless information, which saves them a great deal of time and effort. Furthermore, it means that they don’t end up tracking things that don’t matter and focus solely on the KPIs.

And since being highly organized is a part of Six Sigma, they can keep the data somewhere easy to find. This is important because the finance department usually handles more data than any other department. And it can slow things down to a crawl if a lot of time is spent looking for the data in dispersed computers, cabinets, flash drives, and cloud drives.

Helps to Proactively Handle Problems

When problems happen, Six Sigma not only helps you handle them, but it also helps you prevent them from ever reoccurring. It allows you to define and analyze the problem, figure out the root cause, come up with a solution and commit to continuous improvement.

Conclusion

It is a good thing that Six Sigma is industry agnostic. With its ability to significantly reduce defects or errors, finance departments can use it to their advantage. And when an organization’s finances are rock solid, the organization is ensured of long-term success.

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Lean brings a fundamental change in the way companies build products and manage activities. It is about validating hypotheses and aims to reduce the waste activities (not bringing value to the customer) and increase efficiency.

Recently, Lean marketing has started to become popular and for a reason! Its process is primarily focused on iteration, testing, and measurement as they are the core tenants of the Lean methodology. It allows for flexibility, easy coordination with other departments, such as sales, PR or partnerships and gives incredible simplification of complex projects.

Lean marketing strategy is the solution to immeasurable results. We all know that if you can’t measure it, you can’t improve it, and now we have the opportunity to make our process a tool allowing us to influence results due to empirical data and a scientific analysis. Guessing and estimating are replaced by data-driven analysis and measurable outcomes.

How Lean Differs from Traditional Marketing

In traditional marketing, the final product is determined beforehand and teams can’t adjust and adapt throughout the creation process. In other words, the great marketing plan. Sometimes, marketing specialists start to repeat certain activities until the end of time without measuring success regularly. Customers’ interest is not a constant and they often disengage and are pushed away by not precisely targeted, personalized or creative messages.

in practice, Lean marketing relies on the following key points:

• Realistic prioritization: Focuses on realistic prioritization when creating marketing initiatives that meet customer requirements.
• Faster Delivery: Break large, long-term deliverables into small tasks; deliver small pieces every few weeks and aims toward an optimal solution.
• Frequent status meetings: (feedback loops) to discuss what’s working, what’s done and what’s keeping your team from doing more.
• Rapid correction: If things change or people switch context, it is rapidly corrected, without a complete overhaul.
• Staying focused: The Lean marketing strategy encourages people to be focused and work on single tasks. Multi-tasking is a taboo here because it only lowers productivity levels.

Getting Started with Lean Marketing

The decision to go lean has to be a collective commitment to pursue an incremental change. It has to be discussed and mutually agreed in to order to obtain the best results. The next step is to set regular feedback loops daily stand-up meetings, weekly KPI meetings, and monthly strategy meetings. They need to be short with clear agenda and followed by specific action items. With lean, the change happens mostly as people’s mindsets are adjusted.

The easiest way to apply the lean principles to your process is the Kanban method. Kanban pursues small incremental changes and is easy to overlay. It adds practical steps to follow and the tools to use. Visualizing all the work on a Kanban board allows you to see where the bottlenecks of your process are and follow how every task is progressing from ‘Requested’ toward ‘Done.’ You have the original physical whiteboard with cards and now, there are the online Kanban boards, which make it very easy to begin kanbanizing your workflow.

If you are not sure what indicators you should track, here are the top four lean metrics you need to measure to ensure success:

• Process Efficiency: The ratio between the time a work item just sits there after being started and the time spent actively working on it after starting it.
• Cycle Time: This is the time it takes your tasks to reach the done state.
• Throughput: The number of work items that exit your system in a given time frame.
• WIP: The number of work items that are considered in progress at a given or past time or time frame.

Conclusion

The Lean marketing transformation has already started, and results are proving that the trend will continue. Enhanced communication and no more he said, she said,’ as all the data is on the board.

• No more information loss.
• Remote team members are more included in the work process and take on more initiative and responsibility.
• Encouraged knowledge-sharing for the sake of continuous improvement.
• Substantially increased efficiency.

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What Does Your Operating Profit Margin Do?

Your operating profit margin provides a measurement of your initial sales margin prior to deducting your operating expenses like administration, financing, taxes, distribution, and selling. If you’re fortunate to have a higher operating margin, this can be an added incentive for investors. Larger operating margins mean you have a higher revenue stream to spend on fixed costs or expansion. The contrary means most of your profits, if any, will be spent on developing the products sold to distributors.

Calculating Your Operating Profit Margin

• First of all, you should total your business’s operating income for a specific period of time. You can work this out with little effort. This is because your operating income equals your total profit before you deduct taxes, interest payments, and so on.

• Secondly, you must determine the total for your business’s net sales for the same period as above. Your net sales will be equal to the total sales you make after accounting for losses like returns, concessions, and damaged goods.

• Next, take your operating income from step one and divide it by your net sales from step two.

• Finally, take the result and divide it by 100. This will then give you a figure a percentage, and there you have your operating margin.

Maximizing Your Operating Profit Margin

As we all know, Six Sigma is a strong set of statistical tools you can use to divulge hidden problems such as variation and to identify the root causes behind them. This then allows you to implement improvements and eliminate variability from process execution. Six Sigma also enables continuous improvement for all your manufacturing, administrative, and business operations. There are various ways to improve your operating profit margin using Six Sigma ideas. Read on to find out what they are and how to use them.

• Increase Productivity

Six Sigma empowers your staff to make precise measurements of the time they spend on direct and indirect activities. Making the most of everyone on your staff can be tricky, more so for larger businesses. But Six Sigma helps apply a methodical approach across departments to address these issues effectively.

• Minimize Costs

Using the DMAIC methodology, you can define, measure, analyze, improve, and control your processes. This allows you to identify problems, such as variation, reducing these issues to fewer than 3.4 occurrences per million. Eliminating non-value-adding process stages can transform your business, increasing operating revenue by reducing costs. It also has a host of other benefits such as increased productivity and efficiency.

• Reduce Waste

Six Sigma is highly compatible with Lean philosophy, whose aim is to reduce waste (Muda). Common wastes such as over-processing from non-value-adding processes, unnecessary transfer of information, staff, and products are all common waste causes. Additionally, untapped employee potential is also extremely wasteful.

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