pmn44 Article04
pmn44 Article04
pmn44 Article04
Vol. 4, No. 4
•
Published by
VirSci Corp.
www.pharmamarketingnews.com www.virsci.com
Six Sigma and Lean have been used for more than Six Sigma
two decades to improve manufacturing operations in A statistical measurement that focuses on the
every industry around the world. But, most people identification and elimination of variation and
don’t view these measurement and improvement defects in the system (< 3.4 defects per million)
tools as having applicability to the world of – ensuring the same, accurate result is delivered
pharmaceutical sales and marketing. each time. The goal of Six Sigma is to increase
profits by eliminating variability, defects and
Interview
waste that undermine customer loyalty. Six
At the recent conference, Applying Six Sigma to
Sigma was developed by Motorola in the mid
Marketing & Sales – hosted by Six Sigma IQ 1980s and was fully embraced by General
(www.sixsigmaiq.com), teams and individuals from Electric shortly thereafter.
numerous major companies presented information
about how Lean and Six Sigma have helped to
Lean
improve their sales and marketing organizations.
Lean is a thought process, which is used to look
And, as you read this, other companies within life at any business involving a supplier and a
sciences, your competitors, are starting to move customer/receiver. The key is to identify 'waste'
rapidly to learn and implement these tools. and then determine how to eliminate it. Waste is
The following interview was conducted with Edward defined from a CUSTOMER perspective and is
Abramowich, one of the speakers at this anything that a customer would not want to pay
conference, one of the world’s leading experts in for or that adds no value to the product or
service from the customer's perspective. Those
utilizing Lean and Six Sigma in sales and marketing
activities that do not add value are either
and author of Six Sigma for Growth: Driving
eliminated or minimized. Lean is one of the core
Profitable Top-Line Results
tenants of TPS (the Toyota Production System),
(www.sixsigmagrowth.com). Abramowich is Director where it gained its initial development.
Six Sigma, Global Sales Organization, Sun
Microsystems and has nearly two decades of
Companies Utilizing Six Sigma and Lean
experience driving major strategic change and profit
• General Electric
improvements through Six Sigma and Lean • Honeywell
Enterprise in leading multinational companies, • Johnson and Johnson
including healthcare. • Motorola
Stewart: Your book is very intriguing and timely, • Quest Diagnostics
but the single biggest question I get from people • Starwood Hotels
within life sciences is, “Where are the examples of • Toyota
people applying these tools to increase the top-line • University of Pittsburgh Medical Center
instead of reducing costs?” Six Sigma and Lean • Sun Microsystems
are traditionally thought of as tools designed to • Wyeth
improve manufacturing operations and cutting
costs. Why the interest now in applying them to
sales and marketing and increasing revenues? refocusing traditional Six Sigma initiatives from
problem solving to delivering increased revenue,
Abramowich: The major catalyst for change has margin and market share.
come as companies with extensive experience with
Six Sigma (i.e., General Electric, Honeywell) have In recent years, many companies have experienced
reached a point of diminishing returns from their difficulties in sustaining growth in the face of
efficiency focused initiatives. These changes are increased competition and a consequent trend
Pharma Marketing News © 2005 VirSci Corporation. All rights reserved Pg. 1
toward the commoditization of what were once high Abramowich: Major corporations across a wide
premium items. In the pharmaceutical industry range of industries are using Six Sigma methods to
pricing pressures continue to increase from develop solutions to their customers’ problems
purchasers, foreign governments and the various rather than offering stand-alone products and
purchasers within the U.S. Additionally, with the services. Solution selling aims to create powerful
recent passing of the Medicare Modernization Act value propositions – typically, a combination of
(MMA) it is inevitable that pressures on products and services aimed at solving customers’
pharmaceutical pricing and profitability in the U.S. business problems.
will continue to increase.
Within the pharmaceutical industry this might look
Stewart: How can these tools help deal with like risk sharing arrangements for drug performance
margin pressures in our industry? or disease management programs in which the
Abramowich: To maintain profitability levels that pharmaceutical company offers a fixed price on
are acceptable for investors, pharmaceutical drugs to treat a therapeutic area for a customer’s
companies will continually need to increase the patient population.
efficiency and effectiveness of their commercial Stewart: There’s a lot of talk now in the
organizations; provide solid substantiation of the pharmaceutical industry about reducing the size
overall value their products in relationship to the (and cost) of field sales forces. How might these
total healthcare costs for patients, and develop tools be applied to make the sales force more
unique solutions to offer to purchasers instead of effective and efficient?
discrete products. Abramowich: Six Sigma is already having a major
Lean and Six Sigma can provide substantial help impact on sales forces in other industries. Many
with these efforts, particularly the first and last. Both organizations such as General Electric – with their
of these tools are focused on increasing efficiency sales force effectiveness (SFE) program – have
and effectiveness as demonstrated by just a few gained substantial improvements by making the
results: sales process itself more effective.
• Motorola - $14 billion in savings over 10 years Sales force improvement efforts typically look at two
areas:
• GE Capital achieved over 50% of their financial
benefits in revenue growth versus cost reduction 1. Effectiveness: improving sales hit rates or
• Quest Diagnostics achieved > $150 million in profit success rates in closing sales transactions. This
improvement in three years would typically be done by improving conversion
rates from non-prescriber to prescriber, or more
• General Electric increased operating margins from rapidly increasing the volume of use.
13.6% to 19.6% (1995 – 2001)
2. Efficiency: improving the sales process itself.
As for the last point, numerous companies (Sun Projects usually focus on mapping the existing sales
Microsystems, Johnson and Johnson, General process and seeking ways to remove variability and
Electric) have utilized their internal Six Sigma skills non-value-added activities. Sales force problems
to help improve operations of partner companies are often misdiagnosed and poorly treated. The
through collaborative projects as a way of further thinking may be that in order to improve sales all
deepening their relationships. Also, one of the that is needed is to
processes within Six change the quotas and
Voice of Customer
Sigma, Voice of compensation for each
Customer (VOC), has The "voice of the customer" is the term used
sales person without any
proven to be a very to describe the stated and unstated needs or
changes in the sales
valuable way to uncover requirements of the customer. The voice of
approach, product mix, or
needs that customers the customer can be captured in a variety of
ways: Direct discussion or interviews, customer base. Six Sigma
have that the company is allows a far more rigorous
poorly serving or not surveys, focus groups, customer
specifications, observation, warranty data, method to improving the
serving at all. This, of sales effort by using
field reports, complaint logs, etc.
course, can open up new techniques such as sales
business opportune-ities force effectiveness.
This data is used to identify the quality
and value proposi-tions.
attributes needed for a supplied component
Stewart: How might Six
Stewart: You mention or material to incorporate in the process or
Sigma help to improve
“solution selling.” What product.
sales efficiency in
is solution selling and pharmaceuticals?
how might it apply to the pharmaceutical industry?
Pharma Marketing News © 2005 VirSci Corporation. All rights reserved Pg. 2
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