barcode dll for vb net FACTORS INFLUENCING PROFITABILITY in Software

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FACTORS INFLUENCING PROFITABILITY
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Some functions, such as design, present difficulty in collecting the variable data initially. When greater attention is paid to the details of the design process, however, a business can establish variable data to measure the design process s performance. The design process is the most influential process in an organization, as shown in Figure 6-4. However, it is also the process that is the least measured. Reasons given to justify the lack of data for the design process include that the function involves creativity
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CHAPTER SIX
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and unique projects (no two projects are similar in design), and there just is not enough time to come up with good measures. However, to measure the effectiveness of the design process, a business must take the time to understand the details of the tasks in the design department, the variance or control of the activities, and the significance of each process in the final product. The Six Sigma Business Scorecard addresses the design process as an element of the operational execution category. After all, effective designs of products or services require innovation from all aspects of the business. To make objective and subjective contributors to profitability more visible, the Six Sigma Business Scorecard ranks and weights categories based on their significance to profitability (see Figure 6-5). According to this model, the leadership has a significant impact on the profitability, which is reflected in the compensation the company s leadership receives. The leadership has direct responsibility for the profitability and should be accountable to employees for its actions and behaviors.
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GROWTH AND PROFITABILITY
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One of leadership s roles is to inspire employees to contribute to the business intellectually as well as physically through
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Influence on cost (%)
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20 5 Design Material Labor 5 Overhead
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FIGURE 6-4.
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SIX SIGMA BUSINESS SCORECARD DEVELOPMENT
PSM OPE
Legend: LNP => Leadership and Profitability MAI => Management and Improvement EAI => Employees and Innovation PSM => Purchasing and Supplier Management OPE => Operational Execution SND => Sales and Distribution SAG => Service and Growth
FIGURE 6-5. Business Scorecard categories and influence on profitability.
clear objectives and meaningful recognition. Another equally important management responsibility is to ensure that the business processes are improving fast enough. Unless the executive leadership holds this mind-set, corporate processes will be managed inefficiently without improvement. In most businesses, processes are currently managed according to the budget, which is linked to business growth rather than profitability. Departments grow as the budget grows, and with the increased workload, the budget can become unmanageable: The race for growth leads to losing the visibility of the profitability. No business, irrespective of its size, can sustain growth without profitability. Processes must be challenged frequently so they remain relevant and effective in terms of cost, response time, and performance. Aggressive improvement goals must be set to avoid cost cutting through layoffs or attrition in tough economic times. Setting aggressive improvement
CHAPTER SIX
goals will maintain the line of sight between business processes and profitability objectives.
OWNERSHIP FOR PERFORMANCE
With the Six Sigma Business Scorecard, a business devises measures for three levels Leadership, Executives, and Department Managers, as shown in Figure 6-6. These roles at these three levels may vary from business to business based on the size. Small businesses might have the Executives and Process Owners combined, while larger businesses maintain all three levels. The leadership level is the CEO, or the highest position in the company. The success of the Six Sigma Business Scorecard depends upon how well the leadership owns the performance of the business in the real sense; i.e., their compensation is tied to the performance and profitability of the company. The Business Performance Index (BPIn) provides to leadership a visible measure of business performance. The leadership must know the BPIn on a weekly and monthly basis. Without this knowledge, the profitability for the month cannot be affected and the BPIn cannot be improved.
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