Using Six Sigma to Gain Market Share and Improve Margins
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Transcript of Using Six Sigma to Gain Market Share and Improve Margins
Using Six Sigma to Gain Market Share and Improve Margins
Who is Shaw Industries?Shaw, a subsidiary of Berkshire Hathaway, Inc.,
is headquartered in Dalton, Georgia. Shaw produces and sells carpet, rugs, ceramic,
hardwood, and laminate flooring for residential and commercial applications throughout the world. To be exact, we
manufacture more than 600 million square yards of floor covering every year--enough to
wrap a 6-foot wide path around the earth's equator 7 times.
Who is Shaw Industries? Shaw got its start in 1946 as Star Dye Company,
a small business that dyed tufted scatter rugs. 1972 - purchases of its first yarn plant and
acquiring its first continuous dye plant in 1973. Created its own trucking subsidiary, dramatically
improving shipments nationwide
Who is Shaw Industries?Today
Over 30,000 employees Worldwide Over 25,000 Styles and Colors 2001 Was Purchased by Berkshire
Hathaway – one of their most profitable investments
Shaw is a full-service flooring company with $4 billion in annual sales
Who is Shaw Industries?
Six Sigma @ Shaw Industries Implemented 6 Sigma in 1999 Company-wide Initiative
Sales / MarketingManufacturingCustomer ServiceDistribution Information ServicesCorporate Administration
Growth and Margin Project Objective 1– Utilizing the Six Sigma
Methodology we want to gain Market Share by Improving Growth
Objective 2 – Improve Margins
Growth and Margin Project Scope – Commercial Sales Group
Shaw Commercial Sales Group designs and delivers innovative flooring solutions to meet the requirements of its customers in the health care, education, corporate office, government, and retail sectors.
Growth and Margin Project Scope – Each Selling Group by Region
(Stratify Data)
Growth and Margin ProjectOperational Definitions:
Low Performers – Sales Reps who had the biggest decline in Growth (Volume) or in Margins from 2003 to 2004.
Region Growth – The Growth (Volume) or Margin from year to year on a monthly basis, excluding the Low Performers.
Difference – The difference in Growth (Volume) or Margins between the Low Performers and the Region
Growth and Margin ProjectGoal:
Each Month, we will Measure the Difference between the Low Performing Territories and the Balance of the Region.
The Goal of the Project is to Improve the Low Performing Territories so that this Difference is Eliminated.
Month
Data
Dec-04Nov-04Oct-04Sep-04Aug-04J ul-04J un-04May-04Apr-04Mar-04Feb-04J an-04
15000
10000
5000
0
-5000
-10000
LP GrowthRegion Growth
Variable
LP Growth, Region Growth
Monthly Average $ Margin / Growth
Margin / Growth for Low Performing Territories
Margin / Growth for Region
Each Month, we will Measure the Difference between the Low
Performing Territories and the Balance of the Region.
201 217INVOICE_MONTH Growth Low Performers Growth of Region Delta
200401 5368 5625 -257200402 1622 6108 -4486200403 -6507 2183 -8690200404 -1887 1876 -3763200405 -995 6359 -7354200406 -3793 5160 -8953200407 -11957 9766 -21723200408 -4638 5550 -10188200409 -5849 9105 -14954200410 -12565 187 -12752200411 -2507 -2041 -466200412 -10155 309 -10464
201 217INVOICE_MONTH Growth Low Performers Growth of Region Delta
200401 5368 5625 -257200402 1622 6108 -4486200403 -6507 2183 -8690200404 -1887 1876 -3763200405 -995 6359 -7354200406 -3793 5160 -8953200407 -11957 9766 -21723200408 -4638 5550 -10188200409 -5849 9105 -14954200410 -12565 187 -12752200411 -2507 -2041 -466200412 -10155 309 -10464
Month
Data
Dec-04Nov-04Oct-04Sep-04Aug-04Jul-04Jun-04May-04Apr-04Mar-04Feb-04Jan-04
15000
10000
5000
0
-5000
-10000
LP GrowthRegion Growth
Variable
LP Growth, Region Growth
Month
Diffe
rence
Dec-04Nov-04Oct-04Sep-04Aug-04Jul-04Jun-04May-04Apr-04Mar-04Feb-04Jan-04
-4000
-5000
-6000
-7000
-8000
-9000
-10000
-11000
-12000
Difference Between Region and LP's
Month
Diffe
rence
Dec-04Nov-04Oct-04Sep-04Aug-04Jul-04Jun-04May-04Apr-04Mar-04Feb-04Jan-04
-4000
-5000
-6000
-7000
-8000
-9000
-10000
-11000
-12000
Difference Between Region and LP's
Better
Month
201 Y
ard
s Diff
2005
12
2005
10
2005
08
2005
06
2005
04
2005
02
2004
12
2004
10
2004
08
2004
06
2004
04
2004
02
5000
0
-5000
-10000
-15000
-20000
-25000
Baseline
-8823
Time Series Plot of 201 Yards Diff
The Goal of the Project is to Improve the Low Performing Territories so that this Difference is
Eliminated.
Goal
In Time, We want to move
the process so that the
Difference on Average is 0
Difference Between Region and LP’s
Growth and Margin ProjectKIV’s:
Product Mix
Experience
Price Lists Accuracy
Project Management and Organization
Partnering and Networking
Coaching and Mentoring*
Growth and Margin Project
Improvements thru June 2005:
Margins Improved in 39% of the Regions
Margin Improvement: 88% in Low Performers
Growth Improved in 42% of the Regions
Additional Volume: 55% Yards in Low Performers
Growth and Margin Project
Questions?