Does your cost system need to be precise? Probably not. Does it need to be accurate. Yes! What’s the difference? The four pictures above begin to provide an answer. Accurate costs are random but near the target. For example, I have a refrigerator with a thermostat that keeps it a constant 38.0F. I test it with...

Do you need a green belt or a black belt to get promoted?  The answer is “yes” at a growing number of Fortune 500 companies. The September 14, 1999 Wall Street Journal featured an article on the Six Sigma programs of AlliedSignal, General Electric, Citicorp, Johnson & Johnson, Black & Decker, Weyerhaeuser and a growing number of...

Assume for the moment that you walk into a beauty or barber shop that has only two hair stylists. One has messy hair. The other’s hair is well groomed. Which stylist would you choose to cut your hair? Your instinct is to select the stylist with the good-looking hair. But looks can be deceiving …...

According to Mae West, “There are no good girls gone wrong, just bad girls found out.“ “Good” profitable customers rarely become unprofitable. It’s more likely that they were unprofitable from the onset. Gross margin has been the traditional method of identifying “good” and “bad” customers. For example, if your overhead costs are 30% of gross...

Can you sell and distribute products at a mere 5% gross margin and expect to make a profit? Tech Data does. They make millions by only accepting orders that fit a specific profile. Ask yourself, “Can we do that?” Can you rank employees higher than customers and be a successful company? Southwest Airlines and Ritz-Carlton...

Are you still pricing your products or services to achieve a specific gross margin percentage. If your answer is yes, you had better watch out. Your competition may have just gotten smarter and switched to a more insightful method called Activity Based Cost pricing. Let me explain. Manufacturers, distributors and retailers have used for decades...

The $50 menus are back on American Airlines. Menus that were eliminated five years ago are now back. Probably because airline management does not know what it cost to get a menu in the hands of the customer. I recently used some of my 3 million air miles to upgrade to first class. As we approached...

Are you red, yellow or green? If you do business with First Union Bank in Charlotte, North Carolina, the customer service department knows you by name, account number and by color … red, yellow or green.  When it comes to answering yes or no to a customer’s request for a lower credit card interest rate or to escape the bank’s $28 bounced-check fee,...

“An estimated 10,000 business books have been published worldwide over the past three years,” reported The Wall Street Journal May 21, 2001, “many touting management tools promising to make their users incredibly successful by showing them new ways of doing business.” That is an astounding number of books. I read a book a week, but at this...

“If the jury’s vote is unanimous, the accused cannot be put to death.” [1] Yes, you read it right. This statement from the Jewish Talmud is different from American criminal law. While both Jewish and American law desire the same outcome…truth… the methods used to ensure a criminal defendant is accorded due process are quite different....