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Digg It - Top Ten Business Uses of the 80 - 20 Principle
The 80/20 Principle can be used in almost any area of function to direct strategic and financial improvement. However, Richard Koch in his book-The 80/20 Principle, list ten top business uses that he believes has the most potential for improvement.
Strategy
Using the 80/20 profit analysis, determine a segmen
Strategy
Using the 80/20 profit analysis, determine a segmen
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
t strategy by dividing your business up into as many categories as are relevant to your business. Compare the profit and loss of each segment to find the 20 percent that are accounting for 80 percent of the profits and the 20 percent that are accounting for 80 percent of the losses.
Redirect your efforts to the areas where y
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
u can gain the most benefit. Reduce your efforts in the areas where you are having the most losses.
Quality
Using the 80/20 principle to focus your efforts on the least 20 percent causing most of the problems, instead of trying to tackle all the problems at once. As the least 20 percent that are causing the
Quality
Using the 80/20 principle to focus your efforts on the least 20 percent causing most of the problems, instead of trying to tackle all the problems at once. As the least 20 percent that are causing the
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
most problems become resolved, reevaluate your list again and start over.
Cost reduction and service improvement
Simple is cheaper and better, make the simplest 20 percent of your products as high quality and consistent as possible. If something is complex, simplify it or eliminate it.
Marketing
Cost reduction and service improvement
Simple is cheaper and better, make the simplest 20 percent of your products as high quality and consistent as possible. If something is complex, simplify it or eliminate it.
Marketing
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
ong>
Identify your core 20 percent of your best customers and do everything possible to keep them. Provide exceptional and outrageous service to them even if it has a short-term cost, the payback later will be worth it.
Selling
Have all of sales focus on the core 20 percent of customers in their business li
Identify your core 20 percent of your best customers and do everything possible to keep them. Provide exceptional and outrageous service to them even if it has a short-term cost, the payback later will be worth it.
Selling
Have all of sales focus on the core 20 percent of customers in their business li
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
e. Resort to less expensive phone or mail support for the remaining 80 percent. The core 20 percent are the customers that are providing you with 80 percent of your business profits. Reward you best sales people and hire more with the same personality and attitude.
Information technology
Computer programs
Information technology
Computer programs
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
become more efficient when 80 percent of the processing time is used on 20 percent of the need. This results in functions that are used the most often, being faster and easer to use. Most advances in the last 50 years have been due to the 80/20 principle being applied to technology. There is no end to the refining processes
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
hat use of the 80/20 principle will bring to businesses relating to information technology.
Decision making and analysis
Since 1950, business has increasingly been blessed, or if you prefer plagued, by management, scientists, and analytical managers. Analysis has probably been the greatest U.S. growth indust
Decision making and analysis
Since 1950, business has increasingly been blessed, or if you prefer plagued, by management, scientists, and analytical managers. Analysis has probably been the greatest U.S. growth indust
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
y in the past half-century, and instrumental in some of the greatest U.S. triumphs.
But analysis has had its darker side: the escalation of corporate staffs that are only now being properly dismantled. The 80/20 Principle is analytical but puts analysis in its place.
Five rules for decision making:
Rule one. Not many decis
Five rules for decision making:
Rule one. Not many decis
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
ons are very important. Only one in twenty will be important.
Rule two. The most important decisions are often those made only by default.
Rule three. Gather 80 percent of the data and perform 80 percent of the relevant analyzes in the first 20 percent of the time available. Then make a decision 100 percent of the time and
Rule two. The most important decisions are often those made only by default.
Rule three. Gather 80 percent of the data and perform 80 percent of the relevant analyzes in the first 20 percent of the time available. Then make a decision 100 percent of the time and
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
act decisively as if you were 100 percent confident that the decision is right.
Rule four. If what you have decided isn't working, change your mind early rather than late.
Rule five. When something is working well, double and redouble your bets.
Inventory management
Stock almost invariably follows some so
Rule four. If what you have decided isn't working, change your mind early rather than late.
Rule five. When something is working well, double and redouble your bets.
Inventory management
Stock almost invariably follows some so
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
rt of 80/20 distribution, around 80 percent of stock only accounts for 20 percent of volume or revenues.
Point one. Cut down radically on your unprofitable product.
Point two. Try to export the problem and cost of inventory management to other parts of the value-added chain, to your suppliers or to your customers. The ideal
Point one. Cut down radically on your unprofitable product.
Point two. Try to export the problem and cost of inventory management to other parts of the value-added chain, to your suppliers or to your customers. The ideal
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
solution is for your stock never to come near your facilities.
Point three. If you must hold a certain amount of stock, there are many tactical ways to use the 80/20 Principle to cut costs and speed up picking and packing.
A word of caution, in repair related business, make sure that you are not hurting your business by cutt
Point three. If you must hold a certain amount of stock, there are many tactical ways to use the 80/20 Principle to cut costs and speed up picking and packing.
A word of caution, in repair related business, make sure that you are not hurting your business by cutt
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
ng your part's department of parts needed for repairs. Use the 80/20 Principles to better manage these stocks. Stock higher assembles in place of hundreds of smaller parts.
Project management
Management structures are being exposed as inadequate and worse. Many of the most energetic people in business, fro
Project management
Management structures are being exposed as inadequate and worse. Many of the most energetic people in business, fro
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
chief executives down, do not really have a job. Rather, they pursue a number of projects.
Project management is an odd task. On the on hand, a project involves a team. It is a cooperative and not a hierarchical arrangement. But on the other hand, the team members usually do not know fully what to do, because the project r
Project management is an odd task. On the on hand, a project involves a team. It is a cooperative and not a hierarchical arrangement. But on the other hand, the team members usually do not know fully what to do, because the project r
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
quires innovation. The art of the project manager is to focus all team members on the few things that really matter.
Simplify the objective, 80 percent of the value of any project will come from 20 percent of its activities, the other 80 percent of the activities will arise because of needless complexity. Impose an impossibl
Simplify the objective, 80 percent of the value of any project will come from 20 percent of its activities, the other 80 percent of the activities will arise because of needless complexity. Impose an impossibl
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
e time scale, this will ensure that the project team does only the really high-value task, the 20 percent that will deliver 80 percent of the benefit.
Plan before you act, write down all the critical issues that you are trying to resolve. Decide who is to do what and when. Re-plan after short intervals.
Negotiation<
Plan before you act, write down all the critical issues that you are trying to resolve. Decide who is to do what and when. Re-plan after short intervals.
Negotiation<
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
strong>
The 80/20 Principle adds just two points to the study subject of negotiation. 20 percent or fewer of the points at issue will comprise over 80 percent of the value of the disputed territory. Build up a long list of spurious concerns and requirements early in a negotiation, making them seem as important to you as poss
The 80/20 Principle adds just two points to the study subject of negotiation. 20 percent or fewer of the points at issue will comprise over 80 percent of the value of the disputed territory. Build up a long list of spurious concerns and requirements early in a negotiation, making them seem as important to you as poss
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
ble. These points must, however, e inherently unreasonable, or at least incapable of concession by the other party without real hurt (otherwise they will gain credit for being flexible and conceding the points). Then in the closing stages of the negotiation, you can concede the points that are unimportant to you in exchange f
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
r more than a fair share of the really important points.
Second, don't peak too early, wait until the deadline looms. 80 percent of the concessions will occur in the last 20 percent of the time available.
Impatient people don't make good negotiators.
Suggested reading: The 80/20 Principle, by Richard Koch, ISBN 0-385-49174-
Second, don't peak too early, wait until the deadline looms. 80 percent of the concessions will occur in the last 20 percent of the time available.
Impatient people don't make good negotiators.
Suggested reading: The 80/20 Principle, by Richard Koch, ISBN 0-385-49174-
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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