Saturday, March 3, 2012

Six Sigma - Contribution to GE - 1997

Excerpts from  GE Annual Report 1997

The centerpiece of our dreams and aspirations "the drive for Six Sigma quality.

 “Six Sigma” is a disciplined methodology, led and taught by highly trained GE employees
called “Master Black Belts” and “Black Belts,” that focuses on moving every process that touches our
customers — every product and service — toward near-perfect quality.

Six sigma projects usually focus on improving our customers’ productivity and reducing their capital outlays,
while increasing the quality, speed and efficiency of our operations.

We didn’t invent Six Sigma — we learned it.

Motorola pioneered it and AlliedSignal successfully embraced it. The experiences of these two
companies, which they shared with us, made the launch of our initiative much simpler and faster.

GE had another huge advantage that accelerated our quality effort: we had a Company that was
open to change, hungry to learn and anxious to move quickly on a good idea.

At GE today —finding  the better way, the best idea, from whomever will share it with us, has become our central focus.

Nowhere has this learning environment, this search for the better idea, been more powerfully
demonstrated than in our drive for Six Sigma quality. Twenty-eight months ago, we became con-
vinced that Six Sigma quality could play a central role in GE’s future; but we believed, as well, that it
would take years of consistent communication, relentless emphasis and impassioned leadership
move this big Company on this bold new course.

We were wrong!
 Projections of our progress in Six Sigma, no matter how optimistic, have had to be junked every few months as gross underestimates. Six Sigma has spread like wildfire across the
Company, and it is transforming everything we do.

We had our annual Operating Managers Meeting — 500 of our senior business leaders
from around the globe — during the first week of January 1998, and it turned out to be a wonderful
snapshot of the way this learning Company — this new GE — has come to behave; and now, with Six
Sigma, how it has come to work.

Today, in the uncountable number of business meetings across GE — both organized and “in-
the-hall” — the gates are open to the largest flood of innovative ideas in world business. These ideas
are generated, improved upon and shared by 350 business segments — or, as we think of them, 350
business laboratories. Today, these ideas center on spreading Six Sigma “best practices” across our
business operations.

At this particular Operating Managers Meeting, about 25 speakers, from across the Company and
around the world, excitedly described how Six Sigma is transforming the way their businesses work.

They shared what they had learned from projects such as streamlining the back room of a credit card
operation, or improving turnaround time in a jet engine overhaul shop, or “hit-rate” improvements
in commercial finance transactions. Most of the presenters focused on how their process improve-
ments were making their customers more competitive and productive:

• Medical Systems described how Six Sigma
designs have produced a 10-fold increase in
the life of CT scanner x-ray tubes — increasing
the “uptime” of these machines and the prof-
itability and level of patient care given by hospi-
tals and other health care providers.

• Superabrasives — our industrial diamond busi-
ness — described how Six Sigma quadrupled
its return on investment and, by improving
yields, is giving it a full decadeÕs worth of
capacity despite growing volume — without
spending a nickel on plant and equipment

• Our railcar leasing business described a 62%
reduction in turnaround time at its repair
shops: an enormous productivity gain for our
railroad and shipper customers and for a busi-
ness that’s now two to three times faster than
its nearest rival because of Six Sigma improve-
ments. In the next phase, spread across the
entire shop network, Black Belts and Green
Belts, working with their teams, redesigned the
overhaul process, resulting in a 50% further
reduction in cycle time.

• The plastics business, through rigorous Six
Sigma process work, added 300 million pounds
of new capacity (equivalent to a “free plant”),
saved $400 million in investment and will save
another $400 million by 2000.

At our meeting, zealot after zealot shared stories
of customers made more competitive, of credit
card and mortgage application processes stream-
lined, of inventories reduced, and of whole facto-
ries and businesses performing at levels never
believed possible.

The sharing process was repeated at another
level two weeks later in Paris, as 150 Master Black
Belts and Black Belts, from every GE business
throughout Europe, came together to share and
learn quality technology. This learning is done in
the boundaryless, transcultural language of Six
Sigma, where “CTQ’s” (critical to quality charac-
teristics) or “DPMO’s” (defects per million oppor-
tunities) or “SPC” (statistical process control) have
exactly the same meaning at every GE operation
from Tokyo to Delhi and from Budapest to Cleve-
land and Shanghai.

The meeting stories are anecdotal; big companies can make great presentations and impressive
charts. But the cumulative impact on the Company’s numbers is not anecdotal, nor a product of
charts. It is the product of 276,000 people executing ... and delivering the results of Six Sigma to our
bottom line.

Operating margin, a critical measure of business efficiency and profitability, hovered around
the 10% level at GE for decades.  With Six Sigma embedding itself deeper into Company operations, GE in 1997 went through the “impossible” 15% level — approaching 16% — and we are optimistic about the upside.

Six Sigma, even at this relatively early stage, delivered more than $300 million to our 1997
operating income. In 1998, returns will more than double this operating profit impact.
Six Sigma is quickly becoming part of the genetic code of our future leadership. Six Sigma
training is now an ironclad prerequisite for promotion to any professional or managerial position
in the Company — and a requirement for any award of stock options.

Senior executive compensation is now heavily
weighted toward Six Sigma commitment and suc-
cess — success now increasingly defined as “eatable”
financial returns, for our customers and for us.
There are now nearly 4,000 full-time, fully
trained Black Belts and Master Black Belts: Six
Sigma instructors, mentors and project leaders.
There are more than 60,000 Green Belt part-time
project leaders who have completed at least one
Six Sigma project.

Already, Black Belts and Master Black Belts who
are finishing Six Sigma assignments have become
the most sought-after candidates for senior leader-
ship jobs in the Company, including vice presi-
dents and chief financial officers at some of our
businesses. Hundreds have already moved upward
through the pipeline. They are true believers,
speaking the language of the future, energized by
successful projects under their belts, and drawing
other committed zealots upward with them.

In the early 1990s, we efined ourselves as a company of boundaryless people with a thirst for learning and a compulsion to share

Now it is Six Sigma that is  permeating much of what we do all day.

We are feverish on the subject of Six Sigma quality as it relates to products, services and people — maybe a bit unbalanced —  because we see it as the ultimate way to make real our dreams of
what this great Company could become.

Six Sigma has turned up the voltage in every GE business across the globe, energizing and
exciting all of us and moving us closer than ever to what we have always wanted to become: more than
a hundred-billion-dollar global enterprise with the agility, customer focus and fire in the belly of a
small company.

In our 1994 letter to you, we addressed the
perennial question put to management teams,
which is “how much more can be squeezed from
the lemon?” We claimed, then, that there was in
fact unlimited juice in this “lemon,” and that none
of this had anything to do with “squeezing” at all.
We believed there was an ocean of creativity and
passion and energy in GE people that had no bot-
tom and no shores. We believed that then, and we
are convinced of it today. And when we said that
there was an “infinite capacity to improve every-
thing,” we believed that as well — viscerally — but
there was no methodology or discipline attached
to that belief. There is now. It’s Six Sigma quality,
along with a culture of learning, sharing and
unending excitement

1 comment:

  1. Very well written and a nice read. I have been looking into materiel to help me improve my process improvement skills. Ever since I got my hands on a free evaluation copy of ProcessModel a process simulation software I have been looking into ways to use it more efficiently.