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Some Six Sigma
Success Stories
Seeing the impact that
Six Sigma is having on some leading companies sets the
stage for understanding how it can impact your business.
As we relate some of these results, we will also be
reviewing the history that has brought Six Sigma to be
forefront.
General Electric
Six Sigma has forever
changed GE. Everyone – from the Six Sigma zealots emerging
from their Black Belt tours, to the engineers, the
auditors, and the scientists, to the senor leadership that
will take this Company into the new millennium – is a true
believer in Six Sigma, the way this Company now works. –
GE Chairman John F. Welch.
When a high profile
corporate leader* starts using words like “unbalanced” or
“lunatics” in connection with the future of the company –
you might expect a plunge in the company’s share price. At
General Electric, however, that passion and drive behind
Six Sigma have produced some very positive results.
The hard numbers behind
GE’s Six Sigma initiative tell just part of the story.
From an initial year or so of break-even efforts, the pay
off has accelerated: $750 million by the end of 1998, a
forecasted $1.5 billion by the end of 1999, and
expectations of more billions down the road. Some Wall
Street analysts have predicted $5 billion in gains from
the effort, early in the decade. GE’s operating margins –
for decades in the 10 percent range – continue to hit new
records quarter after quarter. The numbers are now
consistently above 15 percent, and even higher in some
periods. GE leaders cite this margin expansion as the most
visible evidence of the financial contribution made by Six
Sigma.
Improvements from
Services to Manufacturing
The financial “big
picture,” though, is just a reflection of the many
individual successes GE has achieved through its Six Sigma
initiative. For example:
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A Six Sigma team at
GE’s Lighting unit repaired problems in its billing to
one of its top customers – Wal-Mart – cutting invoice
defects and disputes by 98 percent, speeding payment and
creating better productivity for both companies.
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A group led by a staff
attorney – a Six Sigma team leaded – at one of GE
Capital’s service businesses streamlined the contract
review process, leading to faster completion of deals –
in other words, more responsive service to customers –
and annual savings of $1 million.
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GE’s Power Systems
group addressed a major irritant with its utility
company customers, simply by developing a better
understanding of their requirements and improving the
documentation provided along with new power equipment.
The result: Utilities can respond more effectively to
their regulatory agencies, and both the utilities and GE
have saved hundreds of thousands of dollars a year.
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The Medical Systems
business – GEMS – used Six Sigma design techniques to
create a breakthrough in medical scanning technology.
Patients can now get a full-body scan in half a minute,
versus three minutes or more with previous technology.
Hospitals can increase their usage of the equipment and
achieve a lower cost per scan, as well.
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GE Capital Mortgage
analyzed the processes at one of its top performing
branches and – expending these “best practices” across
its other 42 branches – improved the rate of a caller
reaching a “live” GE person from 76 to 99 percent.
Beyond the much greater convenience and responsiveness
to customers, the improved process is translating into
millions of dollars in new business.
The Actions behind the Results
GE’s successes are the
result of a “passionate” commitment and effort. Notes
Welch: “In nearly four decades with GE I have never seen a
Company initiative move so willingly and so rapidly in
pursuit of a big idea”.Ten of thousands of GE managers and
associates have been trained in Six Sigma methods – a
hefty investment in time and money(which is appropriately
deducted from the gains cited earlier).The training has
gone well beyond “Black Belts” and teams to include every
manager and professional at GE – and many front – line
people as well. They’ve instilled a new vocabulary
revolving around coustomers, processes, and measurement.
While dollars and
statistical tools seem to get the most publicity, the
emphasis on customers is probably the most remarkable
element of Six Sigma at GE.As Jack Welch explains it:
The best Six Sigma
projects begin not inside the business but outside it,
focused on answering the question-how can we make the
customer more competitive? What is critical to the
customer’s success?..... One thing we have discovered with
certainity is that anything we do that make the customer
more successful inevitably results in a financial return
for us.
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