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BIJ
7,4 Successful implementation of
Six Sigma: benchmarking
General Electric Company
260 Kim M. Henderson
GE Aircraft Engines, Cincinnati, Ohio, USA, and
James R. Evans
University of Cincinnati, Cincinnati, Ohio, USA
Keywords Kaizen, Electronics industry, Benchmarking
Abstract The Six Sigma phenomenon has followed the TQM movement as the latest thrust for
many companies seeking to improve their performance and effectiveness. The purpose of this
paper is to review the basic concepts of Six Sigma, its benefits, and successful approaches for
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implementation. In particular, we benchmark the practices of the General Electric Company, one
of the leaders and innovators in implementing the process. We conclude that keys for successful
implementation include upper management support and involvement, organizational
infrastructure, training, tools, and links to human resources-based actions.
processes (Fortenot et al., 1994). Motorola eventually developed its Six Sigma
tools curriculum and created Six Sigma practitioner qualifications. These early
efforts led the company to winning the Malcolm Baldrige Award in 1988
(Hendericks and Kelbaugh, 1998).
Sigma/quality level
Off-centering 3 sigma 3.5 sigma 4 sigma 4.5 sigma 5 sigma 5.5 sigma 6 sigma
Sigma DPMOa
2 308,537
3b 66,0807
4 6,210
5 233 Table II.
6 3.4 Six Sigma and defects
per million
a b
Notes: Defects per million opportunities. Most US businesses operate at the 3 sigma level opportunities
BIJ Implementing Six Sigma
7,4 Today, nearly all companies are facing the harsh realities of a competitive
environment. This is no time for evolutionary change. Instead, companies are
instituting revolutionary changes meant to have impact within a very short
time frame:
Six Sigma can be a powerful tool for companies that compete on the basis of the quality of
264 their products. However, in markets such as computer technology and retail, where
innovation and speed are more important than quality, Six Sigma may not be worth the
trouble. Even in companies where quality is a major driver, it's a long haul to realize tangible
bottom-line benefits, and some companies put a halt to their Six Sigma projects before
reaching that point. So it's not for everyone. For companies where quality rules the day,
however, Six Sigma's proponents seem to outweigh its detractors (Paul, 1999).
Why choose to implement Six Sigma even when it is a long haul in both time
and dollars spent to realize tangible bottom-line benefits? Some of the key
reasons are:
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Electric Company).
. Project teams might speak in terms of reducing cycle time, improving
customer satisfaction, cutting down on returns, and improving the speed
and accuracy of order fulfillment. No project is considered complete until
the benefit has been shown and a team of financial auditors signs off
(Paul, 1999) (General Electric Company).
. The process works in what seems on paper a straightforward four-step
program applied to everything from manufacturing and transactions
through software and service. First, identify the key processes and
measure the defects. Second analyze why the defects are generated
through brainstorming and statistical tools. Third, modify the process to
stay within the acceptable ranges, making sure that the measurement
systems are capable of measuring the variation, and finally make sure
that the modifications work (Murdoch, 1998) (General Electric
Company).
. For those not familiar with Six Sigma, it is first and foremost a
philosophical approach that demands the effective use of data to analyze
business issues. Key decisions about business activities now raise the
question, ``How do the available data support that decision?'' Whether
the decision is make-buy decision, a product change question, a new-
model introduction question, or a manufacturing-process decision, the
decision on how to proceed is dependent on the available data
(Hendericks and Kelbaugh, 1998) (General Electric Company).
. Six Sigma was originally defined by its application to manufacturing
processes, where it works very well. After thousands of projects,
however, we have shown time and again that the theory behind Six
Sigma applies everywhere (Hendericks and Kelbaugh, 1998) (GE
Appliances).
The goal of Six Sigma is to improve product and service performance by Six Sigma
reducing defects inherent in the processes and materials used to produce them
(Torode, 1998) (GE Capital ITS).
Organizational infrastructure
``Conversion to a Six Sigma culture is an enormous undertaking. Many people
have to be directly involved, and many support systems have to be in place to
make it all work smoothly'' (Hendericks and Kelbaugh, 1998). Attaining Six
Sigma quality levels requires total commitment from every department and
active participation of every member of the company team. Employees with
specific roles and responsibilities are important in deploying Six Sigma.
The employees in an organization practicing Six Sigma are highly trained,
have undergone rigorous statistical training, and lead teams in identifying and
executing Six Sigma projects. They can be divided into various levels of
expertise: green belt, black belt, master black belt, and champions. Together
they have helped generate hundreds of projects, ranging across every function
of the company (Bowman, 1997). Within the GE realms, the black belt/green
belt growth today includes a diverse population of technical and non-technical
people, managers, and people from key business areas:
. champions are fully trained business leaders who promote and lead the
deployment of Six Sigma in a significant area of the business;
. master black belts are fully-trained quality leaders responsible for Six
Sigma strategy, training, mentoring, deployment, and results;
. back belts are fully-trained Six Sigma experts who lead improvement
teams, who work projects across the business and mentor green belts;
. green belts are full-time teachers with quantitative skills as well as
teaching and leadership ability; they are fully-trained quality leaders
responsible for Six Sigma strategy, training, mentoring, deployment,
and results; and
. team members are individuals who support specific projects in their
area.
Following Motorola's experience, GE selected, trained and put in place such Six Sigma
key people to lead their Six Sigma effort. The ``champions'' are senior managers
who define the projects. The more than 200 trained master black belts are full-
time teachers with quantitative skills as well as teaching and leadership ability.
The more than 800 trained black belts are full-time quality executives who lead
teams, focus on key processes, and report the results back to the champions
(Welch, 1996a). 271
Having everyone in the organization speaking the same language, from the
CEO to the relatively new hire, and having ready access to Six Sigma subject
matter experts helps carry the Six Sigma flag of success throughout the
company.
Training
Besides hardware and software, the ``human-ware'' side is needed to make
productivity work. In a forum on ``Empowered productivity'' staged by GE and
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. workout;
. control plans;
. error proofing and checklists;
. SPC; and
. project closure.
Whether training is outsourced or provided by internal employees, most
successful companies believe that training is worth the investment:
. Welch expects to reap a hefty return for every dollar spent on Six Sigma.
In 1998, GE spent US$400 million on Six Sigma (most of it for training)
and will derive about US$1.2 billion in benefits as a result (Murphy,
1998).
. Allen Yurko was willing to spend US$20 million (part of which was
training) for a revenue increase of US$50 million back to the bottom line
(Davidson, 1997).
Tools
Employees should be armed with the proper tools to successfully approach and
complete Six Sigma projects. A healthy portion of Six Sigma training involves
introduction to, theory behind, typical use of, and practical experimentation
with three groups of tool sets: team tools, process tools, and statistical tools.
Team tools (see Table III) and process tools (see Table IV) are those used to
prepare the Six Sigma project leader with the team and leadership and skills
required through the run of the project. These tools also help the project leader
create a shared need for the project as well as establish an extended project
team.
BIJ Team Tool Description
7,4
15-word flipchart Allows individual team members to draft a simple 15-word statement
of the project's scope. Then, the team identifies key words or phrases
they feel best about and uses these to write a final version of the
project definition statement
Action workouts A team-focused improvement activity to implement immediate,
274 concrete, and significant operating improvements
ARMI model A tool to ensure that the person leading the project has identified key
stakeholders by determining individuals and/or groups whose
commitment is essential for project success by listing individuals/
groups involved in the process and identifying project function
Critical success This tool challenges the team to identify and agree upon the 6-8
factors intangibles that will make or break the project
GRPI checklist This tool is based on a simple model for team formation. It challenges
the team to consider four critical and interrelated aspects of teamwork:
goals; roles; processes; and interpersonal relationships. It also helps a
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PC-based statistics tool set A statistical software package; provides many statistical tools
for analyzing data; presents results in an easy to understand
format; can be used to present data in several different
graphical formats
Scatter plot To evaluate the theory that two variables are related; the
Table V. straight line and tightness of cluster indicate strength of
Statistical tools relationship
Results
``If quality is the number-one priority at your company, Six Sigma will be
appropriate as long as you also have management commitment and lots of cash
BIJ for training'' (Paul, 1999). Six Sigma is an expensive, multi-year undertaking.
7,4 However, the results are rewarding and the concept has changed the quality
profession.
Improved performance/financials
Six Sigma pioneer Motorola began the program in 1987, and it took a full five years to see
278 significant results, say Dennis Sester, vice president of quality in the Schaumburg, Ill.
Headquarters. Six Sigma has a long payback cycle at Motorola because it involves product
and process redesign, and it takes years for new products to permeate the marketplace. Sester
says that if you're in it for the long run, it's worth it: Motorola attributes $15 billion in savings
over the last 11 years to Six Sigma (Paul, 1999).
AlliedSignal, which operates within the slightly wider band of 3.5 to 4 sigma,
has shown an incredible upturn since it introduced Six Sigma. In 1992, annual
sales were about US$13 billion from a workforce of 102,00. Sales (in February
1998) were estimated around US$14 billion with a workforce of 77,000.
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280 Conclusions
Having explored the inception, definitions, approaches, reasons for, successful
components of, and results of Six Sigma, it is not unthinkable to ask ``Is Six
Sigma really attainable?'' Although some processes may perform at Six Sigma
levels, at this time, no company has actually achieved Six Sigma performance
levels. However, the rewards of striving for Six Sigma levels appear to be
significantly beneficial and exhibit enough potential results for those
businesses that have invested the time and money to grasp the initiative to
continue to do so, and for others, even suppliers, to begin the journey.
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Jack Welch said the following about people and their capabilities:
What we call ``stretch'' simply means figuring our performance targets that are doable,
reasonable, within our capabilities, and then raising our sights higher ± much higher toward
goals that at the outset seem to require superhuman effort to achieve. We have found that by
reaching for what appears to be the impossible, we often actually make it. We wind up doing
much better than we would have done. An exciting by-product of stretch behavior is an
enormous surge of self confidence, as people achieve things they once suspected were beyond
them (Welch, 1996b).
With this mindset and approach, perhaps true Six Sigma quality levels are
possible.
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