Building Six Sigma Excellence: Case Study of General Electric
Study GE's Six Sigma Quality Assurance program to understand its design, implementation, training, career path planning, and measurement system. This Best Practices Benchmarking® Report provides a unique look at the Six Sigma quality initiative from an implementation perspective. The knowledge collected in this report helps organizations focus on the critical steps for designing and executing Six Sigma initiatives -- something that is often not addressed by the popular Six Sigma literature.
Business Operations > Benchmarking and Quality d
Industries Profiled:
Manufacturing; Health Care; Pharmaceutical; Research; Financial Services; Banking; Automobile; Consumer Products; Telecommunications; Aerospace; Electronics
Companies Profiled:
ABB; AlliedSignal; Argus Research Corp; Benson Securities; Citigroup; Dresdner; General Electric; Honda; Honeywell; Kleinworth; Merrill Lynch; Morgan Stanley-Dean Witter; Motorola; Polaroid; Prudential Securities; Raytheon; Sony; Texas Instruments
Study Snapshot
Benefits of Implementation
As a result of the Six Sigma program, companies can save on materials and labor. Six Sigma companies are enjoying other benefits such as:
- Decreased work-in-progress
- Improved capacity and output
- Improved customer satisfaction and process flow
- Improved inventory turns
- Increased productivity
- Reduced cycle times
When executed correctly, the Six Sigma program can result in financial payoffs to a company within a short period of time.
The Six Sigma quality assurance program offers a powerful approach to process and productivity management. The tools of the Six Sigma initiative are not new, but as they have been implemented at General Electric (GE), they have produced extraordinary productivity gains that have helped fuel double-digit sales and profit growth throughout GE’s diverse operating companies. This report stresses the critical nature of implementation excellence in achieving Six Sigma program benefits and showcases the success GE has experienced with the initiative.
Key elements of the report inclue:
- Easy-to-reference metrics guide
- Job deployment analysis
- GE data through 2000
- In-depth black-belt system analysis
- Reviews of the Six Sigma program from industry analysts
- Six Sigma terminology guide
Specific reasons for initiating Six Sigma
World-class companies such as GE have recognized that quality assurance initiatives are synonymous with profit enhancement. Consequently, companies such as GE are expending considerable effort toward the development and implementation of Six Sigma programs. GE has successfully been applying Six Sigma for a number of years. In 1996, the company spent $200 million on the initial stages of the program. In 1997, GE made plans to spend an additional $300 million. expecting to realize a cost savings of $400 to $500 million translating into a profit of at least $100 million. In the long run, GE hopes that its Six Sigma program will save $7 to $10 billion by preventing costly snafus. According to Welch, "the financial rationale for embarking on this quality journey is clear."
Genesis of the Six Sigma Program
General Electric’s Six Sigma program originated in a meeting between CEO Jack Welch and former vice-chairman Lawrence Bossidy, now CEO of AlliedSignal. Welch invited Bossidy to speak to GE executives on Six Sigma in May 1995. By October 1995, Six Sigma was company policy.
Best Practices, LLC originally studied GE’s implementation of Six Sigma in 1997, two years after CEO Jack Welch designed his company’s program, now a global benchmark standard. Our analysts recently revisited the financial and cultural implications of the program to produce "Building Six Sigma Excellence: A Case Study of General Electric." The updated and expanded report provides detailed descriptions of how problem-solving skills and techniques mastered at General Electric can boost the impact and efficiency of all business activities. The power of this research study is the comprehensive yet concise profile of successful practices at several top GE business units, including GE Capital, GE Appliances, GE Plastics, and GE Medical Systems as well as in-depth information highlighting Six Sigma innovation at Motorola and Allied Signal.
The Six Sigma methodology has become more deeply ingrained in GE's corporate culture than any other company. Throughout the development and deployment of the program, GE has benchmarked the Six Sigma methodology from other companies, including Motorola and AlliedSignal, to ensure that the process is implemented for maximum benefit.
What executives are saying about this report...
"I asked two of our research specialists to review Best Practices, LLC’s Six Sigma report. Both thought that the work on this report indicated that Best Practices does a fantastic job. As AT&T moves forward, the format of this report is what we're looking for. We need to work harder, faster and with more intelligence than ever before. This report helped us do just that."
--Chris Irwin, Benchmarking Manager at AT&T |
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Key Findings
Six Sigma Program Implementation:
- How is implementation organized (projects, councils, etc.)?
- Which people in the organization are responsible for implementation (content and number of projects, both company-wide and per division)?
- What is a feasible roll-out schedule?
- Which employees are involved in roll-out?
- Was there a key pilot project?
Six Sigma Program Training:
- What is the training content for the different levels of experts?
- How are training programs organized?
- How many hours of training are required for different expert levels?
- Which level of employees are selected to be trained as experts?
- What is the role of these employees after training?
- How many employees are trained company-wide per year?
- Which positions/levels are trained?
- How do employees benefit from their training?
Six Sigma Program Metrics:
- How is the program linked with compensation?
- How is the program controlled and who is responsible for it both company-wide and per division?
- How will the program be affected by future transitions in leadership?
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Related Research:
Best Practices in Developing the Benchmark Function
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Understand optimal structures for benchmarking, successful approaches to prioritizing research requests, methods for building buy-in for benchmarking as a concept and ways to track process improvements resulting from benchmarking efforts... (ID KM-39)
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