Sucessful Implementation of Six Sigma Benchmarking GE PDF

Benchmarking: An International Journal
Successful implementation of Six Sigma: benchmarking General Electric Company

Kim M. Henderson, James R. Evans,
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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
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.
Evolution of Six Sigma

Two hundred years ago, statesman, publisher, philosopher and inventor Benjamin Franklin
wrote in his autobiography that he ``conceived the bold and arduous project of arriving at
moral perfection''. His desire was to live without committing error. He went about his task in a
systematic way, identifying 13 virtues that he ``fixed on'' one at a time. When he felt he had
mastered one, he moved on to the next. But as great as he was, Franklin never achieved
perfection. The problem, he said, was that when he progressed to a new virtue, he often
suffered relapses in those he thought he had already mastered. Franklin finally gave up the
quest for perfection, finding himself ``so much fuller of faults than he had ever imagined''
(Thompson, 1994).
Despite the recent successes of Six Sigma at large companies like General
Electric and AlliedSignal Inc. that have made Six Sigma a high-profile business
phenomenon, its tenets have been around a long time. Depending on whom you
ask, Six Sigma was born anywhere from 10 to 20 years ago in corporate
engineering communities, which are in the habit of reducing processes to
statistically measurable phenomena (Paul, 1999).
Motorola is the oft-cited creator of the formal Six Sigma methodology.
Although some authors imply that Motorola first embarked on its Six Sigma
quality initiative in the mid-1960s (Smith, 1993), the concept of implementing
Six Sigma processes was pioneered at Motorola in the 1980s. Their approach
was based on rigorous Japanese theories of TQM for use in the manufacturing
process, where defects are relatively easy to spot and count and thus well
Benchmarking: An International
suited to the high-volume, high precision electronics industry that has highly
Journal, Vol. 7 No. 4, 2000, complex processes (Murdoch, 1998). Motorola's specific involvement with Six
pp. 260-281. # MCB University
Press, 1463-5771 Sigma began in 1982, when it implemented a quality-improvement program
focused on manufacturing. Motorola's CEO asked his corporate managers to Six Sigma
cut quality costs in half that year. He repeated the charge in 1983. By 1984, the
cost reduction efforts were beginning to point to the need for improved
analytical methods and product design for continued process improvement.
The company's emphasis focused on design quality and a number of advanced
quality tools were employed (Hendericks and Kelbaugh, 1998). It is no surprise
that the first proponents of Six Sigma after Motorola were Texas Instruments, 261
Allied Signal, Eastman Kodak, Borg-Warner Automotive, GenCorp, Navistar
International and Siebe plc (Murphy, 1998). These forerunners of Six Sigma
documented their discoveries and successes and, in the ensuing years, other
companies followed their lead.
While the original goal of Six Sigma was to focus on the manufacturing
process, it became clear that the distribution, marketing and customer order
processing functions also needed to focus on reaching Six Sigma quality
standards (Smith, 1993) and eliminating defects throughout the organization's
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).
Six Sigma definitions and philosophy

At Motorola, Six Sigma has been and still is defined as a quality improvement
program with a goal of reducing the number of defects to as low as 3.4 parts per
million opportunities. It uses the normal distribution and strong relationships
between product nonconformities, or defects, and product yield, reliability,
cycle time, inventory, schedule, and so on (Tadikamala, 1994). However, there
is some confusion and uncertainty among many people (including statisticians)
on how Six Sigma quality translates statistically into 3.4 defects per million
(Tadikamala, 1994). In fact, there is a difference in the true value of Six Sigma
and Motorola's value of Six Sigma (Billups, 1993). To understand the definition
of Six Sigma, it is important to differentiate between these.
The sigma value of a process describes the quality level of that process. A
quality level of K sigma exists in a process when the half tolerance of the
measured product characteristic is equal to K times the standard deviation of
the process:
K * process standard deviation = half tolerance of specification
However, this definition alone does not account for the centering of a process. A
process is centered when X = T, where X is the process average or mean and T
is the target value, which is typically the midpoint between the customer's upper
specification limit (USL) and the lower specification limit (LSL). A process is off-
centered when the process average, X, does not equal the target value T. The off-
centering of a process is measured in standard deviations or sigma.
As Table I (Tadikamala, 1994) shows, the value or number of defects of
a process is a function of the sigma value (quality level) of the process
BIJ (e.g. 6 sigma) and the off-centering value of the process (e.g. 0 or 1.5 sigma). The
7,4 true value of the quality level of a process is the number of defects that occur
when the process is centered, when the off-centering value is 0 sigma. In the
case of six sigma, there are 0.002 defects per million or 2 defects per billion. On
the other hand, ``Motorola's concept of 6 sigma allows a shift in the mean of 1.5
sigma'' (Evans, 1993). Therefore Motorola's value of six sigma assumes an
262 allowable shift of 1.5 sigma and thus also shows a defect rate not exceeding 3.4
per million. The value of 3.4 defects per million in a centered process implies a
process quality level between 4 and 5 sigma. This is the concept that was
introduced and popularized by Motorola and became known as Six Sigma
(Anonymous, 1998a).
Depending on whom you ask, Six Sigma has different meanings and
interpretations. ``From the technical viewpoint, it might make sense to talk in
terms of process variance; from the managerial or customer viewpoint, the
quality standards can be described in terms of defects per million''
(Tadikamala, 1994). Other definitions that have been used include:

. Six Sigma is a formal methodology for measuring, analyzing, improving
and then controlling or ``locking in'' processes. This statistical approach
reduces the occurrence of defects from a three sigma level or 66,800
defects per million (average for most companies) to a six sigma level ±
less than four defects per million (Bolze, 1998) (GE Harris Corporation)
(see Table II).
. By definition, Six Sigma is a statistical term that refers to 3.4 defects per
million opportunities (or 99.99966 percent accuracy), which is as close as
anyone is likely to get to perfect. A defect can be anything from a faulty
part to an incorrect customer bill (Paul, 1999).
. Think of a sigma as a mark on a bell curve that measures standard
deviation. Most companies have between 35,000 and 50,000 defects per
million operations, or about 3 sigma (Conlin, 1998). Six Sigma equates to
3.4 defects per million opportunities.
Sigma/quality level
Off-centering 3 sigma 3.5 sigma 4 sigma 4.5 sigma 5 sigma 5.5 sigma 6 sigma
0 2,700 465 63 6.8 0.57 0.034 0.0002

0.25 sigma 3,577 666 99 12.8 1.02 0.1056 0.0063
Table I. 0.5 sigma 6,440 1,382 236 32 3.4 0.71 0.019
The number of 0.75 sigma 12,288 3,011 665 88.5 11 1.02 0.1
defectives (parts per 1.0 sigma 22,832 6,433 1,350 233 32 3.4 0.39
million) for specified 1.25 sigma 40,111 12,201 3,000 577 88.5 10.7 1
off-centering of the 1.5 sigma 66,803 22,800 6,200 1,350 233 32 3.4
4
process and quality 1.75 sigma 105,601 40,100 12,200 3,000 577 88.4 11
levels 2.0 sigma 158,700 66,800 22,800 6,200 1,300 233 32
. Six Sigma is for broader, institutional maladies versus kaizen is for Six Sigma
fixing small problems in a matter of days says Wayne Hewitt, general
manager of global six sigma quality for GE Plastics division. The
Japanese concept of kaizen, or continuous improvement, already has
been introduced to many US manufacturers (Murphy, 1998).
. Six Sigma is a quality initiative that employs statistical measurements 263
to achieve 3.4 defective parts per million ± the virtual elimination of
errors (Murphy, 1998).
. At General Electric, Six Sigma is a measurement. A more illustrative
explanation can be found in a 1997 letter Welch sent to GE stockholders:
``The Six Sigma quality initiative, very briefly, means going from
approximately 35,000 defects per million operations, which is
average for most companies, including GE, to fewer than four defects
per million in every element in every process that this company engages
in every day'' (General Electric Company) (Hendericks and Kelbaugh,

1998).
. ``Six Sigma'', the most recent quality initiative to hit the UK, might very
well seem to have the stigma of being the latest in a stream of
management fadism. Scott Adams, writer of Dilbert, has referred to
quality programs as a way of becoming efficient at the things your
company should not be doing. To the uninitiated, it [Six Sigma] seems
like another term for total quality management. In fact, it is the
Koh-i-Noor diamond, the Rolls Royce, the Veuve Clicquot of quality
programs . . . and it comes at a very heavy price (Murdoch, 1998).
. Six Sigma, a comprehensive, statistics-based methodology that aims to
achieve nothing less than perfection in every single company process
and product (Paul, 1999).
. When used as a metric, Six Sigma technically means having no more
than 3.4 defects per million opportunities in any process, product, or
service (Anonymous, 1998b).
. Six Sigma alters the paradigm from fixing defective products to
correcting the process so that perfect products are made (Kane, 1998).
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:
(1) To be responsive to and focused on the customer base:

. We realized early on that just as our customers were instituting
changes, we also needed to change some of our processes so that we
could be more responsive. Customers now needed solutions faster
and were asking us to be quicker, too.
. The goal of the new leader James Mohn (new leader of GE Capital
Information Technology Solutions) is to focus on the customer and
enhance delivery of value (Torode, 1998).
. Sales and marketing VP at GE Aircraft Engines directly attributes
the success of the division to the Six Sigma initiative: `ìt has helped
our salespeople focus on building relationships with our customers
[whose demands] for increased value have forced us to place a
greater emphasis on speed, quality, and productivity'' (Cohen, 1997).
. TIDS saw the concept of agile manufacturing as the best way
to anticipate customer needs. ``We need to do what the customer
wants before they want it. We needed to look at the future and
match customer needs with our core competencies. We [need] to
operate in a dynamic systems and change direction fast in
response to the environment'' said Phil Roether, VP of the systems
group and manager for product production processes (Litsikas,
1997).
(2) To improve product and service performance:
. The goal of Six Sigma is to improve product and service
performance by reducing defects inherent in the processes and
materials used to produce them (Torode, 1998) (GE Capital ITS).
. Company executives say they want zero defects from their plants
(Murphy, 1998).
(3) To improve financial performance and profitability of business: Six Sigma
. Most manufacturers in the USA operate at about three sigma,
churning out 66,000 bad parts for every million produced. These
companies lose up to 25 percent of their total revenue due to defects
(Murphy. 1998).
. Over the past 15 years, GE has pursued business-performance 265
improvement and corporate profitability using a wide range of
programs. In 1995, GE CEO Jack Welch directed the company to
undertake Six Sigma as a corporate initiative to ultimately improve
net profits and operating margin by eliminating defects. Corporate
profitability must be the driver of such an effort. If it doesn't deliver
dollars to the bottom line, don't do it (Hendericks and Kelbaugh,
1998).
(4) To be able to quantify its quality programs. The Six Sigma process
strives to eliminate those defects by forcing a company to quantify its

quality. A database is installed to collect information about every
process within a facility. Improvement can then be charted on a factual
basis. Implementation of Six Sigma within a business's processes
eliminates `Ì think'' and `Ì feel'' from conversations about plant
operations (Murphy, 1998).
(5) To be considered as a supplier for a business. Electronics suppliers,
especially semiconductor manufacturers, commonly have defect levels
of less than 100ppm (parts per million) and some even reach SS level
quality. Building a part with a low part per million defect rate allows a
supplier to be considered for business, but it has become a dying
differentiator (Carbone, 1996).
The aim of Six Sigma is to control all processes at the outset well before they
get to the customer (Murdoch, 1998). This is done in a variety of ways by
different firms. The following approaches represent some of the philosophical
underpinnings:
. At GE the process measures how products are made and how customers
are serviced. Its goal is to ensure that there are no problems with any
product or service that GE provides. This is done through quarterly
customer surveys and daily manufacturing checks by internal engineers
(Cohen, 1997).
. Six Sigma teams use extremely rigorous data collection and statistical
analysis to ferret out sources of errors and to find ways to eliminate
them. The basic approach is to measure performance on an existing
process, compare it with a statistically valid ideal and figure out how to
eliminate any variation (Paul, 1999) (General Electric Company).
. The process, originally used for manufactured goods, is today being
applied to all aspects of our business: manufacturing, program
BIJ execution, product development, new business acquisition, customer
7,4 service, accounting and more. It starts with a detailed analysis to
quantify and measure factors that are critical to our customers' success,
and to find ways to remove obstacles (defects) to that success. When the
process is working, it results in an entire organization thinking about
meeting customer ``critical-to-quality'' objectives and eliminating steps
266 that do not add value (Bolze, 1998) (GE Harris Corporation).
. Six Sigma emphasizes identifying and avoiding variation. For example,
what causes a process to take five seconds when one person does it and
20 seconds when done by another? Six Sigma teams use a five-step
approach to tackle specific problems such as inaccurate customer
billing, sales policy errors, returned products, shipping errors, overtime
expenses, rework expenses, inventory holding costs and long cycle time.
Customer requirements, both external and internal, are paramount in
choosing which Six Sigma projects to undertake (Paul, 1999) (General
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).
Case study: General Electric Company

There are certain management mantras that will forever be associated with
GE's CEO Jack Welch: 267
. being number one or number two in your field;
. preaching the ``boundaryless'' sharing of ideas enabling information
flow up and down the organization structure; and now
. Six Sigma (Conlin, 1998).
Since the 1980s, GE has sought improvement in business-performance and
profitability through various programs (Hendericks and Kelbaugh, 1998).
However, in 1995, Welch decided that those programs were not enough and
directed the company to undertake Six Sigma as a corporate initiative. He said

that it `ìs the only initiative he will introduce, but it will be introduced
everywhere'' (Murdoch, 1998).
When embarking on their own process, GE adopted many of the concepts
and disciplines of Motorola's Six Sigma methodology (Hendericks and
Kelbaugh, 1998). Expecting to leverage lessons learned from both the Six
Sigma pioneers and their own 1989-initiated program, ``Workout'', Welch
reduced the time needed to achieve Six Sigma levels from ten years to five
years. His goal was for the corporation to be operating at Six Sigma levels by
the year 2000.
The introduction of Six Sigma within GE was a dramatic culture change
requiring impetus from the very top. Welch's personal leadership and direction
was necessary and instrumental in the rollout of Six Sigma. When the
employees tried to dismiss Six Sigma as the program of the month, Welch
changed the business structure at a corporate level to underscore the
importance of the goal. He implemented two notable strategic changes:
(1) a full 13 days of training for every employee; and
(2) promotional consideration dependent on the completion of Green Belt
training (Hendericks and Kelbaugh, 1998).
Welch has directed that every exempt employee at GE be trained in Six Sigma
methodologies by the end of 1998.
The concept of Six Sigma at GE deals with measuring and improving how
close the company comes in delivering on what it planned to do. Six Sigma
provides a way for improving processes so that the company can more
efficiently and predictably produce world-class products and services. There is
a five-phased methodology applied by a Six Sigma team to tackle specific
problems to reach Six Sigma levels (Paul, 1999). (We note that when Six Sigma
was first launched at GE Aircraft Engines, a four-step methodology (MIAC)
BIJ was followed. Recently, the Define phase has been added to recognize the
7,4 importance of having a well-scoped project and to be in line with the current
practices across GE):
(1) Phase 1 ± define (D). Who are the customers and what are their
priorities?
268 . A Six Sigma project team identifies a project suitable for Six Sigma
efforts based on business objectives as well as customer needs and
feedback.
. As part of the definition phase, the team identifies those attributes,
called CTQs (critical to quality characteristics), that the customer
considers to have the most impact on quality.
(2) Phase 2 ± measure (M). How is the process measured and how is it
performing?
The team identifies the key internal processes that influence CTQs
and measures the defects currently generated relative to those

processes.
(3) Phase 3 ± analyze (A). What are the most important causes of defects?
. The team discovers why defects are generated by identifying the key
variables that are most likely to create process variation.
(4) Phase 4 ± improve (I). How do we remove the causes of the defects?
. The team confirms the key variables and quantifies their effects on
the CTQs.
. It also identifies the maximum acceptable ranges of the key
variables and validates a system for measuring deviations of the
variables.
. The team modifies the process to stay within the acceptable range.
(5) Phase 5 ± control (C). How can we maintain the improvements?
. Tools are put in place to ensure that under the modified process the
key variables remain within the maximum acceptable ranges over
time.
A critical step at GE is identifying and bounding Six Sigma projects. Projects
include ``dashboards'' headed up by Customer Business Teams and those
projects managed and worked by all employees. At GE Aircraft Engines, there
are currently 80+ dashboard projects, targeted to collect, report, track, and
improve customer satisfaction through focusing on requirements identified as
vital to key customers. Dashboards are negotiated with individual customers to
identify what is most important about GE products and services to the
customer. Other projects are selected based on their ability to impact either
customer satisfaction or business priorities. In addition, projects may be
selected to leverage successfully completed projects to other processes, sites, or
product lines. Different approaches to applying Six Sigma include achieving Six Sigma
`èntitlement'' and implementing ``stable operations''. Entitlement is the level of
performance a process, product, factory, or business should be able to achieve
without substantial investment and/or reengineering. Stable operations entails
stabilizing a process, product, or service by identifying the causes (process
input or ``Xs'') of the defective outliers (defective outputs ``Y''), eliminating the
occurrences of the outliers, and eventually improving the process. 269
In summary:
. . . as both philosophy and measurement, six sigma at GE focuses on gaining full-process
understanding, including thorough analysis of how the key process inputs affect the process
output. Data about output alone is not the defining parameter, but rather that information is
analyzed together with the input data to confirm the ``root cause''. Once the key inputs are
identified, assuring sustainability of any process, improvement is simplified by linking the
control plan to controlling the input rather than controlling the output'' (Hendericks and
Kelbaugh, 1998).
Components of successful Six Sigma implementations

There are several key elements that are necessary for successfully
implementing Six Sigma approaches. Some of these elements are described in
the following sub-sections.
Upper management support/involvement

Most testimonials on why Six Sigma is working extremely well and building
further momentum profess ``continued top management support and
enthusiasm'' (Anonymous, 1998b) are critical. Those who have implemented
and practice Six Sigma agree the most critical success factor is top
management support. According to an associate dean and professor of
operations and manufacturing management at the John M. Olin School of
Business, ``The top executive must be part of Six Sigma. [He or she] must
change the agenda of upper management meetings so the quality initiative is
right near the top''. A general manager of a US$1.2 billion electronics business
in Atlanta states that ``Six Sigma has to be part of every discussion on the
performance of the business ± Six Sigma results are discussed daily with his
boss'' (Paul, 1999).
Lawrence Bossidy, CEO of AlliedSignal keeps end customers safe and the
company competitive via implementing Six Sigma quality and 7 percent year-
over-year productivity (Minahan, 1997). And it is no surprise that upper
management has been and is the secret to success at GE. The support has
strongly influenced and enabled the restructuring of the business organization
and the cultural change in attitudes of individual employees toward quality
possible in a short implementation period (Hendericks and Kelbaugh, 1998). It
is through Welch's usual zeal, personal leadership, and direction that quality
was and continues to be the key to success and a priority in every function.
In addition to Welch's support at GE, other upper management (up to and
including presidents and CEOs of GE divisions) participates in very hands-on
approaches:
BIJ . personally spending time in every Six Sigma training wave, speaking
7,4 and answering questions for students;
. dropping in (usually unannounced) on weekly and monthly Six Sigma
reviews;
. making site visits at the manufacturing and call-taking operations to
270 observe at first-hand the degree to which Six Sigma is ingrained in the
culture; and
. monitoring Six Sigma project progress weekly through summary
reports from the tracking database and monthly reviews with the
master black belt team.
The bottom line Six Sigma success demands an ironclad commitment, beyond
lip service, from the highest corporate executive.
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 `Èmpowered productivity'' staged by GE and
Microsoft, it was agreed that training is a cornerstone and that improved

human input is critical in the productivity equation (Anonymous, 1998c). It is
critical to ``communicate both the why and the how of Six Sigma as early as
possible, and provide the opportunity for people to improve their comfort level
through training classes'' (Hendericks and Kelbaugh, 1998) unleashing the
employees into the world of Six Sigma.
Training can come in a variety of packages including outsourced training
and internally provided training. In support of outsourcing training, some
think that cultural changes such as Six Sigma rarely come from within an
organization. Greg Brue, senior partner and a founder of Six Sigma
International Ltd (SSI), a six sigma consulting services firm, compares training
using insiders to brain surgery ± a process that cannot be self-performed. Some
SSI customers pay SSI a daily consulting rate of US$3,000, while others sign
long-term contracts that are based on the company size. SSI is so confident in
the results they deliver that they offer a money-back guarantee if a company
does not obtain at least a 200 percent return on investment of training cost over
two years. SSI has been performing surgery on US manufacturers for the past
three years by building a database of pertinent data and training ``black belts''
within the company to train other employees.
Upon deciding to pursue Six Sigma as a company initiative, GE retained
Dr Michael J. Harry as a consultant. Dr Harry helped define and write
Motorola's document ``The nature of Six Sigma quality.'' Under Harry's
guidance, GE developed the company Six-Sigma course content and
curriculum, defined organizational infrastructure support (e.g. master black
belts, black belts, etc.), and identified key individuals within each business to
receive direct training from Dr Harry. These key individuals were pulled
directly from each business, each having backgrounds `ìn sync'' with the Six
Sigma strategy: statisticians, quality specialists, mathematicians, etc.
Welch directed that every exempt employee at GE be trained in Six Sigma
methodologies. Therefore, after the train-the-trainer sessions from Dr Harry
BIJ were complete, the newly trained GE Six Sigma consultants were tasked with
7,4 training those people identified as champions, master black belts and black
belts. Additionally, expecting to meet Welch's training directive and business
directive that all GE divisions be operating at Six Sigma levels by the year
2000, some GE divisions decided to engage other consultants (e.g. from local
universities) to assist in the training rollout.
272 The 13 days of internally provided training at GE have since been
condensed to ten days. This ``green belt'' training is delivered to all GE
employees and is available in strategic locations across the world. It is typically
rolled out over a four-month period and is scheduled to help facilitate the
trainee in leading a ``green belt project'' to not only yield savings but also
practice in a real-life situation what is being learned in the training. The
following shows some of the session content:
(1) Define/measure (three days). Designed to help answer the questions
``who are the customers and what are their priorities?'' and ``how is the
process performing and how is it measured?'':

. Six Sigma overview;
. process mapping;
. data gathering;
. risk management;
. team and leadership skills;
. process measurements (definition of unit, data types, probability
distributions);
. process performance (first time yield, defects per unit, defects per
opportunity, Z long term, Z bench, Z shift, sub-grouping);
. in-class exercises; and
. introduction PC-based recommended statistical tool.
(2) Analyze (three days). Designed to help answer the question ``what are the
most important causes of the defects?'':
. overview define/measure;
. graphical tools;
. quality tools;
. stable operations;
. types and terms;
. hypothesis testing;
. group dynamics;
. benchmarking;
. high-level design;
. simple linear regression; Six Sigma
. multiple regression; and
. binary logistic regression.
(3) Improve/control (four days). Designed to help answer the questions ``how
to remove the causes of the defects?'' and ``how to maintain the
improvements?'': 273
. overview define/measure/analyze;
. design of experiments;
. smart simple design;
. detailed design;
. failure mode and effect analysis;
simulation;
. 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
group become a team

In/out frame A visual tool based on the analogy of a picture frame. It challenges the
team to identify those aspects of the project (the type and extent of end
results or deliverables, the people impacted, timing, product lines
impacted, sites involved, etc.) which are in the frame (meaning clearly
within the scope of work), half-in-half-out, or out of the frame
Includes/excludes A process tool that helps the team to clarify and agree on what is
chart included in and excluded from the scope of work
Responsibility A useful tool to help the project team sort out ``who will do what'' in
grid terms of decision making
Threat vs This tool requires the team to find ways to frame the need for a
opportunity change as a threat and an opportunity over both the short and long
matrix term. By doing this, they begin to get the attention of key stakeholders
Table III. in a fashion that ensures their involvement beyond what can be gained
Team tools from a short-term sense of urgency
Statistical tools (see Table V) and a disciplined methodology used by specially

trained individuals can improve processes by helping identify potential causes
for variation and then reducing variation and defects.
Other tools and approaches include:
(1) A Six Sigma project tracking system that supports the Six Sigma effort by
making the following readily available to any interested party:
. status of projects;
. sharing of best practices (leveraging) to minimize the resources
required for a new improvement effort; and
. information for generating business reports.
(2) Weekly help open sessions with personnel trained in and experienced in
Six Sigma tools and approaches.
(3) Web-based Q&A site:
Process tool Description Six Sigma
Action workouts A team-focused improvement activity to implement immediate,
concrete, and significant operating improvements
Brainstorming A traditional tool to generate ideas without judgment
CTQ drill down A tool by which a large and complicated process/system can be broken
in to manageable pieces which are then addressed or to create a time-
ordered sequence and address those pieces
275
Fishbone diagram A tool to identify possible causes (Xs) for a particular effect (Y)
Pareto analysis A tool to classify data and rank categories in decreasing order of
occurrence to separate significant categories from trivial ones. This is
done by separating data into categories, counting occurrences in each
category, arranging categories from highest to lowest frequency, and
drawing and labeling bars for each category
Process mapping A process tool that identifies process steps, responsibilities, hand-offs,
critical to quality factors, and non-value added operations. A graphical
display of the steps, events, and operations in time sequence that make
up a process. Process maps may be used to provide a view of the

process from a very high level to a very detail level, leveraging the
notion that you cannot improve what you cannot understand. It allows
identification of process deficiencies, responsibilities of process owners;
waste; rework loops, non-value added steps, where defects may be
occurring, and causes of variation
SIPOC SIPOC (suppliers, inputs, process, outputs, customers) is a high level
process tool that identifies major steps in the process that may be
presented in more detail later in process development, and can provide Table IV.
a map as to how CTQs (high customer expectations) are delivered Process tools
. an interactive Web-based program available to employees through

the Intranet; a training tool for learning the Six Sigma process in and
out of the classroom;
. a mentor for answering questions about what process and which
tools to use, when to use them and how;
. a quicker means of help rather than contacting black belt or master
black belt for assistance; a supplement to classroom training; and
. provides on-line mentoring/coaching on the Six Sigma tools and
methodology; quick instruction for using tools, glossary of terms,
examples.
(4) Six Sigma home page: presentations, training schedules, basic
documentation, toolkit, links to other businesses, and other tools to help
promote the sharing of best practices and to reduce research time.
Link to human resources-based actions (promotions, bonuses, etc.)

Truly changing behavior over the long term requires that the Six Sigma goals
be internalized on an individual level. To this end, human resources-based
actions need to be put into effect to promote desired behavior and results.
BIJ Statistical/graphical tool Purpose
7,4
One-sample t-test Compares mean to target
Two-sample t-test Compares two means
ANOVA Compares two or more means
Box and whisker plot To look for differences in the distribution of the data in a
276 graphical fashion
Chi-square test Compares the number of items in groups or categories
Dot plot To visually represent all data points and enable graphical
comparisons of two or more processes
Homogeneity of variance Compares two or more variables
or F-test
Kruskal-Wallis test Compare two or more means with unknown distributions
Matrix plot To screen for relationships between factors, and save time as
compared to running individual scatter plots
Normal probability charts Used to identify unstable and stable operations
One-way ANOVA To examine statistical differences among different populations
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
Six Sigma accomplishments as key measure for management performance and

compensation is a sure fire means to encourage successful selection and
completion of Six Sigma projects
For example, any employee (at GE Appliances) who wants to be considered
for promotion must be Six Sigma green belt-trained ± period. This also includes
senior executives (Hendericks and Kelbaugh, 1998). In fact, across all GE
businesses no one will be promoted without the full Six Sigma training and a
completed project. This in itself is an impressive behavior-driver.
Likewise, across all GE businesses, it is corporate policy that 40 percent of
each bonus given to all top managers is now tied to that manager's Six Sigma
goals, progress and successes within his/her organization. Additionally, along
with managerial promotions, the awarding of stock options is linked with an
individual's specific Six Sigma performance. It is also interesting to note that
before any Six Sigma savings (any savings generated by a Six Sigma initiative)
is credited to an individual (e.g. green belt), Jack Welch requires the black belt
overseeing that project to prove that the problems are fixed permanently
(Conlin, 1998). This can be achieved by having the project improvements
implemented, practiced, and under control for a specified time period.
Two other related actions complement the above requirement for linking
human resources based with Six Sigma performances:
(1) adding specific Six Sigma sections to the annual performance evaluation
form; and
(2) awarding even executive incentive compensation based on achievement Six Sigma
of Six Sigma goals.
GE Aircraft Engines has consistently been the far-and-away market leader in
the past few years thanks to a consistent flow of sales:
But, salespeople don't easily change their ways. They [too] need motivation [on practicing Six
Sigma]. So GE Aircraft Engines instituted a compensation plan that rewards its salespeople 277
and managers for customer service and quality. [Not only] is forty percent of every manager's
bonus tied to his or her progress on quality results (determined by customer surveys). The
company's 12 salespeople now have a portion of their total compensation tied to customer
satisfaction (also measured by the surveys) (Cohen, 1997).
Other components of success

In addition to all of the aforementioned components of Six Sigma success, early
communication to employees, measurement systems, and an information
technology infrastructure are also important.
During the early phases of Six Sigma rollout at GE:

. . . the individual fear of the Six Sigma tools themselves became increasingly apparent as the
mandate to train all exempt employees went into effect. As larger numbers of non-
manufacturing functions were enrolled in the training, some people were literally terrified of
the thought of learning statistics and using a computer for more than just e-mail. Pre-training
stress levels were unnecessarily high for many of the participants (Hendericks and Kelbaugh,
1998).
A communication plan addressing the importance of Six Sigma quality and

how the method works is thought to be critical in driving out two basic fears at
individual levels that come with the true cultural revolution that Six Sigma
brings: fear of change and fear of not measuring up to the new standards.
GE Appliances noted that it became abundantly clear that there were more
required elements to infrastructure than human resources. `Ìn many cases, the
measurement systems needed to be developed or were not repeatable or
reproducible enough to be used. Not having adequate gauges or control
systems in our systems in [their] factories represented a major roadblock to
implementation of early projects'' (Welch, 1996a).
James Stanley, senior vice president of US operations for Howmet
International Corp., a GE Aircraft Engines' supplier, suggests ``systems are
vitally important. The systems have to give you data instantaneously . . . the
IT infrastructure could make or break the Six Sigma effort. Data gathering is
key'' (Paul, 1999). Additionally, a Six Sigma consultant confirms that ``data
collection is the Achilles' heel of many a Six Sigma effort''. Typically at large
companies, including those which have been the early adopters of Six Sigma,
the data are either unavailable, or is stored on an amalgamation of computer
platforms. A planned and integrated IT infrastructure is key.
Results
`Ìf 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.
Productivity in 2Q1998 rose above the long-term target of 6 percent a year

(Murdoch, 1998).
Upon the realization of the cost of not embarking on the Six Sigma quality
journey, GE's decision became clear. The company would continue to waste,
mostly through scrap, reworking of parts, and rectifying mistakes in
transactions, about US$7 billion to US$10 billion annually (Welch, 1996b).
`Òver the past 15 years GE has [consistently] pursued business-performance
improvement and corporate profitability using a wide range of programs. In
the 1980s, these programs resulted in a reduction in GE's total work force
from 400,000 to 300,000 and an increase in net profit from US$3 billion to
US$4 billion annually. And, at this time, GE had an operating margin of just
under 10 percent'' (Hendericks and Kelbaugh, 1998). When Welch decided to go
with Six Sigma, he committed all the way. He implemented stretch goals and in
1997 alone GE invested US$380 million in Six Sigma ± mostly for training.
However, there was payback in the same year ± GE received about US$700
million in documented benefits from increased productivity (Paul, 1999).
``The reported operating margin for 1997 was 15.7 percent, up from 14.8
percent in 1996. At this margin level for a diverse corporation, continued
growth demands a more intense effort'' (Murphy, 1998). In 1997 GE Company
raised its company-wide savings estimates twice: from between US$400 million
to US$500 million up to between US$600 million and US$650 million and finally
up to US$700 million. In 1998, GE expects to see benefits of US$1.2 billion. `Àt
this point, peeling the next layer of the onion requires a different set of
investigative tools and a new methodology. If done well, using Six Sigma tools
will allow GE to continue to reduce business costs relative to income'' (Murphy,
1998).
The impact of Six Sigma on the bottom line has been huge. GE Aircraft
Engines attributes the division's success to the Six Sigma quality and service
initiative. GE Medical Systems alone saved US$40 million in 1997 (Conlin,
1998). GE Appliances was expected to show annual reductions in defects of
between 50 percent and 90 percent, with an obvious impact on savings. With all Six Sigma
the savings within its divisions, GE's operating margin broke the 15 percent
barrier in 1997 after hovering around 10 percent for decades.
Improved customer satisfaction

Ultimately, our customers will judge our progress. In today's deregulated
environment, we believe such mindset and approach offers true competitive 279
advantage (Bolze, 1998). One of the greatest benefits of Six Sigma aside from
improving product-to-market times is how it engages employees and customers
in greater dialogue in a way that both energizes and unites the company. Rocks
are turned over, problems are analyzed, and solutions are implemented not only
between the business and its employees but also between the business and
its customers. A shared language develops focused on customer goals and
metrics.
``When the process is working, it results in an entire organization
thinking about meeting customer `critical-to-quality' objectives and

eliminating steps that don't add value''. It enables a business to focus its
activities in support of improving in areas most critical to customers ±
designing products and systems faster, and delivering them sooner. `Ìn the
process it has also fostered greater customer interaction and dialogue'' (Bolze,
1998).
At GE Harris Energy Control Systems LLC, the goals and metrics of the
Six Sigma process clearly had a positive effect on customer satisfaction
and customer perception of the company. In 1996, for example, they were
shipping the XA/21 Energy Management Systems at a rate of six per year,
with a poor on-time delivery record. In 1997 they set an aggressive objective to
ship 20 systems. They not only met this goal, but more importantly for
customers, they delivered all 20 systems 100 percent on targeted date (Bolze,
1998).
Improved product development

Prior to Six Sigma implementation at GE Medical Systems, customers
were frustrated by the short lifespan of the tubes in GE's CAT scanners.
After GE assigned a team of black belts to measure and analyze each phase of
the tube manufacturing process, engineering found they could reduce by nine
months the time needed to perfect new models of the X-ray tubes. GE is now
producing tubes that have up to five times the lifespan of the old tubes (Conlin,
1998).
Product development cycles have also improved at GE Harris Energy
Control System, LLC. In the past it typically took 12-18 months to develop
their Energy Management Systems. After implementing Six Sigma
processes, they were able to develop and introduce two new Internet-based
management information products in just three months. The products
were identified during a Six Sigma review of critical customer needs (Bolze,
1998).
BIJ The quality profession
7,4 Six Sigma at GE is an example of how trends in the quality profession are unfolding in many
large, multinational corporations today. Such initiatives are here to stay for the foreseeable
future and has implications very different from the initiatives to which quality professionals
may be more accustomed (Hoerl, 1998).
280 Conclusions
Having explored the inception, definitions, approaches, reasons for, successful
components of, and results of Six Sigma, it is not unthinkable to ask `Ìs 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.
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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Benchmarking: An International Journal

Successful implementation of Six Sigma: benchmarking General Electric Company

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Evolution of Six Sigma

Six Sigma definitions and philosophy

(Tadikamala, 1994). Other definitions that have been used include:

0 2,700 465 63 6.8 0.57 0.034 0.0002

in every day'' (General Electric Company) (Hendericks and Kelbaugh,

(1) To be responsive to and focused on the customer base:

strives to eliminate those defects by forcing a company to quantify its

Case study: General Electric Company

directed the company to undertake Six Sigma as a corporate initiative. He said

and measures the defects currently generated relative to those

Components of successful Six Sigma implementations

Upper management support/involvement

Microsoft, it was agreed that training is a cornerstone and that improved

process performing and how is it measured?'':

group become a team

Statistical tools (see Table V) and a disciplined methodology used by specially

up a process. Process maps may be used to provide a view of the

. an interactive Web-based program available to employees through

Link to human resources-based actions (promotions, bonuses, etc.)

Six Sigma accomplishments as key measure for management performance and

Other components of success

During the early phases of Six Sigma rollout at GE:

A communication plan addressing the importance of Six Sigma quality and

Productivity in 2Q1998 rose above the long-term target of 6 percent a year

Improved customer satisfaction

thinking about meeting customer `critical-to-quality' objectives and

Improved product development

[Abstract] [Full Text] [PDF]

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