Implementing six Sigma at GE

Journal for Quality and Participation, The, Jul/Aug 1998 by Hendricks, Candace A, Kelbaugh, Richard L

Show Me the Money. More than any other GE business, GE Appliances is focused on the bottom line. Margins are slim and competition is brutal. An oft-quoted fact of the appliance business is that a 14cubic-foot refrigerator sells for less today than it did in 1965. Productivity improvements and cost take-out are the only way we can stay in business and achieve the return that GE's shareholders demand. The Six Sigma initiative initially posed a significant dilemma for GE Appliances because defect reduction was the only published goal. It didn't take long to learn, however, that all defects are not created equal. It's great to focus a Six Sigma project on a process and reduce defects by 90 percent, but if we could have saved more money by making a SO percent reduction in defects on another process, we just wasted valuable resources. It's a big risk to take it on faith and assume that quality improvements will translate into profit improvements, because the assumption is not necessarily a valid one.

Everybody Plays. 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.

We even apply a one-size-fits-all approach to the training. Giving real-life examples from all different aspects of the business allows those going through interactive training to see the universal applicability of the Six Sigma methods. Is everyone equally enthusiastic about learning the tools? Of course not. The diverse backgrounds and skill levels of the Green Belts also provide many mentoring challenges.

The concept that "Everybody Plays" created special challenges for GEA. Many product lines are characterized by a high level of outsourced parts that comprise the final assembly-thus, you can't be a Six Sigma company without your suppliers participating in the culture change.

Encouraging this involvement by suppliers is not always easy. Many small businesses have limited infrastructure, which makes it difficult to drive and sustain meaningful change. Our approach is to treat the suppliers as extensions of our own factories, training their Green Belts in the same classroom as our employees.

The key element of successful integration of suppliers into Six Sigma is obtaining support up front from the highest levels of management in the supplier firm.

From the perspective of the suppliers, it's a win situation: they get Six Sigma-trained employees who can use the tools they've learned to subsequently improve their own profitability.

Specific Techniques. Six Sigma demands trained employees. While the training itself requires Herculean effort, management of projects is even more challenging. It didn't take long to learn the value of good project selection, and the importance of prioritizing projects and aligning them to the business goals. The most valuable tool in this effort is the humble process map. By sitting down and documenting all of the steps in a process, it is amazing how opportunities for defects can be highlighted.