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Case Study: General Electric (GE) and Six Sigma

Companies globally choose to implement the Six Sigma business improvement methodology into their businesses for a multitude of reasons. From improving production efficiency, decreasing byproduct waste, and increasing revenue, executives look to Six Sigma to better their business practices. As a methodology that follows a strictly disciplined approach with aspirations to achieving perfection, it’s no surprise Six Sigma has proven to be successful in corporate restructure, organization, and process improvement.

In 1995, CEO Jack Welch made it his priority to turn General Electrics into a Six Sigma practicing corporation within five years. Like most executives, Welch’s motivation behind implementing the methodology was to improve the quality of the company’s products to be better than their competitors. Six Sigma aims at achieving a certain degree of production defects. Specifically, 3.4 defects for every million products produced. Likewise, this degree of defects insured near-perfection in all production processes.

The Implementation

Training

The success of Six Sigma depends almost solely on its implementation into the company. Without strict discipline, training, and project management, your company will not reap the magnitude of benefits you might expect. For General Electric, Welch began implementation by requiring nearly every employee to partake in a 2-week, 100 hour Six Sigma training program. Additionally, every employee was expected to complete a certified Six Sigma project by 1998. Like other successful Six Sigma companies, such as Motorola, Welch also required employees to complete follow-up training courses to perfect their current skill sets. 

Mentors

However, Welch alone did not implement Six Sigma across the entire corporation. Just as you will see with other companies, mentoring was a major variable for General Electric’s success. Master Black Belt Six Sigma certified professionals were hired for full-time mentor roles who trained and managed fellow employees. Likewise, the trained employees would then qualify as Black Belts and could manage other Six Sigma projects throughout the company. Additionally, lower certification levels, such as Green Belts, assisted in numerous projects as team members and the workforce.

Management

In conjunction with thorough, routine training for most employees, Welch gained the support of upper level management and executives by linking their bonuses to quality improvement. Immediately, senior executives had a motive to encourage their employees to perfect their Six Sigma skill sets and improve their production quality. Furthermore, any employee seeking a promotion would have to be Six Sigma Green Belt certified.

Specific Approaches

One key aspect to General Electric’s success was their three specific approaches. The first, “Show Me the Money”, brought focus to cutting costs in specific price-sensitive markets. This included removing workplace production defects, while also improving quality and productivity. The second, “Everybody Plays”, sought to bring Six Sigma business improvement processes to all product line components. From the suppliers to the assembly line personnel, everyone integrated the methodology into their roles. Last, “Specific Techniques”, ranked projects by aligning them to specific business goals the company had.  This was done by using Six Sigma tools, such as process mapping. 

The Results

Through revolutionizing their corporate culture, improving the quality of their products, and reducing their production costs, General Electric greatly benefited from the Six Sigma methodology. By 1997, General Electric experienced a nearly $700 million in corporate benefits, and over $2.5 billion by 2000. Increasing product reliability and improving production efficiency lead to enhanced customer relations and thus, greater revenue generation.

Without the strict, disciplined integration executed by Welch, General Electric would not be the successful Six Sigma corporation it is today!

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