Quality is the next act of productivity.
Following Motorola’s lead, General Electric designed a Six Sigma quality program comprising four steps to be applied to every process and transaction:
- Measure. Identify the key internal process that influences “critical-to-quality” issues (CTQs) and measure the defects generated relative to identified CTQs. Defects are defined as out-of-tolerance CTQs. The end of this phase comes when the Black Belt can successfully measure the defects generated for a key process affecting the CTQ.
- Analyze. The objective of this phase is to learn why defects are generated. Brainstorming, statistical tools, and so on are used to spotlight key variables (Xs) that cause the defects. The output of this phase is the identification of the variables most likely to drive process variation.
- Improve. The objective of this phase is to confirm the key variables and then: (a) quantify the effect of these variables on the CTQs, (b) identify the maximum acceptable ranges of the key variables, (c) make certain the measurement systems are capable of measuring the variation in the key variables, and (d) modify the process to stay within the acceptable ranges.
- Control. The objective of this phase is to ensure that the modified process enables the key variables (Xs) to stay within the maximum acceptable ranges.
THE SIX SIGMA PLAYERS
There are four groups of key players in the GE Six Sigma effort:
- Champions. These are senior managers who—although not on Six Sigma full time—define, approve, and fund projects and are responsible for the success of the overall program. Most Champions report directly to the business leader, and a GE business might have up to 10 Champions, each of whom receives a week’s training. Several hundred Champions have been selected.
- Master Black Belts. These are full-time teachers with heavy quantitative skills as well as teaching and leadership ability. They mentor Black Belts. Master Black Belts are trained for at least 2 weeks. In the fall of 2000, there were 500 Master Black Belts.
- Black Belts. These are full-time quality executives who lead teams and report to the Champions. In the fall of 2000, there were 5000 Black Belts.
- Green Belts. These are members of Black Belt project teams who do not work on the projects full time and have other jobs in the company. In the fall of 2000, there were 100,000 Green Belts.
THE SIX SIGMA PROCESS
Each of the four phases—measure, analyze, improve, control— takes 1 month. Each begins with 3 days of training, followed by 3 weeks of “doing” and 1 day of formal review by the Master Black Belts and Champions.
A “successful” project is one in which (a) defects are reduced 10 times if the process began at less than three sigma (66,000 defects per million operations) or (b) there is a 50 percent reduction in cases where the process started at greater than three sigma.
GE defined five corporate measures to help its businesses track progress in the Six Sigma program:
- Customer Satisfaction. Each business conducts customer surveys, asking customers to grade GE and the best in a category on critical-to-quality issues on a one-to-five scale, where five is the best. A defect is defined as less than best in a category or, even if best in a category, a score of three or less.
- Cost of Poor Quality. There are three components: appraisal (mostly inspection), internal costs (largely scrap and rework), and external costs (mainly warranties and concessions).
- Supplier Quality. GE tracks defects where the defective part either (a) has one or more CTQs out of tolerance and therefore must be returned or reworked or (b) is received outside the schedule.
- Internal Performance. GE measures the defects generated by its processes. The measure is the sum of all defects in relation to the sum of all opportunities (CTQs) for defects.
- Design for Manufacturability. GE measures the percentage of drawings reviewed for CTQs and the percentage of CTQs designed to Six Sigma. Most new products are now designed with CTQs identified. This is an important step because the design approach often drives the defect levels.
THE VERDICT
Since Six Sigma began in January 1996, the results have far exceeded Welch’s expectations. He noted the progress in his letter to shareholders:
The Six Sigma initiative is in its fifth year—its fifth trip through the operating system. From a standing start in 1996, with no financial benefit to the company, it has flourished to the point where it produced more than $2 billion in benefits in 1999, with much more to come.
Consistently throughout this ramp-up period, Welch stressed that quality-mindedness was critical to success at, and by, GE:
In the next century, we will neither accept nor keep anyone without a quality mindset, a quality focus. It has been remarked that we are just a bit “unbalanced” on the subject. That’s a fair comment. We are.
WELCH RULES
- Understand the component parts of Six Sigma quality. Measure, analyze, improve, and control to achieve a new discipline in your company.
- Nothing is more important than follow-through. You will need to make sure that quality does not fall off in the future.
- Your customers know quality. Consider initiating customer surveys to assess your quality effort.