General Electric's Quality Gamble
The Implementation of Six Sigma
General Electric (GE) is among the most profitable companies and, according to Fortune magazine, the most admired. It stock is the most highly valued in the world. Some critics would argue, if it's not broke, why fix it? Jack Welch, CEO of GE, believes in the "infinite capacity to improve everything." Why does a company that has experienced so much success recently invests over a billion dollars in a quality initiative? Increased competition has GE adopting the attitude that businesses that stand still become obsolete as businesses that continue to grow pass them by. Also by implementing Six Sigma, GE is preparing itself for future profitability opportunities. Finally, research indicated a need for improvement in the way GE does business. GE had been straining for years to increase operating margin and six sigma is a way to do that.
What is Six Sigma?
Six sigma, the mother of all quality efforts, can mean different things to different organizations. The Six Sigma Academy defines it as tactics and tools to improve profitability through focusing on improving the sigma capability of an organization's processes. GE defines six sigma as first as a management philosophy; a never ending to competitive leadership by satisfying customer requirements profitability. Second they define it as a measurement system; a measure of a processes inherent ability to meet customer requirements. In general six sigma is a statistical non-financial performance measurement at which you should design, operate, and control every process in your company in such a way that none of yield more than 3.4 defects per million units of output. Six Sigma is a tool that measures in a clear, accurate, mathematical terms how good or bad their quality levels are, how much they can improve, and what progress they are making along the journey.
On a global perspective, companies that have not begun their quality journey are around one or two sigma. The worldwide average is around three sigma. The majority of the companies utilizing six sigma in India are at a low two sigma. An average domestic company is at three sigma, while a good company is at three and a half. Today GE is around three and a half with goals of reaching six sigma by the year 2000. Companies operating at three to four sigma lo...
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...reduced cycle times, increased productivity, improved capacity and output, decreased work-in-progress, and improved process flow. Companies operating at 3 to 4 sigma generally loses up to 10-15% of their total revenue due to defects, on the contrast a company that operates at 6 sigma generally loses less than 10%.
Six Sigma stars Motorola has reported savings of $2 billion over 10 years of implementation while GE shaved off 750 million of cost in 1998. In 1999, GE has projected a 1.5 billion in savings due to Six Sigma, and if they reach their goal of six sigma in the year 2000 they will add between 8 to 12 added to the bottom line.
In conclusion, GE has decided to ride Six Sigma into the next century. The year 2000 is the deadline for reaching Six Sigma, which is also around the time its CEO Jack Welch plans to retire. If GE's quality gamble pays off, Jack Welch will go out a winner, leaving behind his most admired company on top.
Reference
"The Enigma of Six Sigma." (1999, May). Business Today. Online
Romeo, Mary. Six Sigma Quality. GE Capital FMP Conference, Stamford, 1999.
Curran, John. "GE CAPITAL: JACK WELCH'S SECRET WEAPON." Fortune July 1999.
There are many people that benefit from Lean Six Sigma which include mainly customers, suppliers, employees, and also stockholders. Lean Six Sigma is a way for businesses to improve, to reduce waste and to become more successful. In the future, more and more organizations will adopt or practice some of the Lean, Six Sigma, or both in order to stay competitive in today’s market. In some cases, blending both Lean and Six Sigma can be costly and difficult; however the end result can create an organization that focuses on quality, accuracy, and speed to meet the goal which is profitability.
These methods provide a logical solution to the various problems and help in enhancing the quality and efficiency of products and processes [7]. The critical power of Lean Six Sigma is its focus on finding the variables impacting the majority of variations in process {3]. Thus Lean Six Sigma methodology together helps in achieving project goals and the targets
Barnard, W., De Feo, J. (2004). Juran Institute’s Six Sigma Breakthrough and Beyond. New York, NY: The McGraw-Hill Companies
Therefore, people usually tend to slip into predefined roles, behaving in a way that they thought was required, rather than using their own judgment and morals. It doesn’t matter if these are good people or no, they tend to conform even when that means doing horrible things. Surprisingly, people could become subject to obedience when are confronted with higher authorities or the individual personalities of people could be swamped when they are given positions of authority. Those in power become abusive, and those subject to that power become immature, passive, and rebellious. These effects do not have to do with differences in original personality, but result from the situation in which people find themselves. I would say that people in a position of absolute power can easily take it to extremes as well. By having legitimated their actions as necessary and brought on by the target, through a process of cognitive dissonance people can come to believe that they acted morally and appropriately in a given situation while the reality is relatively different. It is just incredible how great an effect the environment has on our individual behavior, capable of trumping what we would otherwise consider our steadfast moral and behavioral guidelines. Individuality so easily melts away as the social environment begins to define the individual. It is scary and amazing at the same time how quickly and easily people adopt in new social
The Six Sigma process, developed by Motorola focuses on saving time, lower costs by improving quality, identifying the causes of defects and removing the causes of defects, and minimizing variability in manufacturing and business process (Satterlee, 2013). The acronym, DMAIC represents the Six Sigma improvement model. The steps in the DMAIC process are to define the purpose, scope and output and then define quality; measure the process and collect data; analyze the data ensuring reliability; to improve by modifying existing process or procedures; and controlling the new processes to ensure increased performance levels are maintained (Satterlee, 2013). The foundation of the Six Sigma processes is to eliminate waste and improve
These occurrences can be analyzed using social psychology because the environment, the situation, and those holding the authority influenced the behavior of others. Due to these influences, prisoners and guards acted on the roles they were given, in the way that society sees them. The description, in itself, is the definition of social psychology.
Before commencing the study all participants were briefed on the roles pertaining to the experiment without actually being assigned roles. Once roles were determined and assigned each participant was given specific instruction to their roles whether it be the role of the Guard or Prisoner. The group assigned to the prisoner role were greater in number and were instructed to be available at a predetermined time, this was done to maintain the reality of the simulation. The prisoners were arrested and escorted by real-life law enforcement officials and processed as any detainee would be in a real situation. Upon completing the processing part of the experiment the students were then transferred to the simulated prison, which was housed in the basement of the university, and assigned identifying numbers, given demeaning clothing as uniform and placed in barren cells with no personalized
According to what we have learned in class, six sigma, statistically, is interpreted as having no more than 3.4 defects per million. However, they dump 10-12 dough balls per week, while 5-6 is more reasonable, which illustrates the quality mismanagement. So, the food cost there is way higher when it accounts for 38%, while industry ideal is 30%. In order to streamline the entire process of making pizza, it is an imperative for Pizza My Heart to exhaustively put six sigma in action.
The article, “Where Process-Improvement Projects Go Wrong,” by Satya L. Chakrvorty, WSJ.com, January 25, 2010 (http://online.wsj.com/news/articles/SB1000), offers a great example of how and why many Six Sigma and other process improvement projects fail. He examines what happened at an aerospace company that initiated a number of process improvement projects, half of which ultimately failed.
The 21st century has brought new challenges to manufacturing and service organizations, and one of these important challenges is that the industry is constantly changing (Maleyeff, 2012). Therefore, the systems, processes and procedures of successful businesses will be able to evolve according to the constantly changing industry needs. Six Sigma is one method being widely used by both manufacturing and service businesses today to provide a framework for continuous process improvement (Maleyeff, 2012).
Sitnikov, C. (2012). Six sigma as a strategic tool for companies. Young Economists Journal / Revista Tinerilor Economisti, 94-102.
For example, it has started Six Sigma training in Warren, Michigan, where the organization is one of the biggest employers. The objective of the initiative is that GM sees the concept as one of the ways to improve the quality of the processes, as there have been concerns about the company’s performance (General Motors seizes every opportunity to capitalize on Six Sigma training in Warren, n.d.).
An excellent example of this is Adolf Hitler and his dictatorship of Germany that led to the Holocaust. While many people automatically assume Hitler has been the face of evil, there is some good in him. Hitler decided to create a blitzkrieg economy, which is purposely mobilizing the economy at a low level to be able to reduce stress caused by war amongst the German citizens (Overy, 1982). Through his economy, he wanted the German people to not have to worry about the struggles of war. Hitler was looking out for his people. However, he seemed to care for them so much that he came up with an idea of killing off people who weren’t a part of his group, mainly the Jews. This was when Hitler’s evil started to shine through, during the time of the Holocaust. The individuals who were put into gas chambers to die were in a part of dehumanizing experiences; some people didn’t even want to acknowledge how bad the Holocaust was (Ayalon et al., 2007). They were taken from their homes without permission, stripped of their families, and killed in gas chambers at different concentration camps. The person whom was overseeing this operation was none other than Adolf Hitler. A finding from the Stanford Prison Experiment was that people will act irrational when authorized to do so (Lankford, 2009). This can be relevant to Hitler’s Nazi followers when they were demanded to complete a task. Undoubtedly, evil succeeded over good in this situation. Killing six million individuals just because you want a better country is unjustifiable. It is also
When put into an authoritative position over others, is it possible to claim that with this new power individual(s) would be fair and ethical or could it be said that ones true colors would show? A group of researchers, headed by Stanford University psychologist Philip G. Zimbardo, designed and executed an unusual experiment that used a mock prison setting, with college students role-playing either as prisoners or guards to test the power of the social situation to determine psychological effects and behavior (1971). The experiment simulated a real life scenario of William Golding’s novel, “Lord of the Flies” showing a decay and failure of traditional rules and morals; distracting exactly how people should behave toward one another. This research, known more commonly now as the Stanford prison experiment, has become a classic demonstration of situational power to influence individualistic perspectives, ethics, and behavior. Later it is discovered that the results presented from the research became so extreme, instantaneous and unanticipated were the transformations of character in many of the subjects that this study, planned originally to last two-weeks, had to be discontinued by the sixth day. The results of this experiment were far more cataclysmic and startling than anyone involved could have imagined. The purpose of this paper is to compare and contrast the discoveries from Philip Zimbardo’s Stanford prison experiment and of Burrhus Frederic “B.F.” Skinner’s study regarding the importance of environment.
The General Electric Company (GE) is organized with its chief executive officer, shareowner, and board of directors on the top of the pyramid, followed by their executive leaders and corporate staff. GE’s Board of Directors ensures the company serves the interests of shareowners and other key stakeholders with the highest standards of integrity and compliance. Serving equally as tough critics and wise counselors, they provide in-depth oversight of the major strategic issues of the company (General Electric Company, 2012). The authority officially vested in the board of directors is assigned to a chief executive officer (CEO), who occupies the top of the organizational pyramid (Bateman & Snell, 2011). There chai...