Six Sigma at GE Mark Mazar Leader Six

Six Sigma at GE Mark Mazar Leader, Six Sigma GE Industrial Systems

Six Sigma Vision The GE vision of Six Sigma. . . “…this Six Sigma journey will change the paradigm from fixing products so that they are perfect, to fixing processes so that they produce nothing but perfection, or close to it. ” JF Welch, 1996 Annual Meeting . . . is to be delivering Six Sigma quality products and services everywhere 2

Everything we do will be changed. . . • Customer interface • Product Design • Material Procurement • Manufacturing • Field Support • Internal Business practices . . . by the time we get there 3

If you’ve never: • Been forced to produce beyond the limits of process capability • Argued with a customer about who’s gauge is “right” • Sorted parts to meet a specification • Had too much scrap, rework, inspection. . . • Cursed a late payment, a wrong bill, a discrepant delivery; produced too much or too little • Faced a cost reduction that “couldn’t be done” . . . then you’ve probably already implemented Six Sigma 4

The Sigma Scale Z = PPM = Yield 2 308, 537 69% 3 66, 807 93. 3% 4 6, 210 99. 3% 5 233 6 3. 4 99. 98% 99. 9997% *all short term, 1. 5 sigma shift 5 *

In a Six Sigma Process, the average step yields 99. 99966% for example: 20 Six Sigma Steps. . . ( 99. 99966% ) 20 = 99. 993% 68 ppm delivered quality . . . delivering only typical automotive quality in the 50 ppm defective range 6

Where does U. S. industry stand? PPM IRS Tax Advice (phone in) (140, 000 PPM) 1, 000 Restaurant Bills Doctor Prescription Writing Payroll Processing Order Write up Journal Vouchers Wire Transfers 100, 000 10, 000 Airline Baggage Handling Purchased Material Lot Reject Rate 1, 000 100 Best-in-Class 10 Average Company 1 1 2 3 4 Domestic Airline Flight Fatality Rate (0. 43 PPM) 5 6 7 Sigma Scale of Measure © 1994 Dr. Mikel J. Harry V 4. 0 7

What is Six Sigma at GE? • GE Company-wide Quality Initiative – Involving all employees, in every business, worldwide. • Structured methodology to reduce defects in our products and services – Defects are defined by customers – Uses a rigorous procedure to understand customers needs – Can be applied to all business functions • Manufacturing and Delivery • Engineering and Design • Transactional and Commercial Processes • Services • Sales and Customer Service • Quantitative analysis based – All process performance is measured – Analysis and improvement decisions are data based

Why Six Sigma? • Focuses Business on Customer Satisfaction • Embeds a Quality Culture in the Organization • Structures a Methodology to Eliminate the Process Variations That Drives Defects • Drives Speed, Delivered Quality, Reliability • Increases the Value of GE as your Supplier 6 s. . . The Way We Run Our Business

The Six Sigma Philosophy. . . • All processes have variability • All variability has causes • Typically only a few causes are significant • To the degree that those causes can be understood they can be controlled, and therefore, defects reduced • Designs must be robust to the effects of the remaining process variation • This is true for products, processes, information transfer, everything. . . is that uncontrolled variation is the enemy 10

What is the Focus of Six Sigma f (X) Y= Critical needs of the customer n Y f (All steps taken to meet those needs) n Complete Documentation n Fast Start-ups n On Time Delivery n Newest Technology n Accurate Sequencing n = X 1, X 2, X 3. . . X N Accurate Specification n Order Completeness n Component Reliability n Manufacturing Quality n Software Programming n If we are so good at X, why do we constantly test and inspect Y? Focus on X’s rather than Y, as done historically 11

The Six Sigma Approach. . . Ø If we can’t measure it, we don’t know much about it. Ø If we don’t know much about it, we can’t control it. Ø If we can’t control it, we are at the mercy of chance. Practical Statistical Practical Problem Solution . . . applies statistical tools to practical problems. The key is data-driven decision making. 12

Six Sigma Methodology For Each Product or Process Critical Need Measure - Analyze - Improve - Control Identify Customer Needs (CTQ’s) 1. What are the customer needs & key processes? Limits? How do we measure performance? (dashboards / surveys / interviews / inquiries) Measure 2. What is the frequency of defects? (measurement system/process mapping/sigma rating) Analyze 3. When and where do defects occur? What are the variables? (statistics/Pareto/benchmarking/etc. . ) Improve 4. How can we fix the process by effecting key variables? (design of experiments/expert brainstorming/etc. . ) Control 5. How can we continue to ensure the process remains fixed? (measurement feedback control/procedural/etc. . ) . . . a Rigorous, Customer-Focused Improvement Proc

Six Sigma Concept Every Process Step Has Variability. . . Performance Target Customer Specification Limit X X XXX 1 s X XXXXXXXXXX Acceptable Performance defects Defective Performance Reducing Variability Is The Essence of Six Sigma

What is Six Sigma? Before 3 s A 3 s process because 3 standard deviations fit between target and spec Performance Target Customer Specification Limit 1 s 6. 6% Defects 2 s 3 s Performance Target Customer Specification Limit After 6 s ! 1 s 2 s 3 s 4 s 5 s 6 s No Defects! By Reducing Variability, We Can Make a Robust Product or Process

Six Sigma Performance Comparisons If we demanded only 99% Good performance (3. 8 Sigma), then we could expect. . . But, by demanding 99. 99966% Good performance (6 Sigma), we could expect only. . . • 20, 000 lost articles of mail per hour • Seven articles lost per hour • Unsafe drinking water for almost 15 minutes each day • One unsafe minute every seven months • 5, 000 incorrect surgical operations per week • 1. 7 incorrect operations per week • Two short or long landings at most major airports each day • One short or long landing every five years • 200, 000 wrong drug prescriptions each year • 68 wrong prescriptions per year

Six Sigma in the Future Moving to Six Sigma. . . Optimize/Redesign Entire System Innovative Product Design Improve your Suppliers Processes Improve Processes and Products with Basic Tools Logic and Intuition Improvements 3 s DESIGN BARRIERS 6 s . . . Will Require Major Redesign of the Entire Business to Get Past Current Process Limitations 17

GE is Making a Strong Commitment. . . - Applying 1500+ Dedicated Quality Resources in All Businesses - Providing Training at All Levels - Officers to Hourly - Multi-million Dollar Incremental Investment - Incorporated Into All Management Performance Measurements - Largest GE initiative ever . . . a Huge Investment - but with Incredible Added Value for GE’s Customers

How ? - With Dedicated Quality Resources Roles • Champion • Facilitates leadership and deployment of Six Sigma philosophy at business level • • Create vision & define strategy Allocate resources Drive culture Generate excitement • Master Black Belt • Develop Black & Green Belts in Six Sigma tools and provide technical expertise and advice to Owners and Champions • • Coach & mentor Belts Train individuals in tools Scope opportunities at project level Verify project benefits & drive closure • Black Belt / Green Belt • Incorporate tools / methodology of Six Sigma into current jobs to make improvements on processes • • • Lead process improvement teams Educate others on tools Reduce and/or prevent defects Deliver on project results Use tools to improve processes or to DFSS

Six Sigma Culture Dedicated 6 s Resources Moving Six Sigma into the culture. . . Plant: Hey, this really works! Integrate “tools” and approach into daily jobs Corporate: Hey, this really works! Small MBB and Training Group Let’s give it a try years Push Pull Integrate . . . requires a strong driving force 20

Six Sigma Evolution TS P C JE RO LS O TO cts je Pro OF ” AY NG “W KI HIN ols T o t. T jec Pro TIME (years) 21

Six Sigma Evolution Sure glad they’re doing it & I don’t have to. . The “buy-in” propagates with time & pressure 22

Rewards & Recognition Rewards & recognition. . . INDIVIDUALS â Chose Only The Best â Formal Certification Program â “Big Jobs” on the Way Out D evelopment, Not a Career in 6 s â High Level Reviews Routinely â Preferential Stock Options & LEADERSHIP â 40% of Officers IC Tied to 6 s Leadership â Rolling Leaders to Bigger Jobs â No Options, Promotions or IC Without Project Completion Salary Action â Media Attention . . . a key part of any program 23

THE NEXT PERSON WHO IMPLEMENTS 6 WORKING PART TIME. . . WILL BE THE FIRST. 24

Investing in People Training Requirements. . . ALL LEADERSHIP 1 1/2 DAYS OVERVIEW & HOW TO MANAGE/SELECT/REVIEW MBB 4 WKS/4 MOS WITH PROJECT & STATISTICS SELF STUDY & LEADERSHIP SKILLS BB 4 WKS/4 MOS WITH PROJECT MBB MENTOR GB 2 WKS/2 MOS WITH PROJECT BB MENTOR HOURLY J. I. T. 2 HR MODULES TO FIT PROJECT BB OR GB TEACHER . . . a huge investment -- huge payoff! 25

Driving Participation “Everyone must do a project”. . . + : Broad Familiarity – - l Mitigation Approach Overwhelms Infrastructure l Opportunity : Huge “Extra Effort” – Resource Pool Quality Coach l : Universal “Lights-On” Wait a Year to Demand High Abandonment Rate l – Only Allow In-Scope Projects Higher “Junk” Project Count l Euthanasia l “Day-Zero” Reviews l Strategic Grouping of Projects . . . a key but dangerous part of the program 26

Picking the team Don’t Waste Your Time. . . 6 s Benefit + AHA! If you can afford to free up this person to be a BB -- don’t bother 0 - Brain Power . . . with anything but the best people 27

Accounting for 6 s. . . Accounting for the results Variable Cost Productivity Base (Fixed) Cost Productivity Incremental Margin From Growth } EBIT or OP Margin Cost Avoidance Working Capital Improvement Measurable Improvements in Quality & Service. . . Expect $750 K/Year/BB 28

Six Sigma Management Involvement. . . INVOLVEMENT LEADERSHIP Business Leadership â Generate The Excitement â Ensure Good People Only Steering Committee Members â Project Area Selection â Monthly Review of a Few Projects â Certification Celebration Sponsor/Champion â Project Selection â Monthly Progress/Issues Review MBB â “ 2 Hrs”/Week/Project “Technical” Review . . is critical in any new adventure 29

Walking the Talk “ By January 1998 there will be no one on any slate for consideration for any management job in GE, no matter how JFW 1997 Annual Meeting junior, without some green belt training. . . ”

The purpose of this is to infect the management of this corporation with the principles and thought processes of Six Sigma That doesn’t mean that we should preferentially promote Six Sigma people… …it means that we should preferentially put into Six Sigma the people whom we expect to promote. It is then reasonable to expect that this population will see more options, raises, promotions

Staffing is critical. . . â Leader (Corporate) â MBB Per Site (Full Time) â MBB Per Major Function (Optional Add-On) â Trainer(s) @ 20 -25/Class â “Scorekeeper”. . . to ensure success 32

Measuring the Program 6 s Program Metrics. . . 1 People Trained Projects Staffed Projects Completed People Certified Savings Customer Metrics Year 2 3 (e. g. , Quality, Service) RTY Process Z-Score 4 Not Separately … shift from mechanics to results to impact 33

Six Sigma Training Evolution. . . Year 2 Overview Leadership 1 GB 1 1/2 Day GB -- 2 Wk Overview Masses 3 GB 1 1/2 Day Practitioners Mfg Commercial Technical Hourly BB (4 Wk) BB DFSS (3 Days) DFSS (5 Days) Modules … taking it in large, but manageable chunks 34

Why Six Sigma? To Meet Escalating Customer Needs in the new millennium. . . 1. Deliver Higher Quality Products and Services … 1. Emphasis on customer service/satisfaction 2. Latest technology 2. Through Improved Processes Delivering. . . – Improved Customer Productivity • Faster responsiveness • More innovative features, less installation time • New equipment delivered on-time, complete – Lower total life cycle costs • Acquisition & Administration costs • Responsive Customer Service to minimize downtime • Lower operating expenses

Six Sigma IS. . . • An attitude change to outrageous quality expectations • A tool set to make that change practical • A lot of work but with excellent compensation • A common language for discussing, planning, committing, measuring, comparing process capabilities • A powerful competitive advantage . . . How GE conducts business 36

g GE Industrial Systems Thank You