SIX SIGMA at GE

AMIT JAISWAL(49)
GANESH(06)
Brief summary about
case
The case examines the initiatives taken by GE,
one of the world’s largest diversified
companies to implement the Six Sigma
quality tool in the 1990s. The case discusses
in details the concept of Six Sigma, its
implementation procedure and its benefits. It
also explores the implementation procedure
at GE and the benefits reaped by the
company on account of adopting Six Sigma.
Jack Welch CEO of GE said in
annual meeting in 1996
“Six Sigma-GE Quality 2000 will be the
biggest ,the most personally rewarding ,and,
in the end, the most profitable undertaking in
our history. We have set for ourselves the
goal of becoming ,by the year 2000,aSix
Sigma quality company , which means a
company that produces virtually defect-free
products , services and transactions.”
About GE
The US –based General Electric company was
easily the largest diversified company in the
world . Out of the company’s 24 different
businesses, some were so large that they
could independently feature in the Fortune
500 list of companies.
GE operated in more than 100 countries and
had over 250 manufacturing plants in 26
countries .
The companies was one of the largest
employees in the world with a strength of
around 275,000 employees.
GE’s products ranged from plastic for small
compact discs to powerful locomotives. The
company was the word leader in light bulbs
and power generation equipment.
GE’s strong focus on R&D and quality since its
inception. The GE R&D center was one of the
world’s largest and most diversified industrial
laboratories.
It employed 1600 people that include around
1100 scientists , engineers and technicians.
About Six Sigma
Six Sigma is a well structured ,data driven
methodology for eliminating defects, waste,or
quality control problems in all kinds of business
activities.
It is based on a combination of well-established
statistical quality control techniques,simple and
advanced data analysis methods and the
systematic training of all personnel at every level
in the organisation involved in largest activity or
process.
Motorala’s initiative stemmed from its belief that
improving quality would reduce costs and that
the highest –quality producer should be the
The primary objective of Six Sigma was to
increase customer satisfaction through
continuous improvement in quality..
Six Sigma offered specific methods to redesign
the process so that defects and errors would
not occur in the first place.
GE before implementation
Six Sigma
Before beginning the implementation ,studies
revealed that GE’s operations were carried
out between 3-4 sigma , i.e., about 35000
defects per million opportunities .
According to company estimates, avoidable
expenditure of $7-10 bn was being incurred in
the form of scrap , reworking of parts
,correction of errors ,inefficiencies and lost
productivity.
The GE had begun in 1988 in the form of an
initiative known as work out programme.

The goal of work out programe were
Build trust
Empower employees
Eliminate unnecessary work
Create a new paradigm for GE

Benefits after
implementation of Six sigma
Within 5 years of it’s implementation of six sigma
at
GE produced annual benefits of more than $ 2.5 bn
for GE worldwide.
In 1988 GE’s profitability improved significantly and
welch attributed this success largely to the
company’s Six sigma initiative
Not only did the company’s revenues increased by
11% to $ 100 bn. the net earnings went up by
13% to $ 9.3 bn
While the earning per share increased 14 % to $2.8
per share the operating margin increased to 16.7
% & the working capital turnover rose to 9.2%
from 7.4% in 1997
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Thank you.