66Six Sigma

Presented By:- Amit Kumar DMS Pondicherry University

What is six sigma?

•Sigma is a measure of “goodness: the capability of a process to produce perfect work.

• Sigma indicates how often defects are likely to occur.

• The higher the sigma level, the lower the defect rate.

• The lower the defect rate, the higher the quality.

66

Sigma Conversion Table:

If your yield is: Your DPMO is: Your Sigma is:

30.9% 690,000 1.0

62.9% 308,000 2.0

93.3 66,800 3.0

99.4 6,210 4.0

99.98 320 5.0

99.9997 3.4 6.0

The Six Sigma Evolutionary Timeline

1986: Bill Smith, a senior engineer and scientist introduces the concept of Six Sigma at Motorola

1994: Larry Bossidy launches Six Sigma at Allied Signal.

1995: Jack Welch launches Six Sigma at GE.

THE GROWTH OF SIX SIGMA

in General Electric

Imagination at Work

The General Electric Company (GE) is a multinational American technology and services conglomerate incorporated in the state of New York.

General Overview

Group Companies of GE

Radio Corporation of America (RCA)

• The Electric Bond and Share Co

• GE Commercial Finance

• GE Consumer Finance

• GE Infrastructure• GE Money• GE Security• GE IndustrialGE Healthcare

• Welch’s Corporate Model:– High Discipline– High Efficiency– Cut costs whenever possible

• Per Annum organic growth rate:– Only 4%

• Implementation of lean Six Sigma methodology for manufacturing and service processes

• Originally established in U.S. by Motorola• Goal: meet or exceed level of 3.4 defects per million

operations within any process

“the most important initiative GE has ever undertaken”.Jack Welch

Chief Executive OfficerGeneral Electric

• In 1995 GE mandated each employee to work towards achieving 6 sigma• The average process at GE was 3 sigma in 1995• In 1997 the average reached 3.5 sigma • GE’s goal was to reach 6 sigma by 2001• Investments in 6 sigma training and projects reached 45MUS$ in 1998, profits increased by 1.2BUS$

General Electric

1995 Operating margin—13.5%

1998 Operating margin—16.7%

Result: $600million bonus

66

13

Company Annual SavingsGeneral Electric $2.0+ billionJP Morgan Chase *$1.5 billion (*since

inception in 1998)Motorola $ 16 billion (*since

inception in 1980s)Johnson & Johnson

$500 million

Honeywell $600 million

Six Sigma Results

66Thanks