The Unforgiving Demands of ‘Six Sigma’ Process Controls

The term ‘six sigma’ is one familiar to statisticians. In practical terms, it means reducing the defects in a process to just over three per million. It is thus an extremely demanding target for quality control.

The term was thought up 10 years ago by the US electronics group Motorola, based on Japanese methods of total quality management. The approach is particularly suited to the high-volume, high-precision electronics industry. For example, a mobile phone such as Motorola produces might contain 400 components. If the company operates to two sigma – 45,000 defects per million – on each part, the chances of the phone being defective are far too high.

General Electric is now in its second year of applying six sigma across its businesses. Last year, it spent $200m on the initial parts of the programme.

This years, it aims to spend $300m and expects cost savings in the year of $400m – $500m: that is, a profit of $100m – $200m. Six sigma is by no means confined to manufacturing. GE Capital, the financial services division of General Electric, applies it to processes ranging from billing to various kinds of customer service. Denis Nayden, president of GE Capital, says that in practical terms the hard part of applying six sigma is obtaining real data. ‘It’s highly dependent on the data you have,’ he says. ‘And given all the businesses we’re in, the data are all different.’ Thereafter, he says: ‘The real question is whether you can put the right model in place, so the process has fewer moving parts and less things to break down. It’s very important to change the process fundamentally. You need to change the whole behaviour of the company, to become more responsive to the customer.’

This last part is crucial. GE Capital surveys its customers regularly – some weekly, some monthly or quarterly, depending on their business – to check its performance. ‘It’s very important that the customer is engaged in this,’ Nayden says. ‘We use a score card, whereby customers identify what’s going wrong and what we should focus on.’

From the Financial Times

Exercise 6. Complete these statements.

a) Figures and information are ……. .

b) Preparing and sending invoices to customers is ………. .

c) A way of doing something that can be used in different situation is a…….

d) The way that someone acts, does things, etc. is their ……….. .

e) If something is only used in a particular situation, it is ………. To that situation.

f) If you use something in a situation, you ……….. it to that situation

Exercise 7.  True or false about General Electric. Correct the false statements.

General Electric

a) has been using six sigma for three years.

b) spent $200m on it in the first year.

c) expects to save over $400m in the second year by using it.

d) only uses six sigma in manufacturing.

e) has found it easy to apply to different activities.

f) changes the way it does things when it applies six sigma.

g) says six sigma makes it more aware of customers’ needs.

Exercise 8.  Use the words and phrases separated by slashes and add the missing words to make complete sentences about GE, based on the article. Each slash indicates one missing word, and the words in brackets have to be put into their correct grammatical form.

a) / involvement / customers / extremely /.

b) GE Capital (question) / customers regularly – some / week, some / month, some / three months: / (depend) / their type / business – / order / check how it / (do).

c) Mr Nayden (think) it / very important / customers should / (involve) / the process.

d) GE uses / score card, where customers (show) what (need) (improve) / what it / concentrate /.