Six Sigma at GE

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Case Details:

Case Code : OPER015
Case Length : 12 Pages
Period : 1995 - 2002
Organization : GE
Pub Date : 2002
Teaching Note : Available
Countries : USA
Industry : Varied

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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GE's Six Sigma Experience

Before beginning the implementation, studies revealed that GE's operations were carried out between 3-4 sigma, i.e., about 35,000 defects per million opportunities. According to company estimates, avoidable expenditure of $7-10 billion was being incurred in the form of scrap, reworking of parts, correction of transactional errors, inefficiencies, and lost productivity.

According to analysts, the groundwork for the implementation of Six Sigma at GE had begun in 1988 in the form of an initiative known as the 'WorkOut' program. The company realized that employees were an important source of intellectual power for new and creative ideas.

The WorkOut program gave each employee an opportunity to influence and improve GE's operations. The program had set four major goals that later helped to lay the groundwork for Six Sigma. The goals were as follows:

Build Trust: Employees were encouraged to criticize GE and the way they performed their jobs without negative consequences to their careers.
Empower employees: As employees who performed a particular task knew how to do it perfectly, GE granted them more power, to encourage them to take more responsibility for their jobs...

Reaping the Benefits

Analysts felt that the implementation of Six Sigma enabled Welch to transform an old-economy industrial giant into a competitive and growing company. No other corporation seemed to have integrated Six Sigma in to its operations as widely as GE. Within five years of its implementation of Six Sigma at GE produced annual benefits of more than $2.5 billion for GE worldwide. Analysts remarked that Six Sigma was an indisputable success at GE whether in terms of customer satisfaction, improvement in internal performance, or in the improvement of shareowner value...


Exhibit I: GE's Businesses
Exhibit Ii: The Concept of Six Sigma
Exhibit Iii: Results Achieved by Some Companies using Six Sigma
Exhibit Iv: GE - Statement of Earnings (1997-2001)


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