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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"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, a Six Sigma quality company, which means a company that produces virtually defect-free products, services and transactions."

- Jack Welch, CEO, GE, at the company's annual meeting, in 1996.

Introduction

By 2001, with revenues of $ 125.91 billion and net earnings of $ 13.68 billion, the US-based General Electric Company (GE) 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 company was one of the largest employers in the world with strength of around 275,000 employees. GE remained the only company listed in the Dow Jones Industrial Index that had been included in the original index in 1896.

GE's products ranged from plastic for small compact discs to powerful locomotives. The company was the world leader in light bulbs and power generation equipment. Its diagnostic medical imaging equipment were well known all over the world. In addition, GE had a strong presence in the financial services, consumer durable goods and entertainment businesses (Refer Exhibit I). In the late 1990s, GE initiated various measures to transform itself into a services and solutions-oriented company.

GE was well known for its strong focus on R&D and quality since its inception. The GE Research and Development Center was one of the world's largest and most diversified industrial laboratories. It employed 1,600 people that included around 1,100 scientists, engineers and technicians. The center provided GE's businesses and strategic partners with cost effective technical innovations for various products, processes and services. During the 1990s, quality became a major issue of concern for the company.

This made GE's CEO Jack Welch (Welch) to consider the benefits being derived due to a quality initiative called Six Sigma by companies such as Motorola1.

Though Welch felt that quality programs were only theoretical and did not show any substantial results, he was impressed by the Six Sigma concept and decided to implement it at GE in 1995.

Six Sigma at GE - Next Page>>

1] The US-based Motorola is one of the world's leading electronics goods manufacturers offering wireless communication equipment, semi-conductors, advanced electronic equipment and services.

 

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