Operations Management

Case Studies

case study (20 Marks)

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 a 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. 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 organization involved in the targeted activity or process. It is based on the statistical concept that the output of most of the physical processes follows a normal distribution, with the processes centered at the mean Theoretically; any process would have a natural spread of 3 Sigma (standard deviation) from the normal distribution mean on either side of the center. Six Sigma is a sophisticated quality program that is designed to reduce defects to 3.4 per million opportunities. The program focuses on streamlining all the processes in the organization to improve productivity and reduce capital outlays while increasing the quality, speed, and efficiency of the operations. The concept was pioneered by Motorola in the early 1980s. Motorola\’s initiative stemmed from its belief that improving quality would reduce costs and that the highest-quality producer should be the lowest-cost producer. Six Sigma enabled Motorola to achieve defect-free performance in its manufacturing, designing, engineering, and business processes. Six Sigma was originally developed to be used for \’physical processes\’ those performed in manufacturing and are easy to observe record, analyze, and measure. However, in the years to come, it was extended to processes that were not as explicit as the physical processes. It encompassed some business areas like bid and proposal, and procurement and contract management. While Six Sigma comprised strict measurements for physical processes, it involved identifying waste in the form of delays for other processes. The primary objective of Six Sigma was to increase customer satisfaction through continuous quality improvement. In the 1990s, GE, one of the world\’s largest diversified companies took initiatives to implement the Six Sigma quality tool.

Answer the following question.

 

Q1. What is Six Sigma? Explain.

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