General Electrics Quality Gamble Essay -- GCSE Business Six Sigma Cou

General Electric's Quality Gamble The Implementation of Six Sigma General Electric (GE) is among the most profitable companies and, according to Fortune magazine, the most admired. It stock is the most highly valued in the world. Some critics would argue, if it's not broke, why fix it? Jack Welch, CEO of GE, believes in the "infinite capacity to improve everything." Why does a company that has experienced so much success recently invests over a billion dollars in a quality initiative? Increased competition has GE adopting the attitude that businesses that stand still become obsolete as businesses that continue to grow pass them by. Also by implementing Six Sigma, GE is preparing itself for future profitability opportunities. Finally, research indicated a need for improvement in the way GE does business. GE had been straining for years to increase operating margin and six sigma is a way to do that. What is Six Sigma? Six sigma, the mother of all quality efforts, can mean different things to different organizations. The Six Sigma Academy defines it as tactics and tools to improve profitability through focusing on improving the sigma capability of an organization's processes. GE defines six sigma as first as a management philosophy; a never ending to competitive leadership by satisfying customer requirements profitability. Second they define it as a measurement system; a measure of a processes inherent ability to meet customer requirements. In general six sigma is a statistical non-financial performance measurement at which you should design, operate, and control every process in your company in such a way that none of yield more than 3.4 defects per million units of output. Six Sigma is a tool that measures in a clear, accurate, mathematical terms how good or bad their quality levels are, how much they can improve, and what progress they are making along the journey. On a global perspective, companies that have not begun their quality journey are around one or two sigma. The worldwide average is around three sigma. The majority of the companies utilizing six sigma in India are at a low two sigma. An average domestic company is at three sigma, while a good company is at three and a half. Today GE is around three and a half with goals of reaching six sigma by the year 2000. Companies operating at three to four sigma lo... ...reduced cycle times, increased productivity, improved capacity and output, decreased work-in-progress, and improved process flow. Companies operating at 3 to 4 sigma generally loses up to 10-15% of their total revenue due to defects, on the contrast a company that operates at 6 sigma generally loses less than 10%. Six Sigma stars Motorola has reported savings of $2 billion over 10 years of implementation while GE shaved off 750 million of cost in 1998. In 1999, GE has projected a 1.5 billion in savings due to Six Sigma, and if they reach their goal of six sigma in the year 2000 they will add between 8 to 12 added to the bottom line. In conclusion, GE has decided to ride Six Sigma into the next century. The year 2000 is the deadline for reaching Six Sigma, which is also around the time its CEO Jack Welch plans to retire. If GE's quality gamble pays off, Jack Welch will go out a winner, leaving behind his most admired company on top. Reference "The Enigma of Six Sigma." (1999, May). Business Today. Online Romeo, Mary. Six Sigma Quality. GE Capital FMP Conference, Stamford, 1999. Curran, John. "GE CAPITAL: JACK WELCH'S SECRET WEAPON." Fortune July 1999.