The surprise box office hit of the early summer 2000 movie season was U-571. This is a fictionalized story of the World War II capture of the Nazi Enigma coding device from a submarine in the Atlantic. Capturing surprises is not limited to Hollywood: There were more than a few people surprised when Ford Motor Company management announced that senior executives would not get their complete compensation bonus this year because the company had not met its quality targets. Time was that only budget and profit performance determined rewards and punishments in the auto industry. This led me to wonder: how is quality measured in other industries and does that measurement affect compensation? So I found out the following:
At GE’s Transportation Systems business, quality is like a a U-boat. It surfaces, submerges, throws torpedoes in the water, hits its targets, and then continues on its quality mission. The U-boat heritage is now in the light of day and riding high at GE. (Note: GE Transportation Systems’ (GETS) locomotive technology evolution included its Universal Series freight units—which were known as “U-boats”—and progressed through years of proven performance to the DC DASH series, onto the higher horsepower AC4400 and AC6000 technology locomotives.) Although quality has always been on GETS’ radar screen, a rigorous process was established at all GE businesses in the mid-1990s.
GE started the Six Sigma quality program nearly six years ago and the results have been impressive. The original program was modeled on Motorola’s Six Sigma effort, but there is considerably more to the story.
First, GE ramped up this program more quickly than any other U.S. corporation did. Focused productivity improvement efforts were already underway at the time Six Sigma was sited on their scope. GE’s Work Out session groups and “boundaryless” company processes were extremely successful predecessors on which to quickly adopt Six Sigma and build strong quality capabilities. Thousands of quality projects have been designed and implemented by GE Black Belt and Green Belt certified employees, as well as suppliers to GE. (To be certified, employees train in Six Sigma techniques, develop and complete projects, and pass a Six Sigma test. Suppliers also attend the training sessions.)
Second, quality progress is tied directly to rewards at GE, and the Transportation Systems team is no exception. Black Belts not only have to go through rigorous training, but they also also have to complete two years and 20 quality projects before moving on in the company. No management promotions will come without at least Six Sigma Greenbelt certification at GE. This is a Jack Welch management credo. Mr. Welch has been named the best CEO of the 20th century—maybe this is one of the reasons.
The third reason Six Sigma has been so successful at GE is that it is tied to customers and not just inwardly directed on internal processes. For example, at Transportation Systems, Bob Danville, Quality Leader for GETS, described the “Four O’Clock” meeting they have every day at headquarters in Erie, PA. Data from locomotives in service all over the world are compiled and reviewed. A daily status report (score card) on each of the companies provides results-centered targets. Every issue on every locomotive is logged and action items are assigned along with expected completion dates. Fulfilled actions are closed out with the appropriate solutions.
The key to being a successful Six-Sigma company is being data driven. GE Transportation Systems, like most companies, used to deal in averages. But customers see variance. And GE is eliminating this variance through the use of Six Sigma theory. The company is 100% focused on its customers’ success. Some of its railroad customers now have GETS Black Belts in residence and who are working on quality improvement projects on site.
What are the next steps? Mr. Danville is working on an e-business project with customers to support the data-driven process of Six Sigma. His customers want to increase the mean time between locomotive failures in the field. In one case, the current rate is 110 days (mean) between failure and the customer wants 120 days. When there is data there is no discussion other than “how to improve”. Each general manager champions one customer. Mr. Danville has the custody and care responsibility for Amtrak, for example. Previously, upper-level management did not focus directly on one individual customer. That has all changed under the Six Sigma program.
When GE Transportation Systems uses the Quality Function Deployment (QFD) technique on a new product or component enhancement, they use all four houses of quality, not just the first house. They look at the customer need, system level requirements, priorities, and planning to identify, design, optimize and validate the process. The voice of the customer and the systems requirements relationship are vital to quality. The company has made a small business out of finding out what the true voice of the customer really is. Simply stated, a customer calls in and says they need a replacement part ASAP. Everybody wants things done right away. But when one customer says ASAP, it is not necessarily the same as when another customer says ASAP. Mr. Danville’s organization now has a series of customer service questions that are asked to find out what the customers really mean when they say ASAP. In some cases, taking product from inventory or changing production schedules is warranted. In other cases, it is not.
Finally, GE has made the key connection between employees and customers. When GE Transportation Systems employees boot up their PCs, a pop-up screen appears that gives the status of customer responsiveness. Some days the company is having a good 24-hour period and items on the screen are blue; other days, when things are not going so well, some items on the screen are red. Everyone at GETS knows how their individual performance can affect customer satisfaction and expectations. Bottom line: GETS employees want and need to know if they are meeting customer expectations—don’t underestimate the power of these quality tools! And, of course, make quality a U-boat in your company on which to build proven, measurable advancements.