General Electric Company operates as a technology and financial services company worldwide. The company was founded in 1892 and is headquartered in Fairfield, Connecticut. The company has many segments, such as Energy Infrastructure segment, Aviation segment, Healthcare segment, Home and Business Solutions segment, and Capital segment. Its GE Capital segment offers commercial loans and leases, fleet management, financial programs, home loans, credit cards, personal loans, and other financial services.
Case DiscussionAs company that acquired two or three different companies in between 1996 and 2001, GE Financial has experienced many consolidation and integration of people, technologies, and processes during the process of development. Six-sigma help the GE Financial in improving the profitability and reduce deffects. Six-sigma in here refers to a business process that allows companies to drastically improve their bottom line by designing and monitoring everyday business activities in ways that minimize waste and resources while increasing customer satisfaction.
Although the business was run pretty well, GE Financial recognized an opportunity to improve their business through optimization. Optimization refers to a process that routinely occurs as an insurance company manages its investments. For example, when a customer purchases an insurance policy, their premiums were invested by the insurance company in instruments such as bonds in various yields and maturities.
The insurance company goals are to pick the best combination of investments that will ensure that the premium will grow sufficiently to repay a customer’s future claim and to provide a profit to the insurer. To ensure this, the investment managers fine-tune the portfolio (optimization) with a goal of maximizing the desirable characteristics (yields) while minimizing the undesirable characteristics (credit default and interest rate risk).
The current optimization process could be more effective when it is reflected the most current conditions. The team measured the time from the start of the optimization process until the output was delivered to the internal customer. The resul of the cycle-time was 84 working days. The team realized to meet the customer’s requirement that reflect the most current conditions, they needed to reduce the cycle time to, at least, 5 days. To drive the cycle down to an acceptable level, a six-sigma quality “Black Belt” was assigned. The role of Black Belts is similar to a consultant which is facilitating the team through changes and providing expertise in six-sigma methodology. Steps in Driving The Process Improvement:
1. DefineIn defining phase, Black Belt and process improvement team gathered information to understand the current process and the requirements of key stakeholder and customers. The team determined the project boundaries and how to allocate proper resources for an on-time project completion.
The portfolio optimization team also divided the project into 3 generations of related projects, the first-generation project focused on reducing time cycle and the latter-generation projects focused on improving scalability and capability, require long-term technological investment in research and development. In define phase, a long-term course of improvement, based on the customer’s requirements, was defined.
In measure phase, the best way to precisely measure the existing process and collect data was set off and determined. 3. Analyze The data collected were analyzed by the team to identify the possible causes behind the issue, the existing cycle time for the process. The ones that were determined to be statistically significant and had the greatest impact were further analyzed. 4. Design
The team devised specific improvements for each key drivers both in process and procedure changes. For example about the formatting inconsistency. The amount of a dollar may incure in $100,00,000 or 100,000,000 or $100,000,000.00 format. It may caused time delays and has possibility for error. The solution is clearly specify and communicate to data suppliers both the particular data requirement and the format for the data as well. They create and distribute a new data templates to the data suppliers. 5. Optimize and Verify
This phase involves communicating the changes in process, procedure, and technology to the associates. They should ensure clear understanding of the new process and methods. The result of six-sigma implementation in GE Financial was the exceeding of 30% cycle-time reduction.
The previous goal was to reduce the cycle-time from 84 days to 59 days (30%), but then the result appeared to be 50% reduction, from 84 days to 42 days. Besides, the project team had a better sense of the process and the customer’s requirements, it will make the implementation of the next project generation (95% cycle time reduction) becomes quicker. Conclusion
Six-sigma at GE Financial illustrate three concepts in problem-solving methodology. The first is consistent interaction between the project team and the stakeholders and process owners allowed for realistic project expectations and set the stage for project success. The second, having appropriate project scoping and project phasing allowed for the setting of realistic goals and timelines. The robust use of qualitative and quantitative data to properly identify rot causes will ensure that the right solutions are undertaken.
Six-Sigma appeared to generates sustained success for GE Financial. It sets performance goal for everyone involved in improvement process. It also enhances value for customers, accelerates rate of improvement, promotes learning across boundaries, and executes strategic change. Application of Six Sigma at General Electric brought a marked culture change in the attitude of individual employees toward quality, translating into dramatically lower service-call rates, and improved product reliability. From a small beginning to improving product quality by reducing defects at the workplace, the scope of Six Sigma at GE has expanded.