Sunday 14 August 2011

GE's Six Sigma

General Electric strives to improve quality without ignoring costs and its managers are responsible for controlling the combination of quality and costs. Its responsibility accounting program, called Six Sigma, has increased its annual productivity by over 200 percent and its operating margin by 4 percentage points. Six Sigma, is a means of measuring quality (through errors or defects) for any activity. For each activity, a target for improvement is set and a manager is assigned the responsibility to achieve the target. The reporting system centers on the rate of improvement as measured by reduced defects or errors. The program has five basic steps:

1. Define: Teams work to define problems related to a process or service.
2. Measure: Determine what is wrong with the existing process or service.
3. Analyze: Determine reasons for what is wrong.
4. Improve: Define and develop a plan of action.
5. Control: Ensure changes are installed and used effectively; keep problems from recurring.

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