Stretching, Welch asserts, ...allows people to constantly reach for the goal. And people are getting more and more comfortable with the idea that you get the best out of people not by fighting budgets, which are all about minimal numbers, but by getting people to do the best they can, and measuring their progress toward it - against last year, against what competitors are doing. We are in the process of enriching our organization through the stretch concept . Operating margins are 50 percent higher than they were for the first one hundred and eighty years of our company, and in a tougher global environment.
Stretch is a concept that would have produced smirks, if not laughter, in the GE of three or four years ago, because it essentially means using dreams to set business targets - with no real idea of how to get there. If you do know how to get there - it's not a stretch target. We certainly didn't have a clue how we were going to get to ten inventory turns when we set that target. But we're getting there, and as soon as we become sure we can do it, it's time for another stretch.
Measure : Identify the key internal process that influences CTQs and measure the defects generated relative to identified CTQs. Analyze : The objective of this phase is to start to understand why defects are generated. Improve : Here the objective is to confirm the key variables and then quantify the effect of these variables on the CTQs, identify the maximum acceptable ranges of the key variables, make certain the measurement systems are capable of measuring the variation in the key variables, and modify the process to stay within the acceptable ranges. Control : The objective of this final phase is to ensure that the modified process now enables the key variables to stay within the maximum acceptable ranges using tools such as statistical process control (SPC) or simple checklists.
GE has designed five corporate measures to help a business track progress in the six sigma program : Customer Satisfaction : Each business performs customer surveys, asking customers to grade GE and the best-in-category on critical-to-quality issues. The grade is a five-point- scale, where 5 is the best and 1 is the worst. A defect is defined as either less than best in a category or a score of 3 or less. GE measures defects per million survey responses. As with all measures in the project, the results are reported on a quarterly basis. Cost of Poor Quality : There are three components: appraisal, which is mostly inspection, internal costs, largely scrap and rework; and external costs, largely warranties and concessions. GE tracks the total as a percent of revenues on a quarterly basis. Supplier Quality : GE tracks defects per million units purchases, where the defective part has either one or more CTQs out of tolerance and therefore must be returned or reworked, or the part is received outside the schedule. Internal Performance : GE measures the defects generated by its processes. The measure is the sum of all defects in relation to the sum of all opportunities for defects (CTQs). Design for Manufactuability : GE measures the percent of drawings reviewed for CTQs designed to six sigma. Most new products are now designed with CTQs identified. GE hopes to begin designing products and services to six sigma capability. This measure is very important, since the design approach often drives the defect levels.