Making the Case for Quality

               Six Sigma Saves Nearly $1 Billion,
               Key Customers, and a Comp...
Common Six Sigma Themes                                                      of skepticism that Six Sigma was just another...
Figure 1 Vibration Reduction Results for Dodge Ram
    Interestingly, one of the biggest customer projects completed at
the ongoing monitoring required in the long-term control plan.     Contributing to This Article
 Others are more informal,...
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Six Sigma Saves Nearly $1 Billion, Key Customers, & A Company


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Six Sigma Saves Nearly $1 Billion, Key Customers, & A Company

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Six Sigma Saves Nearly $1 Billion, Key Customers, & A Company

  1. 1. Making the Case for Quality Six Sigma Saves Nearly $1 Billion, Key Customers, and a Company by Janet Jacobsen The year is 2001 and the “perfect storm” of adverse business factors—tightening fuel emission stan- dards, the September 11 attacks, Y2K expenses, and an oncoming recession—all converge and threaten the future of Cummins Inc. The Columbus, Indiana, based diesel engine company was in jeopardy after losing nearly 72% of its core business, heavy-duty trucks, in 2001. Fortunately, under the direction of new CEO Tim Solso, Cummins had recently launched an all- encompassing Six Sigma initiative in 2000, which ultimately, in Solso’s words, “saved the company.” And, in the following years, Six Sigma has saved much more, as 5,000 Six Sigma projects completed At a Glance . . . in all parts of the business across the world have resulted in nearly $1 billion in savings. About Cummins Inc. • Just months before severe business conditions Founded in 1919, Cummins is a global power leader that designs, manufactures, sells, and services threatened the company’s diesel engines and related technology. Cummins serves its customers through a network of 550 economic future, Cummins company-owned and independent distributor facilities and 5,000 dealer locations in more than 160 Inc. deployed an all- countries and territories. Due in part to its far-reaching Six Sigma program, Cummins enjoyed its encompassing Six Sigma program. most profitable year in 2005 as it earned $550 million on sales of nearly $10 billion. • Using three versions of Six But the company’s financial picture wasn’t as positive when Solso took the reins as CEO in 2000. With Sigma, (Technology changing market conditions and tightening fuel emission standards—Solso knew that greater attention Development for Six Sigma, DMAIC, and Design for Six to detail was needed to improve the business. After speaking to other CEOs about Six Sigma and Sigma) Cummins has saved studying the stunning results at General Electric, Solso and his team, including George Strodtbeck, nearly $1 billion through the executive director of corporate quality at Cummins, launched the company’s first Six Sigma Black Belt completion of nearly 5,000 projects in January 2000. improvement projects. What is Six Sigma? • While Six Sigma is commonly used to improve internal production • This fact-based, data-driven philosophy of quality improvement values defect prevention over processes, Cummins extends defect detection. this quality methodology to • Six Sigma quality performance means no more than 3.4 defects per million opportunities. every facet of its business • It drives customer satisfaction and bottom-line results by reducing variation and waste, thereby and beyond, to both promoting a competitive advantage. customers and suppliers. • Six Sigma applies anywhere that variation and waste exist, so employees at all levels of a business can play important roles in Six Sigma projects. The American Society for Quality ■ Page 1 of 4
  2. 2. Common Six Sigma Themes of skepticism that Six Sigma was just another “quality program of the month” that would eventually fade. • Six Sigma places an emphasis on the DMAIC approach (define, Paul Wiczynski, a Master Black Belt for the Design for Six Sigma measure, analyze, improve, and control) to problem solving. program in the heavy-duty engine division of the company, says that • Organizations using Six Sigma often utilize teams that are some employees jumped on board with Six Sigma right away, while assigned well-defined projects with a direct impact on the some decide to wait and watch before getting involved. “Some wait bottom line. a little longer and some don’t want to participate at all. That’s one of • Upper management typically supports Six Sigma as a key the things that you learn to deal with as a belt; you can’t slice out business strategy. the ones who don’t want to participate,” Wiczynski notes. Cummins’ All-Encompassing Approach to Six Sigma To encourage employees to support Six Sigma, Strodtbeck says that beginning in 2008 Cummins employees working for promotions to At Cummins, the scope of Six Sigma goes well beyond the manu- critical positions that are identified as level 10 or higher must have facturing floor—it extends to every facet of the company’s business, earned Six Sigma certification at one of four classifications: from the accounting and legal departments to manufacturing units to human resources and now even to customers and suppliers. “From • Sponsor the beginning we decided to implement Six Sigma across the com- • Green Belt pany and use it as the process improvement methodology. We took a • Black Belt leap of faith that it would apply every place,” notes Strodtbeck who • Master Black Belt directs the company’s Six Sigma efforts. Six Sigma Project Solves Production Issue From day one, he explains, Cummins has adhered to a consistent strategy with the direction for Six Sigma coming from the corpo- As employees began to fully embrace the Six Sigma methodol- rate level and execution of that strategy happening locally, whether ogy at Cummins, they saw the results of improvement projects the site is in Indiana or Australia. To ensure consistency of its Six firsthand. At one Cummins manufacturing facility, management Sigma methodology, Cummins uses the same training for both detected that engine production was decreasing during shift Green Belts and Black Belts throughout its worldwide operations. changes and before and after the production workers’ breaks, so a Green Belt was assigned to address this issue. To date, the company has: The Green Belt, using various control charts, studied the production • 3,700 employees who have completed Six Sigma training, decreases during shift times and before and after breaks, explains • 500 Black Belts, and Megan Henry, a Master Black Belt working in the company’s • 65 Master Black Belts. engine business for midrange products. Using hard data gathered by the Green Belt on production numbers, management was able to This cadre of “belts,” as they are referred to at Cummins, are assigned to demonstrate to the union the real loss of engine production. one of three “versions” of Six Sigma utilized by the company: “It made it easier to negotiate new policies by using data to • Technology Development for Six Sigma, demonstrate areas of concern; using Six Sigma took a lot of the • DMAIC (Define, Measure, Analyze, Improve, and Control), and politics out of the issue,” explains Henry, who helped with the • Design for Six Sigma. data analysis. Once new break policies were implemented and the Six Sigma project was completed, Henry says that production Cummins purposefully views Six Sigma as a tool for business at this facility increased by nine engines per day, an improvement success as opposed to a training program. “We’ve kept the train- of nearly 1.4%. ing very specific; if you are going to receive training to be a belt, then you are going to work on (Six Sigma) projects for the Supporting Customers Through Six Sigma business,” emphasizes Strodtbeck. After nearly three years of using Six Sigma methodology, A Six Sigma Culture Change Strodtbeck and his team felt confident enough to start working on projects for customers. He identifies the basic criteria for sup- For a companywide initiative such as Six Sigma to take root and porting customers with a Six Sigma improvement project: flourish, a cultural change that persuades employees at all levels to embrace that change is vital. Strodtbeck says that Cummins staff, • The customer must identify the problem; they come to from senior leaders to line floor supervisors, use data for informed Cummins with the issue. daily decisions using Six Sigma methodology. Of course, in an • Ideally, the problem was caused by Cummins or is an issue organization with more than 29,000 employees, some resistance on which Cummins can have an impact. and skepticism is expected. After various continuous improvement • The customer must be willing to share data concerning the initiatives and training throughout the years, there was a high level problem. The American Society for Quality ■ Page 2 of 4
  3. 3. Figure 1 Vibration Reduction Results for Dodge Ram Interestingly, one of the biggest customer projects completed at Pickup Project Cummins was for the benefit of a “customer” who hadn’t pur- chased a single Cummins product. This company had recently DCX Lift Pump Vibration Measurement taken over a competitor that exclusively used Cummins engines. Truck #5989 – Chassis Dyno, Full Load, Sweep Up When the customer brought an engine servicing issue to Overall Level – Accel Z-axis 12.000 Cummins’ attention, a Cummins Black Belt was sent in to work through the issue. The company was so pleased with the proj- 10.000 Overall Level (Grms) ect’s results that it truly became a top customer—placing a large 8.000 On-Engine Lift Pump order followed by a second shortly thereafter. 6.000 “This is about making quality better for both customers and 4.000 suppliers and driving the total supply chain to a higher level of performance. We’ll also be more competitive because we can do 2.000 things for customers that others won’t do,” says Strodtbeck of his In-Tank Lift Pump 0.000 company’s commitment to supporting customers through 500 1000 1500 2000 2500 3000 3500 Six Sigma. Engine speed (RPM) Using the DMAIC Approach to Solving Lessons Learned Customer Issues While Cummins has enjoyed outstanding results from its Six Cummins frequently uses the DMAIC problem-solving approach Sigma program, Strodtbeck identifies two areas in which the to tackle customer-related problems. The company uses the cus- company could have initially performed better. tomer’s measures for a specific improvement and then holds the 1. Project Selection —“We underestimated the importance of belts accountable to deliver that for the customer, explains project selection—of having clear project selection processes Henry. With their traditional before and after measurements, tied to the goals and objectives of the business unit,” DMAIC projects are well suited for customers because they can Strodtbeck notes. He says that if he had to do it all again, easily show the delivered improvement, she adds. he’d spend six months working with leaders around the com- One Cummins Six Sigma success story involves a major cus- pany developing project ideas that were critical to what those tomer, Daimler Chrysler with its Dodge Ram pickup. Chrysler leaders were trying to achieve in their businesses and then and Cummins each monitor warranty failures monthly and both drive the Six Sigma projects from there. Strodtbeck laments companies detected a high number of warranty claims for faulty getting started with a brainstorming, random selection of the fuel transfer pumps on this pickup model. problem-of-the-day approach, and wryly says he’s been in the process of stopping this ineffective approach for five years! A Six Sigma belt was tasked to investigate and ultimately 2. Control Plans—Cummins, according to Strodtbeck, also reduce the lift pump failures underemphasized the significance of the control plan follow- in the Cummins diesel ing the project and the need to audit control plans after the For a detailed account of another Six engines supplied to Chrysler. belt completes the project. He recommends embedding Sigma project for Daimler Chrysler, The belt determined that tighter long-term audit control plans into the system right see the case study “Cummins Six vibrations were a key cause from the beginning. Sigma Project Results in a Smoother for the failure of the pumps. Ride for Dodge Ram Pickup.” Sustaining the Gains The belt set up vibration measurements to test alterna- tive locations for the fuel pump. Eventually, an alternative It’s these long-term control plans that are helping the company to location was determined, moving the fuel pump from the engine sustain the impressive gains made through thousands of Six to the fuel tank. Sigma projects. As Henry explains, if it was important enough for a Six Sigma project, then it must be tied to some sort of busi- “It was about a 17% failure rate over the entire warranty period ness measure that should be monitored regularly—weekly, [before the Six Sigma project]. It has essentially dropped to monthly, or quarterly. “We try to automate that business measure nothing with the new pump location,” Henry reports. She says as much as we can, not taking away time for other improve- that while total savings average $900,000 per year, it’s equally ments. It’s not the belt, but the process owner who is charged important to note that the customer’s trucks are on the road more with this ongoing monitoring,” Henry emphasizes. and in the shop less. This improvement project reduced peak transfer pump vibration on the vehicles from more than 8.0 Grms As the Six Sigma program at Cummins has matured, the team to less than 1.0 Grms, shown in Figure 1, without impacting has learned more effective ways of engaging process owners. vehicle-starting performance (Grms represents root-mean-square Some facilities have a very formal signoff procedure after a Six acceleration). Sigma project is completed and the process owners commit to The American Society for Quality ■ Page 3 of 4
  4. 4. the ongoing monitoring required in the long-term control plan. Contributing to This Article Others are more informal, where the belt and the process owner simply sit down and discuss the control plan. According to Megan Henry is currently the Master Black Belt for Cummins’ Henry, the more formal signoff process tends to enjoy the most midrange engine business in southern Indiana supporting manu- success at her organization. facturing, engineering, and marketing/sales. She has been a Master Black Belt for two years. Previously she worked as a The Future of Six Sigma at Cummins Black Belt at the Cummins’ Columbus midrange engine plant, completing seven projects. Henry joined Cummins in 1998 after In the next five years the goal at Cummins is to move into a graduating from the University of Michigan with a master’s structure where one-third of the company’s Six Sigma projects degree in industrial and operations engineering. are customer focused, one-third are internal projects, and the final third are projects completed for suppliers. The real value George Strodtbeck has served as the executive director of cor- and infinite source of opportunity is working on projects for porate quality at Cummins since May 2004. He’s led the suppliers and customers, Strodtbeck notes. worldwide implementation of Six Sigma from the company’s inception of the program in July 1999. A graduate of the U.S. Noting that leading Cummins’ Six Sigma program is probably Military Academy at West Point, Strodtbeck served in the U.S. the most challenging thing he’s ever done from a large company Army for 10 years where he also earned a master’s degree in perspective, Strodtbeck advises other quality leaders to take on international relations. After six years at Pepsi as fleet mainte- Six Sigma only if they are genuinely serious about it. He says nance and distribution area manager, he joined Cummins in 1992 that Cummins’ began Six Sigma just in time so that when the as a member of the corporate quality department. critical events of 2001 converged, there was enough happening with Six Sigma that it had an impact. “We were making a bet Paul Wiczynski is a Design for Six Sigma (DFSS) Master Black that this (Six Sigma) was the right thing to do,” recalls Belt in the heavy-duty quality organization at Cummins. He has Strodtbeck. By all accounts, that bet was a winner! been trained as a DFSS Green Belt and a DMAIC (Define, Measure, Analyze, Improve, and Control) Black Belt. He is also For More Information certified as an ASQ Black Belt. Wiczynski graduated from Michigan Technological University in 1985 with his master’s • Learn more about Cummins Inc. by visiting the company’s degree in mechanical engineering. He joined Cummins in 1986 Web site at after working for General Motors. • Read the companion case studies to this piece: About the Author • Cummins Six Sigma Project Results in a Smoother Ride for Dodge Ram Pickup Janet Jacobsen is a freelance writer specializing in quality and • Cummins Capitalizes on Six Sigma to Minimize Long- compliance topics. A graduate of Drake University, she resides Term Interest Rate Risk in Cedar Rapids, Iowa. • See the ASQ Web site at for more information on Six Sigma. The American Society for Quality ■ Page 4 of 4