Ii operating margins improved 1 during the 1980s

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ii. Operating Margins Improved. 1. During the 1980’s, operating margins were roughly 9 percents and improved to 12 percent during the early 1990’s. 2. By 2000, GE’s operating margins reached 18.9 percent.
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B. Six Sigma Project Examples i. Wal-Mart (Slater). 1. GE Lighting business has a billing system that did not integrate with Walmart’s purchasing system. 2. GE Black Belt project spends $30,000 and reduces defect in the system by 98 percent. ii. GE Aircraft Engines (Slater). 1. In 1998, GE invests $83 million resulting in over $300 million in benefits. a. 8,279 projects completed. b. Reduced engine shipment preparation times from 2 days to 10 hours. c. Engine assembly time reduced from 5.8 days to under 3 days. iii. GE Medical (Slater). 1. Utilizes designs the LightSpeed CT scanner for the Six Sigma production system. a. New product “revolutionizes the medical diagnostics.” b. 3 minute chest scan reduced to 17 seconds. c. 10 minute full body scan reduced to 32 seconds. d. Provided doctors with more information and improved speed over traditional CR scanner. C. Customer Satisfaction (Bryne). i. GE customer satisfaction did not improve with the increased quality improvements. ii. GE uses simplified Six Sigma approach to resolve customer delivery variance.
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1. GE Plastics – 50 days to 5. 2. GE Aircraft Engines – 80 days to 5. 3. Mortgage Insurance – 54 days to 1. iii. GE takes the Six Sigma to their Customers. 1. GE creates “Six Sigma: At the customer, for the customer.” a. In 2000, GE Aircraft Engines supports 1,500 projects at over 50 airlines resulting in customer earning of $230 millions in operating costs. b. GE Medical supports 1,000 projects at numerous hospital creating over $100 million of operating margin. D. Bottom – Line i. Profits to Shareholders 1. In the end, it is the value to the shareholders that truly matters. 2. GE stock skyrockets after 1995 compared to S&P 500 and Dow Jones Indexes. V. Summary A. Six Sigma is a highly disciplined process that helps a company focus on developing and delivering near-perfect products and services. B. Why “sigma”? The word is a statistical term that measures how far a given process deviates from perfection. C. The central idea behind Six Sigma is that if you can measure how many “defects” you have in a process, you can systematically determine how to eliminate those and approach “zero defects.” D. Six Sigma has changed the DNA at GE – it is the way that GE works – in everything that GE does and in every product GE designs. E. Biz Portfolio Restructuring i. No. 1 or No. 2: Fix, Sell, or Close ii. 3 circle concept:
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12 division, Finance/Service Reorganization Downsizing Delayering Empowerment Cultural Revolution Work-Out CAP Performance Ranking System Establish much more openness and Trust Rebalancing the Portfolio Marketing Oriented “At the Customer, For the Customer (ACFC) ” Growth: New platforms, New Process New People Profile Infrastructure for developing countries Work Cited Bryne, John A. Jack Straight from the Gut. New York: Warner Books, 2001.
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