Using Six Sigma statistical thinking to improve business processes A Cummins case study
Page 1: Introduction
It is easy to identify key competitors in a market by their goods or services. These products clearly meet customer needs in terms of the range of benefits they offer. However, an organisation has to develop, manage and integrate many different processes from across its business prior to launching the product into the marketplace. To achieve a competitive advantage it has to manage this process more efficiently than competitors.
The ability to survive and grow in these long-term competitive markets therefore, not only depends upon how organisations bring new and innovative products to market but also how they manage and develop all of the business processes that allow these innovative products to be supplied to their customers.
An organisation's performance will involve business processes working together to add value to a range of inputs in order to create a series of outputs. In a factory, for example, operations would involve bringing together finance, labour, equipment, materials, administration, marketing expertise, as well as the creative and efficient use of people and management processes to transform all of these inputs into desirable goods and services which meet or exceed customers expectations.
This case study illustrates how a large global manufacturing organisation, Cummins, uses an initiative called 'Six Sigma' for rapid process improvement from a range of key elements across the organisation to significantly improve its business processes. Using statistical tools and data as a base for analysis and a disciplined, logical approach, Six Sigma enables decision-takers within Cummins to improve their understanding of critical business and operational processes, generating major cost savings, developing and sharing best practices.
Worldwide over 1,000 Six Sigma projects have been completed by Cummins generating almost $400 million dollars in corporate savings over just three years. At any one time there are over 500 projects being worked on and 500 projects ready to be implemented.
Those involved in leading Six Sigma projects are known as either 'green belts' assigned to projects part-time or 'black belts' who are specialists leaders working full-time. The training involves creating a new way of thinking about how to meet customer needs.
Within Cummins UK, more than 200 staff have been trained as 'belts' and are leading the initiative. Each project is completed in six months or less to bring a sharper focus and to ensure measurable results can be identified and sustained. Six Sigma is, therefore, more than a statistical tool. It is part of Cummins' overall business model, developing better business processes to suit higher customer expectations.
Cummins | Using Six Sigma statistical thinking to improve business processes