Six Sigma and Contractors

A lot of marketing babble surrounds General Electric's Six Sigma process. When the delivery team needs a glossary as a handout, you know it'll take a while to figure how Six Sigma might help you. In this case, the effort might be worth it.

Six Sigma, GE corporate's internal quality initiative, is based on pure statistical analysis. For contractors, the procedure is begun by marching a process through its steps to find where challenges and losses of productivity lie. The system was launched for GE customers earlier this year.

"I've operated on anecdotal information my whole career," said Mitch Williams, commercial quality leader for GE Supply. "With Six Sigma, we make decisions that have numerically proven impacts. GE Supply has an interest in solving the customer's problem, whatever that problem is.

When the Six Sigma team approached Frischhertz Electric Co. in Louisiana and asked that question, they weren't certain of the answer. Owner Jim Frischhertz suggested there might be a challenge in their service area, but he couldn't pinpoint a specific problem.

With service department manager Claus Grassel, the team followed department processes from the call to the invoice and looked at actual costs, time spent at each step, paperwork generated and efficiency to see where productivity could improve.

"The biggest thing we found was paperwork," Grassel reported. "We had an outdated work order form. A lot of information we were taking the time to generate wasn't being used any more. We were so used to this form, we'd never stepped back and said, ÔLet's streamline this and cut out unneeded information.'"

The department reworked the form, and the project moved into the "control" phase. "Once a project is in control," said Williams, "you study the results over time. We pull charts and study the numbers and measure the actual change, and that change's impacts on productivity. In control, you prove statistically that you've made a difference."

At Frischhertz, the Six Sigma team also analyzed accounts receivable and through certain changes, lowered the payment wait to 28 days. "I think we can get even more granular and get their receivables down further," said Williams.

"They didn't come in here trying to tell us how they do things," said Grassel. "Everything was up to us, how we wanted to handle it, what we wanted them to look at."

Another contractor getting results from working in new ways with GE Supply is Colorado's Sturgeon Electric Co. The big issue with Sturgeon was labor costs. Six Sigma looked at the historical factors that contribute to high labor costs on a job. By focusing on one project, Sturgeon's project manager Dave Aguiar and general foreman Rick Blum worked with GE Supply solutions managers to save costs at several levels.

"On a typical job, Sturgeon might write 40 purchase orders a month," Aguiar reported. "We're down to one per month on this job. When you consider that one PO might cost from $40 to $80 to process, the savings are significant. Certainly, GE Supply has realized some savings as well."

The system employed is on-site materials management and bulk-order drops. At their end, Sturgeon had to get foremen and electricians to take some responsibility for ordering materials by finding out exactly what they would need, when they'd need it and how long beforehand it should be ordered. Once this was accomplished, GE Supply took that materials list and identified what they could box up for bulk drops, when it could be delivered and how to price it.

"The whole thing falls into Sturgeon's process improvement very nicely," said Blum. "We have empowered our foremen to run the jobs and become thinkers, not simply reactors. We've taken concrete productivity drivers like materials handling and gained control. With this system, we've had very little waste, very little handling time."

Aguiar added that he'd seen a new level respect among all workers, from apprentices up to the project manager. "Everyone has had a hand in the process and has ownership," he said. "It's been amazing."

Next, the Six Sigma process will move Sturgeon's project into the control phase and determine to the dollar what manpower savings it has generated.

"Now we are looking at other ways of improving these processes," Aguiar said. "We have had great dialogues between the two organizations on how we can take this to the next level. We have to learn how to take these savings into the estimating phase andsee how we can be more competitive in the marketplace." EC

CHICHESTER is a freelance writer based in Meadows of Dan, Va. She can be contacted at

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