Substance, Not Hype  

 

Defenders say the current downturn, far from denting 6 Sigma reputation, is enhancing it.

 

While they acknowledge 6 Sigma did not help them predict and avoid the downturn, they insist no one ever claimed it would.

“You’re dealing with a global economic problem that is a one-in-80-year event,” Keith Sherin, GE’s CFO, told to Reuters.
“I wish 6 Sigma had been able to keep us out of this.”

What it is allowing them to do, they claim, is respond to the crisis more quickly than in the past. Sherin and Caterpillar’s Burritt both claim that 6 Sigma is helping them improve their working capital positions and reduce cost structures.

Alex Blanton, an analyst at Ingalls & Snyder who has covered Caterpillar for nearly four decades, says

6 Sigma benefits were evident in the enterprise latest results.

While Caterpillar reported a first-quarter loss because of more than $550 million in layoff charges, it actually reported a better-than-expected profit on an operating basis.

Even more remarkably, it managed to increase gross margins and reduce inventories, even as sales slumped.

“In the past it would have gone the other way. The corporte would have increased inventories when sales went down because it couldn’t reduce its production fast enough,” Blanton said.

“So 6 Sigma isn’t just a bunch of buzzwords. Yes, they use this funny-sounding terminology … But it’s a very serious effort. It works and you can see the results right here in this quarter.”

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