Six Sigma in Shenzhen

Three years ago, the process jumped from General Electric's manufacturing operations to GE Money, and now, to its partnership in China.
Don DurfeeApril 13, 2007

When Jack Welch embraced Lean/Six Sigma in 1990s, it made perfect sense. GE has long been a company that values perfection and self-improvement, and LSS, as the process is known at GE, is the ultimate perfectionist’s tool.

Three years ago, LSS jumped from GE’s manufacturing operations to GE Money, which applies it to any routine activity you might find in a financial-services operation, such as loan or credit-card application processing. The result, says Angus Bishop, who is in charge of LSS efforts for GE Money Asia, has been “resoundingly positive.” He cites a GE operation in Thailand, where after an LSS workout session, the company was able to cut the processing time for auto loans by 40 percent.

Essentially, the “Lean” part of LSS requires a company to examine a process from the customer’s perspective and strip away any waste and inefficiency. The “Six Sigma” part means refining the process so that you get the same result every time (or at least 99.9997 percent of the time).

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Today, GE Money takes all of its acquisitions and partners through the LSS process. That means mapping all of the steps involved in getting a product to the customer. In the case of credit cards, you may find that applications pile up because the company needs documentation from customers. Or, in the case of a card co-branded with a retailer, there may be wasted time because filled-up application forms and documentation have to be put in a store truck and driven back to the processing center.

Through workout sessions, employees devise ways of trimming the fat. That can require some convincing. “Before a meeting, we compile a big dashboard that shows where there’s waste,” says Ed Pinto, GE Money’s COO for Asia. “Then we’ll bring the senior managers in and ask them, ‘Did you know that your process has 51,000 applications just waiting for two days with no one touching them?’ They’ll say ‘No way — that can’t happen.’ And we’ll bring them in to see the process. It’s a real wake-up call.”

Fixing such problems may mean reducing the number of fields on an application form to make it quicker for the applicant, or shuffling desks around in the underwriting unit so that there are fewer handoffs. In the case of the Wal-Mart credit card in Shenzhen, for example, GE and partner Shenzhen Development Bank put bank employees inside Wal-Mart stores so that there was no need to ship forms back to the processing center.

LSS has its critics, to be sure. A study last year by consulting firm Qualpro reviewed the shareholder returns of 58 Six Sigma adherents in the U.S. — only six outperformed the S&P 500. Defenders of the technique have responded that stock price is the wrong way to evaluate process improvement. In any event, GE Money believes it has found a source of competitive advantage. “In some markets you’ll find that customers are happy getting their credit cards in 30 days,” says Pinto. “But get it to them in two days, and they’ll be ecstatic.”

(For more, read CFO Asia’s April 2007 cover story, “Mix Masters.”)