GE Fanuc Case Study

I.

Statement of the Problem This case study provides information from General Electric (GE) Fanuc approach in implementing their Six Sigma headed by Jack Welch in 1996. A business strategy that helps them gain competitive advantage and reduce cost of failure. To ensure quality product, test is being conducted on their circuit boards called the Environmental Stress Screen (ESS) and the used of oven for seven (7) hours with a high-temperature. This test is followed be second and a final test. They realized a high expense for electricity payment and maintenance cost per oven. We come up of different problems regarding the use of testing: 1. They consume much in electricity. 2. They have expensive maintenance cost per oven. 3. They are paying high labor cost.

II.

Objectives The GE Fanuc found a way to solve their problem and we conducted this study to help solve their problems too, with the following objectives: 1. To provide some Alternative Courses of Actions that am a lower cost to eliminate the ESS and the used of ovens too. 2. To have a consistent Six Sigma technique effectively. 3. To find a better way of implementing their technique

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III.

Alternative Courses of Actions (ACA’s) It is necessary to identify the key variables that are most likely to create errors and excessive variation - the root cause. One useful approach for identifying the root cause is the “5 Why” technique. This approach forces one to redefine a problem statement as a chain of causes and effects to identified the source of the symptoms by asking why, ideally 5 times but in the problem presented we have different numbers of chains of why causes just to come up to the root cause. Problem 1: They consume much in electricity. Q: Why they consume much in electricity? A: Because they used large number of electric equipment. Q: Why they used large amount of electric equipment? A: Because they implemented testing after the circuit boards were produced. (rootcause) Problem 2: They have expensive maintenance cost per oven. Q: Why they have expensive maintenance cost per oven. A: Because they used oven frequently. Q: Why they used ovens frequently? A: Because they badly needed it in testing circuit boards. (rootcause) Problem 3: They are paying high labor cost. Q: Why they are paying high amount of labor cost? A: Because the company has more number of employees. Q: Why they have many employees? A: Because they need many employees for testing frequently the circuit boards. (rootcause)

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Alternative Courses of Actions (ACA’s) for Problem 1 1. They could use equipment which consumed less amount of electricity. 2. Reduce the number of equipment. 3. They can eliminate testing and ESS. Alternative Courses of Actions (ACA’s) for Problem 2 1. They could purchase ovens with high quality. 2. They could institute training to employees on how to use the equipment properly. 3. They could eliminate testing and ESS.

Alternative Courses of Actions (ACA’s) for Problem 3 1. They could lower the salary of the employees. 2. They could terminate some of the employee. 3. They could eliminate testing and ESS.

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IV. Conclusion 5- Excellent 4- Very Satisfactory 3- Satisfactory 2- Good 1- Poor Cost

Effectivity

Quality Of Products Produced

Total

ACA 1

2

3

4

9

ACA 2

5

5

4

14

ACA 3

5

4

4

13

ACA 1

5

3

3

11

ACA 2

4

4

5

13

ACA 3

5

5

4

14

ACA 1

5

2

2

6

ACA 2

5

1

2

8

ACA 3

5

5

4

14

Problem no.1

Problem no.2

Problem no. 3

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This analysis indicated that the final test captured the same failures as the ESS (Environmental Stress Screen test) in a more time-and cost-effective manner, so the ESS and the ovens used for the test could be eliminated. To control the improvement, the company must track the number of failures and defective boards on the line to ensure that product quality remains high after elimination of ESS. The actual benefits that resulted from the project are summarized here.

Direct labor and materials savings

$ 84,742

Inventory Reduction

$ 48,400

Energy/maintenance

$ 16,000

Total Hard Savings

$149,142

Labor Cost Avoidance

$ 18,000

TOTAL SAVINGS

$167,142

Jack Welch, the CEO of GE concluded: “Today, Six Sigma is focused squarely where it must be- on helping our customers win. A growing proportion of Six Sigma projects now underway are done on customer processes, many on customer premises. The objective is not to deliver flawless products and services that we think the customer wants them when we promise them-but rather what customers really want when they want them.” V. Recommendation If a problem arises, we must begin with a detailed assessment and analysis. Using the Six Sigma approach, we must first identify the root cause of the problem. Then, we must decide on what to do using some criteria for judging different alternative courses of action like the costs and benefits of implementing a solution.

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