Hispanic Enterprise - February/March 2008 - (Page 50)

MANAGING SIX SIGMA ORIGINALLY INTENDED FOR MANUFACTURING, THIS MANAGEMENT APPROACH CAN HELP PINPOINT THE OBSTACLES TO TAKING YOUR BUSINESS TO THE NEXT LEVEL. W hen Juan Semente was charged with lowering the cost of goods at Johnson & Johnson, he turned to Six Sigma principles to drill down into company practices—and make improvements. Six Sigma, a set of practices developed at Motorola, originally was used in manufacturing, But the process is bigger than that. Six Sigma is now used on a wide range of businesses and industries to improve proﬁt margins, minimize waste and defects, and keep customers and employees happy. It worked for Semente. “We didn’t have a process in place to prevent the suppliers from sending more material that we needed,” explains Semente, Johnson & Johnson’s global vice president of supply chain and distribution. “In establishing a process, we found three concepts for managing inventory. We were able to reduce our inventory by $67 million, and that allowed us to lower the cost of goods.” Like peeling an onion, Six Sigma uncovers the layers of process variables and defects that you need to understand in order to control to eliminate the wasted time, effort, and materials that add to your costs but don’t add value for your customers. No longer just for manufacturing, you can apply Six Sigma principles to any business and potentially save millions of dollars in the process. “Six Sigma is a problem-solving technology, but it’s also a management methodology that ties process improvement directly to lowered costs, improved customer satisfaction, and higher returns on your investment of time and money in your business,” says Greg Brue, a Six Sigma pioneer who implemented the principles at General Electric with Jack Welch. He is the currently CEO and president of Six Sigma Consultants in Albuquerque. Motorola reportedly saved more than $15 billion in the ﬁrst 10 years of using the program. DuPont started Six Sigma in 1998 and realized more than $1.6 billion in cost savings in four years—in addition to reducing environmental impact and increasing safety. Allied Signal (Honeywell) not only reduced costs by $1.4 billion from 1992 through 1996, it also reduced new product introduction time by 16 percent. ELIMINATING DEFECTS AND CUTTING COSTS How does this apply to the average business? When it comes to the bottom line, there are there are typically two ways to increase proﬁt in your business: increase the price of the services or product you are selling, or decrease the cost of goods and services. To decrease the cost of goods and services you must identify HISPANIC ENTERPRISE 50 February/March 2008

Table of Contents Feed for the Digital Edition of Hispanic Enterprise - February/March 2008

Hispanic Enterprise - February/March 2008 Contents Briefcase: BIZBUZZ: Business Briefs Briefcase: Trendsetters Briefcase: BIZTECH: Virtually Meeting BizLife: Travel: Madrid's New Attraction Q & A: Mi Case es su Casa Hispanic Commerce: The Agenda Cover Story: The Top 50 Corporations for Supplier Diversity Technology: Hispanic Web 2.0 Success & Motivation: Sweetening the Deal Politics & Government: The Rescue Generation Managing: The Method Franchising: The Hispanic Face of Franchising Chamber Focus: It's Showtime Movers & Shakers: Open for Business Finance & Investing: Getting Your 401(K) on Target

Hispanic Enterprise - February/March 2008

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