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Motorola, Allied Signal, GE and Honeywell, these four companies invented and refined Six Sigma -- they are the most mature in their deployments and culture changes. As the Motorola website says, they invented it in 1986. Allied Signal deployed Six Sigma in 1994, GE in 1995. Honeywell was included because Allied Signal merged with Honeywell in 1999 (they launched their own initiative in 1998).

 

Companies And The Year They Implemented Six Sigma
Company Name	Year Began Six Sigma
Motorola (NYSE:MOT)	1986
Allied Signal (Merged With Honeywell in 1999)	1994
GE (NYSE:GE)	1995
Honeywell (NYSE:HON)	1998

 

Table below identifies by company, the yearly revenues, the Six Sigma costs (investment) per year, where available, and the financial benefits (savings). There are many blanks, especially where the investment is concerned.

 

Six Sigma Cost And Savings By Company
Year	Revenue ($B)	Invested ($B)	% Revenue Invested	Savings ($B)	% Revenue Savings
Motorola
1986-2001	356.9(e)	ND	-	16	4.5
Allied Signal
1998	15.1	ND	-	0.5	3.3
GE
1996	79.2	0.2	0.3	0.2	0.2
1997	90.8	0.4	0.4	1	1.1
1998	100.5	0.5	0.4	1.3	1.2
1999	111.6	0.6	0.5	2	1.8
1996-1999	382.1	1.6	0.4	4.4	1.2
Honeywell
1998	23.6	ND	-	0.5	2.2
1999	23.7	ND	-	0.6	2.5
2000	25.0	ND	-	0.7	2.6
1998-2000	72.3	ND	-	1.8	2.4
Key: $B = $ Billions, United States (e) = Estimated, Yearly Revenue 1986-1992 Could Not Be Found ND = Not Disclosed Note: Numbers Are Rounded To The Nearest Tenth

 

Although the complete picture of investment and savings by year is not present, Six Sigma savings can clearly be significant to a company. The savings as a percentage of revenue vary from 1.2% to 4.5%. And what we can see from the GE deployment is that a company shouldn't expect more than a breakeven the first year of implementation. Six Sigma is not a "get rich quick" methodology. It is like a retirement savings plan, Six Sigma is a get rich slow methodology, the take-away point being that you will get rich if you plan properly and execute consistently.

 

As GE's 1996 annual report states, "It has been estimated that less than Six Sigma quality, i.e., the three-to-four Sigma levels that are average for most U.S. companies, can cost a company as much as 10-15% of its revenues. For GE, that would mean $8-12 billion." With GE's 2001 revenue of $111.6 billion, this would translate into $11.2-16.7 billion of savings. Although $2 billion worth of savings in 1999 is impressive, it appears that even GE hasn't been able to yet capture the losses due to poor quality -- or maybe they're above the three-to-four Sigma levels that are the average for most U.S. companies?

 

In either case, 1.2-4.5% of revenue is significant and should catch the eye of any CEO or CFO. For a $30 million a year company, that can translate into between $360,000 and $1,350,000 in bottom-line-impacting savings per year. It takes money to make money. Is investing in Six Sigma quality, your employees and your organization's culture worth the money? Only you and your executive leadership team can decide the answer to that question.