December 26, 2010 One Company’s Journey

Volume 13 | Issue 4

Six Sigma has profoundly impacted the Columbus, Ind.-based Cummins Inc. But successful implementation required patience and active company l

In 1999, Tim Solso, soon to become chairman and chief executive officer of Cummins Inc., began developing his strategy designed to lead the company into the 21st century. As part of that effort, he visited PACCAR (a customer), Eaton (a supplier), and General Electric, a world-renowned organization. He learned one thing from each visit: Six Sigma was positively transforming these companies and their bottom-line performance.

Tim decided that Cummins would pursue Six Sigma. This proved one of his most critical executive decisions, as it initiated a decade of unparalleled change and success (the accompanying chart, “The Cummins Quality Journey,” helps define impact).

10-YEAR IMPACT
Before Six Sigma, profits did not track directly with increases in sales. Cummins usually lost money or broke even in a downturn. Our share in many of our markets was slipping. Product and service quality were inconsistent.

After $3 billion-plus in savings, 17,000-plys projects, and 11,000-plus people trained as belts, Cummins became a completely different company. However, numbers only tell part of the story. After 10 years, Six Sigma takes on many forms at Cummins. These include:

• DMAIC (Define-Measure-Analyze-Improve-Control) – Process and product continuous improvement Six Sigma (reactive to problems that exist in current processes, products and services);
• DFSS (Design for Six Sigma) – Processes and tools used to deliver requirements during the new product phase gate process and to work on key new, unique and/or difficult issues during design;
• TDFSS (Technology Development for Six Sigma) – Processes and tools used during the invention of new technologies needed for future requirements;
• ERM (Enterprise Risk Mitigation) – A Six Sigma focus area that helps define Cumin’s approach to addressing company wide risks;
• SFSS (Supplier Focused Six Sigma) – As Cummins increasingly depends on the quality of its supply base and the management of supply chains, the company uses Six Sigma with suppliers to help them improve their quality;
• CFSS (Customer Focused Six Sigma) – Demonstrates Cummins’ commitment to customers; Six Sigma improvement processes, tools, training and project leadership enhance both the quality of customer business and results and the relationship between our two companies;
• Community Six Sigma – Cummins works with communities by using Six Sigma to improve conditions, schools, and other parts of the community.

In short, if there is a question for which we don’t have an answer, Six Sigma’s processes and tools can help supply the answer.

SIX SIGMA’S ONGOING RELEVANCE
Today’s popular media regards Six Sigma as yesterday. “It is so 20th Century,” we often read and hear. But that suggests that efforts toward continuous improvement, elimination of waste, reduction of variation, people development, and improved customer satisfaction and business results have become anachronistic. Nothing could be further from the truth, and the Cummins’ example provides the evidence: Through Tim Solso’s leadership, Six Sigma has succeeded, and it has become the model for other current and future total company change efforts.

Cummins proved to itself that transformation within a global company of 40,000 people requires leadership, determination, discipline, time and perseverance demonstrated by the company’s senior members.

Transformation cannot occur through lower levels of leadership somehow bubbling up through the boiling cauldron of the day-to-day business. It has to be actively led through the personal engagement of the company’s senior leadership. Anything less leads to failure, as can be seen in the vast wasteland of ill-conceived and implemented total quality programs of the last half-century.

If one could take the top off the company and look down on its inner workings, these differences would be revealed.

Cummins’ operating discipline is dramatically different. It is rare that a decision of any magnitude is made today absent the use of data and analysis developed from a Six Sigma project-based approach with a belt and knowledgeable team leading the investigation.

Capacity is flexible. During the 2008-9 downturn (the most severe in the company’s history) Cummins flexed its capacity up and down based on market demands through a series of actions that were the result of or made possible by uncountable Six Sigma projects carried out by our plants and operating teams through the years.

Education and development is a focused business imperative. Thousands of people have been trained as belts, involved as project sponsors or as team members. All have learned how to think about problems using a data based, systematic approach that improved the quality of decision-making at all company levels. It is so important to Cummins’ future that it is now a requirement that all senior leaders achieve Six Sigma certification as part of their development as leaders and decision makers.

It is easier to work together. A global company brings with it the difficulty of many languages and cultures blended together under a single company banner. One of Cummins’ competitive strengths is its internally integrated product line. We are the world’s only diesel power systems company that owns all of the parts and pieces from air in to exhaust out. This strength can be a weakness if a company’s operating elements cannot work together. Six Sigma gives Cummins a common language, process and set of tools deployed throughout the company’s many parts. This is a tremendous enabler for working across business and functional boundaries, making it much easier to communicate even when the spoken languages are not always the same.

SURVIVING THE STORM
Finally, evidence of the value of Six Sigma at Cummins is best seen in our response to the 2008-9 economic downturn. Our Six Sigma project load was increased rather than reduced. We identified the 50 biggest cost-savings projects to bring additional attention and make them go faster to reap the benefits more quickly. We launched an Inventory War Room that used Six Sigma projects to reduce inventory value by $500 million in four months. Many other efforts across the company accelerated Six Sigma projects to help respond quickly to the economic realities that confronted us. Then, in mid-2009, we began a series of Six Sigma projects focused on how we would prepare and respond to the eventual upturn to capture more markets, improve our customer responses and grow even faster than before the downturn.

There are no limits to how Six Sigma can positively impact a company’s fortunes. But successful implementation depends on the willingness of company leadership to actively engage and stick with it long enough to allow it to truly take root and work its way into every aspect of the company’s DNA. Ten years and $3 billion-plus of savings later, Cummins and its leadership remain committed to continuing the journey.

George Strodtbeck is Cummins’ executive director, Corporate Quality and COS (Cummins Operating System). He has been responsible for the worldwide implementation of Six Sigma since Cummins began its program in July 1999.

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