Quality Improvement and Six Sigma at 3m

Quality Improvement and Six Sigma at 3M

By the end of the year 2000 3M was in trouble, the innovation giant had become unwieldy, profits had become erratic and even worse 3M’s stock had become stagnant and stalled. Their solution to this problem was snatching up James McNerney when he failed to win the race to replace Jack Welch at General Electric. James McNerney was the first outsider to lead 3M in its over 100 year history so 3M was taking quite a chance by bringing him in. One of his first acts as CEO was to trim some fat and fire 8,000 employees about 11 percent of the workforce and to put in General Electric’s version of Six Sigma. Six Sigma is a quality improvement tool developed by Motorola in the 80’s to achieve a very high level of consistent quality in all its processes. (Schroeder, Goldstein & Rungtusanatham, 2010) McNerney and his quality improvement programs brought operating margins from 17 percent in 2001 to 23 percent in 2005. In his first year at 3M McNerney slashed capital expenditures 22 percent, from $980 million to $763 million, and 11 percent more to $667 million by 2003. Research and Development at 3M was systematized in ways that were wholly foreign to the researchers at 3M. Even with the push back from the employees who found parts of the process stifling McNerney was able to hold the Research and Development funding to right around 1 billion Dollars from 2001 to 2005. Six Sigma is meant primarily to improve value but an additional value is its ability to save time and money. Prior to McNerney researchers had been allowed to spend years testing and tweaking products until it was just right. Under Six Sigma Research and Development at 3M was supposed to be directed towards work that will produce a product that will be producing a profit the next quarter or worse case the quarter after that.

There is a school of thought that Six Sigma type of quality improvement is not a one size fits all type of solution for all areas of a company....