JPMorgan Chase & Co. is the second largest bank in the US. The leading global financial services firm was built from the successful merger of JPMorgan and Chase Manhattan Bank in December 2000 and the recent merger with Bank One in July 2004.
Dr. Alex Balbontin, Vice President of Productivity and Quality and Master Black Belt at JPMorgan Chase, recently spoke at the IXPERION Six Sigma in Financial Services Conference in New York.He presented an excellent overview of the evolution of Six Sigma at JPMorgan Chase and Bank One. I’ve summarized his comments below:
Six Sigma dates back to 1998 at JPMorgan where it was introduced as a corporate-wide initiative focused on expense reduction projects. Bank One has been using Six Sigma since 2000 where it was introduced in the National Enterprise Operations Group as a business process improvement tool. Today, Six Sigma is part of a broader Productivity and Quality (P&Q) initiative that includes Lean, Design for Six Sigma (DFSS), Activity Based Costing, Project Management, Kaizen, and Change Leadership. Six Sigma Productivity & Quality became one of JPMorgan Chase’s top six strategic initiatives in 2002 and focuses not only on expense reduction but revenue increase and customer satisfaction as well.
A unique addition to the traditional DMAIC steps, JPMorgan included another “I” into the methodology, creating “DMAIIC”, which stands for Define, Measure, Analyze, Improve, Implement, and Control.
The 2004 Annual Report does not mention Six Sigma specifically but does call out the commitment to waste reduction and efficiency in operations:
“Cut Waste And Improve Efficiency Through Outstanding Systems And Operations: A financial services company cannot win unless it is a low-cost provider. This requires eliminating waste and creating the most effective systems and most efficientoperations in the business. We are well on our way.”
Savings and Benefits
“While the market for financial services is far more fragmented on the retail side than it is in wholesale, certain fundamentals apply in both worlds. One is the importance of flawless execution. That is why we are using the Six Sigma approach to drive improvements in quality and efficiency throughout JPMorgan Chase. Whether the product is a $50,000 mortgage or a multibillion-dollar underwriting, we aim to get everything right the first time.
“Partially offsetting these increases were $145 million in savings achieved through restructuring, productivity and quality programs, including an organization-wide Six Sigma effort.” 2001 Annual Report
“Last year, the firm’s clients and shareholders benefited from Six Sigma – a set of tools that guides teams in understanding what clients need and then helps them meet those needs flawlessly. Emphasizing customer-focused operations and rigorous service levels, Six Sigma drove more than $400 million in financial benefits in 2002. Going forward, the launch of Six Sigma projects is expected to generate benefits of up to $1.0 billion per year.
“To realize the full power of our business model, we have devoted considerable resources to improving our efficiency. We have under way a broad range of re-engineering efforts, many using the rigorous methodology of Six Sigma…we nearly doubled the number of employees with expert Six Sigma certification.” 2002 Annual Report
“In 2003, our productivity and quality efforts yielded more than $1 billion pre-tax in net financial benefits, more than doubling those achieved in 2002. Over one-half of these benefits came from re-engineering key business processes using the disciplined methodology of Six Sigma. We used Six Sigma in several key areas, including enhancing our customers’ experience and removing costs from our larger and more complex operations.” 2003 Annual Report
Articles and Links
Quality Model Mania, Computerworld, March 8, 2004
JPMorgan Chase Sees the Light With Technology Sourcing, Purchasing,November 6, 2003
Peer Counsel – Six Sigma, CIO, November 15, 2003
How J.P. Morgan, Chase tied the IT knot, McKinsey Quarterly, October 4, 2003
Six Sigma, Computerworld, March 5, 2001