iSixSigma

Norfolk Southern Six Sigma

In October 2000 Norfolk Southern began an initiative called “Norfolk Southern for the 21st Century” (NS21). NS21 is an internal effort to improve performance, focus on customer service, and reduce costs. Six Sigma is used in conjunction with NS21 and has helped the railroad giant become one data-driven locomotive!

In 2003 Norfolk Southern refocused the initiative, called it NS21 Version 2.0, and set new targets and goals for improving track structure and density, employee productivity, G&A expenses, equipment costs, yard rationalization, and top-line growth. The company has also implemented the “Thoroughbred Operation Plan” (TOP), which optimizes the way they operate their rail network by improving on-time performance, reducing car handling, shortening routes, accelerating train speeds, and boosting asset utilization.

Savings and Benefits

“We have successfully completed the first three rounds of projects under the NS21 program. Over the last two years, we have realized $110 million of benefits including $45 million in recurring cost savings. These benefits are net of implementation costs. Our first round focused on ’non-core’ areas while our operating department focused its efforts on implementation of our successful TOP program.”

Kathryn B. McQuade, Senior Vice President Financial Planning
Norfolk Southern Corporation
Financial Analysts’ Meeting
January 29, 2003

“’At the end of the day, Six Sigma is all about project completion and taking money to the bottom line,’ Yates said. ’Of the 17 projects completed to date, benefits of $36 million have been recognized, including revenue growth, revenue retention and cost avoidance. There also have been projects that specifically address customer satisfaction. We expect an additional $29 million in benefits once we complete current projects.’”

NS NewsBreak, January 2003

“We have achieved better scheduling and consistent execution of our Thoroughbred Operation Plan. On-time performance has improved measurably, and all of our key service metrics have improved, exceeding our goals. This month, we achieved new highs in on-time train operations. Our measurement systems for customer service have improved markedly. As we know more about our service, we can – and do – drive improvement.”

David R. Goode, Chairman, President and Chief Executive Officer
Norfolk Southern Corporation
Annual Meeting of Stockholders
May 8, 2003

Process analysis of work functions and our ongoing Six Sigma initiatives produced better asset utilization and work force productivity during 2003.”

2003 Annual Report

“We focused on process improvement, using our own NS21 process and the discipline of Six Sigma. Our operating ratio improved 2.2 points. Productivity improvement is a constant necessity, and we continue to devote ourselves to it.”

2002 Annual Report

“More than 100 NS employees received Six Sigma training in the past year and a half. Using Six Sigma methods, NS reduced end-of-train device battery failures, which resulted in fewer train delays, and improved the locomotive overhaul process, which resulted in fewer in-service locomotive delays. Other projects are expected to result in improved customer service and cost savings.

“’Six Sigma builds on what we’’ve accomplished,’ said Yates. ’One day it will simply be ‘the way we work.’”

2001 Annual Report

Handpicked Content:   Project Cycle Time

Articles and Links

NS NewsBreak, Jan 2003

Norfolk Southern Presentation to Analysts, Norfolk Southern Website, 2003

Remarks by Kathryn B. McQuade, Senior Vice President Financial Planning, Norfolk Southern Corporation, at the Financial Analysts’ Meeting, January 29, 2003

NS Adopts Tougher Quality Standards, May 2001

Continual Improvement Assured with Six Sigma, NS NewsBreak, Apr 2002

All Aboard, Recycling Today, May 16, 2002

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