iSixSigma

Six Sigma at CSX Corporation

Six Sigma at CSX is a GE success story. What started out as a GE “At the Customer for the Customer” engagement, turned into a corporate-wide deployment of Six Sigma at one of the leading transportation companies in the United States. Bill Smith, National Account Executive at GE Transportation Systems, tells the story best in GE’s 2001 Annual Report:

“For the past two years, we’’ve had a team working literally “At the Customer, For the Customer” with CSX Transportation at their offices in Jacksonville, Florida. The original idea was to work on a few joint Six Sigma projects together, but it evolved into a full-fledged company-wide initiative, training program and culture change at CSX.

“One of the first things we learned is that the customer’s culture is different from ours, and your way of doing things may not be the most effective way for your customer. Understanding CSX’’s motivations and what really matters to them made all the difference.

“CSX has strong corporate values, including putting the customer first and using fact-based management, that makes Six Sigma a good fit for them. One year into their initiative, more than 25% of CSX’s employees have gone through some level of Six Sigma training and they have 69 full-time Black Belts and 5 Master Black Belts among them. CSX has realized $17 million in annual savings from projects on service delivery, industrial work orders, locomotive fueling, demurrage billing, crew taxis and legal expenditures. Six Sigma has become part of CSX’s strategic plan and part of their culture.”

Savings and Benefits

“We are responding with initiatives designed to produce sustainable, responsible solutions. Foremost among them is a detailed analysis of our cost structure under the keen eye of Chief Financial Officer Oscar Munoz, who joined CSX in May 2003. This is a full evaluation of fundamental business processes to identify opportunities for Six Sigma and other improvements that go far deeper – and will affect our financial performance far longer – than incremental cost cutting.”

2003 Annual Report

“We expect to continue to realize labor savings through attrition and productivity improvements, but also important to our cost structure is the work being done by our employees through Six Sigma. Using fact-based techniques for identifying and eliminating waste by improving processes, we have permanently taken out costs.”

2002 Annual Report

“Six Sigma Successes saved more than $20 million in 2001, and CSXT is in the process of expanding this program.

“The Six Sigma methodology for analyzing and improving work processes has been adopted wholeheartedly at the railroad. Taking the lead from a number of America’s great companies practicing Six Sigma extensively, including General Electric, Motorola, and Johnson & Johnson, Michael Ward formed a high level group to lead the organization to make CSXT a Six Sigma company.”

2001 Annual Report

“But there is still more to be done to deliver the optimum service customers deserve and, in the process, increase shareholder value. Providing consistent, reliable service while lowering operating costs are central goals for 2001. To achieve them, CSXT is implementing specific action plans to increase productivity, introduce new service initiatives and lower costs through revitalized Performance Improvement Teams and the Six Sigma initiative – a fact-based methodology used by major companies to improve processes and drive out costs.”

2000 Annual Report

“’Our out-of-service rate is the lowest in the industry [5.2 percent],’ Wall said. Partly, that statistic comes because of a good preventative maintenance program. In addition, several ’Six Sigma’ projects have shown the way to better locomotive upkeep.”

Big Engines, Big Power at CSX, Destination:Freedom, April 7, 2003

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