Larry Johnston, a seasoned General Electric executive, took over as CEO of Albertsons in April, 2001. Unlike his colleagues, James McNerney and Bob Nardelli, Johnston did not immediately sing Six Sigma in the key of G & E. He waited. Instead, he quickly got to work restructuring the company and three years later announced it was time for Six Sigma at Albertsons.

Overview

Larry Johnston sums up Albertsons Six Sigma initiative in their February 20, 2004 Press Release:

“Six Sigma has the potential to move Albertsons to an all new level of productivity and customer service in our industry. We are excited to be the first food & drug retailer in the world to launch a company-wide Six Sigma effort.

“Over the next 36 months we plan to deploy hundreds of Black Belts into every corner of the company as we re-engineer our major processes in every function and discipline. The world has witnessed how Six Sigma can transform industrial giants like GE, Allied Signal, 3M and others…..we believe it holds the same exciting potential in food and drug retailing.”

Savings and Benefits

Only a year into their deployment no specific details about Six Sigma savings have been released. Johnston’s early cost savings initiatives have paid off well. The 2004 Third Quarter Results Press Release states:

“The Company remained ahead of plan in its cost savings program that was initiated in mid-2001. Through the third quarter of 2004, over $900 million in savings had been realized toward a cost-savings goal of $1 billion by year end 2005.”

This $900 million in cost savings does not include Six Sigma. I expect we will hear even greater savings from Albertsons by the end of this year as the Six Sigma initiative continues to mature and spread into the “major processes in every function and discipline”.

Johnston has made quite a few other good moves since joining Albertsons: hiring Bob Dunst as CTO (former Safeway VP, Advanced Technology), offering the Preferred Savings Card and the best move of all, Patricia Heaton.

Articles and Links

See Albertsons Six Sigma Update, posted April 28, 2005

The Jack Welch of the Meat Aisle – Business Week Online, January 17, 2005

Albertsons will continue to cut prices – The Idaho Statesman, December 3, 2004

The Guru in the Vegetable Bin – Forbes, March 3, 2003

Bagging Profits – The Chief Executive, April, 2002