We have heard about GE being one of the biggest proponents of Six Sigma, both for their own processes and for their customers. We’ve also heard how much GE has saved by implementing Six Sigma. This article is not a regurgitation of the existing rhetoric. Instead, I’d like to focus on an aspect of how GE became so customer focused – an important metric called span. Span is one way GE continues to focus on their customers (something they call “customer centricity”), while using Six Sigma to improve processes.
GE defines span as P95-P5. Unlike the range, which is the maximum value minus the minimum value of process data, the span removes the extreme outliers of your process by looking only at the difference between the 95th and 5th percentiles (the “P”s in the above formula).
Span is important for a couple of reasons:
- It helps the process owner and Black Belt understand the dispersion of a distribution, especially the ones that are non-normal and have a long tail. And let’s face it, whether the distributions display mean time between failures (Gamma distribution), fatigue life (Weibull or lognormal), involve chemical reactions (logistic), or involve cycle time (skewed with long tail), most of our processes are non-normal.
- It is a good measurement for understanding how well your business is meeting the customer requirement of on-time delivery. And this is the main reason GE has adopted span. It is an entirely customer-focused metric.
Citing the Annual Reports of GE
GE’s 2000 Annual Report contains a letter from Jack Welch, the former CEO of GE, to GE’s share owners. In a section, Jack Welch describes how GE is emphasizing the customer metric called span.
Bureaucracies love to focus inward. It’s not that they dislike customers; they just don’t find them as interesting as themselves. Today we have a Company doing its very best to fix its face on customers by focusing Six Sigma on their needs.
Key to this focus is a concept called “span,” which is a measurement of operational reliability for meeting a customer request. It is the time window around the Customer Requested Delivery Date in which delivery will happen. High span shows poor capability to hit a specific date; low span reflects great capability; and zero span is always the objective.
With span, the measurement is based on the day the customer wants the product. When the order is taken, that date becomes known to everyone, from the first person in the process receiving the castings, circuit boards or any other components from the supplier, all the way through to the service reps who stand next to the customer as the product is started up for the first time. Every single delivery to every single customer is measured and in the line of sight of everyone; and everyone in the process knows he or she is affecting the business-wide measurement of span with every action taken.
The object is to squeeze the two sides of the delivery span, days early and days late, ever closer to the center: the exact day the customer desired. Plastics has reduced its span from 50 days to 5; Aircraft Engines from 80 days to 5; Mortgage Insurance took it from 54 days to 1…It’s not that we know all the answers but we’re totally committed to finding them; and committed to externalizing all of our initiatives for the benefit of the customer. Over the long term, we believe this will differentiate GE in the eyes of the customer.
In GE’s 2001 Annual Report, current CEO Jeff Immelt echoes the same sentiment for span that former CEO Jack Welch did. Here is how Jeff Immelt describes GE’s ongoing use of span:
You have heard us talk about span, the “evil” variance our customers feel in our response to their requests for delivery, service or financing. Reducing span remains one of GE’s key goals. Our Appliances business has reduced span by 70%, allowing us to meet the most rigorous standards for rapid home delivery. At Power Systems, as a result of Six Sigma process improvements, we have achieved a significant reduction in span on plant start-ups – saving time and money for our customers.
How Is GE Using Span?
In addition to the uses described above, span is being used by GE on a daily basis to measure how well business units within GE are:
- Meeting promised delivery dates of orders (GE Plastics).
- Processing mortgage applications – from application receipt to approval/denial notification (GE Capital).
- Quickly answering partner requests for underwriting leasing contracts (GE Fleet).
A famous GE Aircraft example is told by GE Black Belts and Master Black Belts when teaching Span. GE Aircraft services the engines for airline customers, but before GE can service the engine it needs to be removed from the wing by a non-GE airline workforce. It is also re-attached to the wing by the same airline workforce after it has been serviced. It was this workforce that was adding significant delay to the cycle time. But the customer cares only about the whole process – how long the engine is out of service – and views GE responsible from the time the engine is ready to be removed from the time it is reattached and ready for service – that is the Span. Over the course of time and through using Six Sigma to measure-analyze-improve and control the process, aircraft engines’ span dropped from 80 days to five, and the customer was delighted.
Span is a metric used to understand process dispersion, as well as help a business become focused on customer requirements. If you promise a delivery date to a customer, span helps you understand how well you’re meeting that promise. Keeping our customers happy is paramount to all businesses; span is one tool to help you quantify the customer experience.