6 Sigma: Foundation for Quality at Caterpillar

by Heather McBroom
Caterpillar Inc.

The quality of Caterpillar’s products reflects the power and heritage of the company. As the organization focuses on executing the enterprise strategy and living by its values, one of the top priorities continues to be product quality. The goal to achieve world-class product quality requires each Caterpillar employee to live Our Values in Action—Integrity, Teamwork, Commitment and Excellence—passionately every day to ensure the company delivers on its promises to customers.

To ensure this focus on the customer, Caterpillar Inc. made organizational changes early this year to align its machine product and marketing organizations, which positions the company to achieve its 2010 and Vision 2020 goals and to build deep expertise in product development.

Five end-to-end machine business divisions were created: Mining, Quarry & Waste, Excavation, Earthmoving and Building Construction Products. These divisions incorporate design, manufacturing, marketing, sales and product support for the entire value chain. The alignment also introduces three new regional distribution services divisions within Caterpillar—Europe, Africa/Middle East; Asia Pacific; and the Americas—with responsibility for Caterpillar’s total portfolio of business with each dealer, the dealer relationship, dealer development and ensuring the most efficient and effective distribution of Caterpillar machines, engines and parts. This alignment will strengthen Caterpillar’s world-class product and service offerings.

The alignment builds on Caterpillar’s success at deploying 6 Sigma, a critical component of the company’s enterprise strategy. 6 Sigma has helped Caterpillar achieve record results, all while improving the way it does business. With more than 7,500 active projects currently aligned to Critical Success Factors, Caterpillar continues to utilize 6 Sigma resources and processes to deliver results.

6 Sigma also serves as the foundation from which to ensure product quality. This disciplined approach is used throughout the product lifecycle—from product development to production through product support.


What is 6 Sigma?

The textbook definition of 6 Sigma refers to a step-by-step approach designed to reduce the number of errors in a given process. At Caterpillar, anything that produces a result is considered a process. This can mean everything from assembling a product to finding areas of opportunity to profitably grow the company. The end result is fewer errors and more successful, efficient processes across the enterprise.

The Greek letter Sigma is used to represent a statistical unit of measurement. It defines standard deviation, or in Caterpillar’s case, the number of errors made in a product or process. 6 Sigma equates to only 3.4 errors per million opportunities.

Most businesses operate at a 4 Sigma level, meaning they’re about 99.5 percent defect free. Sounds pretty good, right?

But it really isn’t good enough when it translates into the following statistics:

  • Two accidents a day at major airports
  • 210 minutes a month without electricity
  • 2,500 incorrect surgical procedures a week
  • 20,000 pieces of mail lost an hour
  • 100,000 incorrect drug prescriptions a year.

To reach the 6 Sigma level, Caterpillar uses 6 Sigma methodology to guide projects and implement processes. The methodology utilizes a common, disciplined approach that focuses on gathering information, analyzing data and making fact-based decisions to ensure the most efficient and effective processes, products and services are in place to meet customer requirements.

Product Development
Caterpillar’s reputation is built on producing quality products, and these products provide a competitive advantage. The product development process focuses on bringing a concept to production to meet or exceed target levels for quality, reliability, cost and schedule.

New Product Introduction (NPI) is the process Caterpillar uses to develop, build and deliver quality products and services to customers worldwide. The NPI process builds on the 6 Sigma product and process creation methodology, DMEDI—Design, Measure, Explore, Develop and Implement. DMEDI is embedded within the phases of the NPI process. Guided by NPI tools and Caterpillar product and industry strategies, NPI teams work together to continuously improve the quality, technology, performance, durability and reliability of Caterpillar products.

Production
In 2005, Caterpillar launched the Caterpillar Production System (CPS) to implement a common enterprise-wide order-to-delivery process to improve safety, quality and velocity, add capacity, and improve cost management. Throughout the company, CPS—along with 6 Sigma—is improving manufacturing efficiencies in Caterpillar’s
global operations.

6 Sigma is foundational to CPS and improving order-to-delivery processes—everything from the time a customer places an order until he or she receives the finished product. The principles followed with 6 Sigma and the alignment process for closing gaps in achieving goals are all leveraged in the execution of CPS processes. CPS focuses on eliminating waste—defined as any activity that consumes resources but creates no value for the customer—in Cat’s processes from order to delivery. Within CPS is the Quality Management process focused on delivering defect-free products and services to customers.

Product Support
Responding quickly to product problems experienced by customers is critical. Integral to product support is the Continuous Improvement Process (CPI), the global process for resolving product problems. Embedded with the fundamentals of 6 Sigma DMAIC—Define, Measure, Analyze, Improve and Control—methodology, CPI provides a disciplined approach to identifying root cause and ensuring permanent corrective action. By quickly resolving and addressing product problems, trust is built and maintained between Caterpillar, dealers and customers.

Perhaps the most critical element to Caterpillar’s product support is its dealer network. Caterpillar’s distribution system is unmatched in delivering integrated solutions tailored to meet customer needs. Caterpillar dealers build lifelong relationships with customers that provide critical information to meet their needs effectively. The excellence of Cat’s distribution system is a formidable competitive advantage that enhances the value of its products and services.

Our Values in Action
A strong commitment to excellence and focus on the needs of customers drives Caterpillar to continuously improve the quality and reliability of its products and services. Historically, Cat has been recognized for providing the highest quality. Continued success depends on exceeding the quality expectations of customers and standing behind everything the company does. iBi  

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