In 2001, Caterpillar Company launched the six sigma approach program. The main goal of the approach was to drive the company to achieving the long-term strategic goals of raising revenue. The approach was an interest of the then CEO, Glen Barton who wanted to reform management technique previously used into a total quality management strategy. The six sigma approach was designed so as to improve the performance of the company. It emphasized quality products, cutting costs of the products, and attaining of the goals of the company (Kotler 2003,p.23).
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The sixth sigma approach was designed in a specific way through which each of its steps emphasized on the improvement of a process as well as analyzing where the problem lies. However, the first approach caterpillar used was to select a team which was mandated to carry out problems analysis. The team used different analytical tools such as root cause analysis, process mapping, and tree and Pareto diagrams. From the results of the analysis, the team made an evaluation of the possible solutions to the problem and how the solution had to be applied. From hence, the team took to the improvement of the project.
The company had a long way ahead towards the realization of the goals especially in the improvement of the product and marketing strategies. With this in mind, the company stakeholders believed that the approach could help in realizatin of company’s goals within a short period of time. With the application of the approach, the company’s new goal was to create a 3.4 defect in every million products produced. This was 4.5 defects from the mean rather than the required 6.0.
More also, the company had to adopt other two methodologies which helped in making process map linear so as to combat the defect. These methodologies were, DMAIC which stood for Define, Measure, Analyze, Improve, Control, and DMEDI which is an abbreviation for Define, Measure, Explore, Develop, and Implement. DMAIC is a data driven strategy which is basically applied for the purpose of products quality development. DMEDI is designed as an approach in designing processes, products and services development (Plank 2004,p.54).
Since the adoption of the sixth sigma approach, the company has been participating in the project each year. The participation involves all members of company supporting groups and the factory workers. According to the company, each employee has the knowledge that changes take place only when the sixth sigma approach is applied. Any problem arising in the company is combated by the six sigma approach. The approach has permeated the company in business aspect since its adoption (Hart 2005,p.65).
Furthermore, the sixth sigma approach has abroad spectrum in its application. It can be applied in all the management fiields of the company. The approach helped caterpillar company to realize that its greatest assets was the employees and that it had to replace the knowledge that was in any case leaving the company by hiring in competitive employees. This helped the company in retaining high competitiveness in the global market and product qualities.
In addition, sixth sigma approach made it easy for the transfer of knowledge between various business units which was difficult before the adoption. The company also embarked on the strategy of teaching its dealers and suppliers about the use of the sixth approach in refining the sales. This approach helped the company to realize its goals since its products boomed in the global market. It also emphasized on the showing factual figures and data to the suppliers. This approach was well adopted by the suppliers within a short period of time.
The introduction of the six sigma approach by CEO Glen Barton was meant to help the company achieve its goal of $30 billion revenue by the year 2006. Surprisingly, the effectiveness of the approach helped the company to achieve the goal in 2004 years instead. Currently, the company uses the approach in problem solving and in development activities. The application of the approach normally involves integrating methodologies and principles in all business aspects including dealers and the suppliers (Morris 2001,p.34).