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Circuit City - Six Sigma

Overview

Circuit City began their Six Sigma initiative early in 2001 as stated in their 2001 Annual Report:

Given the challenging retail climate, we will even more closely examine our operating practices. Specifically, we are undertaking initiatives to...apply the Six Sigma methodology to critical processes so that we measurably increase customer satisfaction while also reducing costs.

The initiative is corporate driven, but on a much smaller scale than an Albertsons or a 3M initiative.  In 2001 Carl Liebert III led their initial deployment and in 2003 left Circuit City to be the Senior Vice President of Operations for The Home Depot.  He held previous Six Sigma positions at GE and Black & Decker.

Projects

The Institute of Industrial Engineers held a meeting at Circuit City's Headquarters in May 2004 where Becky Kates, the Director of Six Sigma for Circuit City, presented an overview of the program and several example projects: 

The May IIE Meeting was held at Circuit City’s Corporate Headquarters and hosted by Becky Kates. Becky is the Director of Six Sigma, with a staff of fifteen Black Belts. The company has been working with Six Sigma for several years. Though they started with smaller projects, they are now using Six Sigma with very large and significant projects.

Some of the projects that they have undertaken involve streamlining the hiring process. In some instances, the hiring cycle took as long as 18 days! Using Six Sigma, the hiring cycle time was reduced to 8 days.

Other projects included determining the sales impact of markdown reductions, as well as determining the sales impact of bundling products with accessories.

Becky Kates and Master Black Belt, Bill Quinn, recently spoke at the 6th Annual Six Sigma Summit, January 25 - 26, 2005.  They showcased two Six Sigma projects aimed at growing retail revenues:

Open Box is a product that has been taken out of its original packaging and sold to the consumer as is. A project was put in place to manage the pricing of this product which produced millions in savings by designing algorithms to better control margins.

Consumers find ‘mail in rebates’ to be a difficult and stressful experience. A project was launched to mitigate consumer frustration and reduce cost. The project resulted in producing viable substitutes for mail in rebates with over $10 million spent in substitute promotions.

After four years of development it is surprising that their Six Sigma program has so few Black Belts.  Circuit City has over 40,000 employees and if only fifteen of them are devoted to improving critical processes they are leaving quite a bit of savings out on the table. 

Albertsons Inc. - Six Sigma

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

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

May Department Stores - Six Sigma

Overview

May Department Stores has not released very much public information about their Six Sigma program.  I have found job postings for positions at May and their brand stores that desire Black Belt certification, a "What is Six Sigma" presentation by the Divisional Controller for May Merchandising Company and the biography of a Six Sigma consultant who lists May Department Stores as one of his clients.

Rob’s clients have included May Department Stores, Fannie Mae, JP Morgan, State Street, DBS Bank of Singapore HSBC, Heller Financial, Liberty Insurance Services, Samsung – Living Division, Navistar, Libby-Owens Ford, Ingersol-Dresser Pumps, Merck-Medco, Crane Building Supply and ZF Lemforder.

Articles and Links

May Department Stores Company Press Release - Federated And May Announce Merger

IMA Six Sigma Presentation - Presented by Warren Sidosky, Nov. 7, 2003