Six Sigma Rescue

Steel prices may be rising, but Peoria, Ill.-based Caterpillar Inc. is ready for them. The $22.8 billion manufacturer of tractors, construction machinery and engines, is planning on cost reductions from its Six Sigma program to offset rising steel prices. In a conference call with analysts in late January, Nancy Snowden, director of investor relations said the program has cut costs companywide, and 40% of Caterpillar's employees are engaged directly in Six Sigma. Currently 15,000 projects are under way. Snowden said it won't be a matter of cutting costs elsewhere to make up for the steel-price hikes but rather applying Six Sigma directly to the problem. "A lot of our [Six Sigma] efforts are directed at materials."