Rio Tinto | Minerals and Metals for the world

Way ahead with Sigma
At Rio Tinto's aluminium subsidiary Comalco in Australia, small incremental changes in operating practices are adding up to big improvements - valued at US$5m in cost savings and extra revenue in 2002, and more than US$7m in 2003. What's the secret? Well, it's all down to something called Six Sigma...

In the late 1990s, Comalco's performance languished among the bottom half of global aluminium producers. Through a three year Performance Enhancement Programme (PEP), costs were reduced by 25 per cent, elevating the business to the second quartile of producers. Then came the question: where do we go from here?

"Finding the next generation improvement programme for Comalco was critical to our business and we spent nearly a year evaluating the options," recalls Comalco chief executive Sam Walsh. "We concluded that a programme called Six Sigma was the one best able to achieve our aims for broad based and sustainable business improvement."

While PEP effectively identified wasteful expenditure, additional tools were needed to make process improvements across business units: employees and line managers were willing to improve the business but the practical means did not seem to exist. This was the vacuum filled by Six Sigma, which has been enthusiastically embraced by managers and employees. Now, rivulets of improvement have delivered a tide of savings that include:



Way ahead with Sigma At Rio Tinto's aluminium subsidiary Comalco in Australia, small incremental changes in operating practices are adding up to big improvements - valued at US$5m in cost savings and extra revenue in 2002, and more than US$7m in 2003. What's the secret? Well, it's all down to something called Six Sigma... In the late 1990s, Comalco's performance languished among the bottom half of global aluminium producers. Through a three year Performance Enhancement Programme (PEP), costs were reduced by 25 per cent, elevating the business to the second quartile of producers. Then came the question: where do we go from here? "Finding the next generation improvement programme for Comalco was critical to our business and we spent nearly a year evaluating the options," recalls Comalco chief executive Sam Walsh. "We concluded that a programme called Six Sigma was the one best able to achieve our aims for broad based and sustainable business improvement." While PEP effectively identified wasteful expenditure, additional tools were needed to make process improvements across business units: employees and line managers were willing to improve the business but the practical means did not seem to exist. This was the vacuum filled by Six Sigma, which has been enthusiastically embraced by managers and employees. Now, rivulets of improvement have delivered a tide of savings that include:
PAGE 1 OF 6

Review is published by Rio Tinto, 6 St James' Square, London SW1Y 4LD, England Telephone +44 (0)20 7930 2399 Editor: Cherry DeGeer