Six Sigma and Corporate Real Estate (CRE)

Real Estate is usually a corporation's second largest expense after salary, yet one of the least efficient applications of resources. In recent years, IT application suites covering Human Resources (HR), Customer Resource (Relationship) Management (CRM), Supply Chain Management (SCM, Enterprise Resource Planning (ERP), Sales Force Automation (SFA), and other systems have enlightened businesses on the benefits of improving processes and, with the greater access to information, has led them to realign many of their operations. Integrated information systems have allowed managers from all levels of an organization an unprecedented range of data from functions throughout the firm. For example, the entire HR database in legacy systems was confidential and inaccessible to decision makers in other functions. With proper safeguards, data on where employees commute from, their travel propensities, their cost per hour of movement downtime, their adjacency needs, opportunity for telecommuting can all be analyzed. This data can be used to develop more optimal Real Estate deployments and used as inputs in the decision making function.

Real Estate has not been a major target for improvement in most organizations until recently. The customers are mostly internal and diffuse throughout the organization. The customer "owner" is often an influential entity within the organization and was more motivated to have their own requirements met than larger organizational objectives as there was nothing in it for them to see those functions improve. Metrics were rarely quantified and relevant data difficult to obtain from disparate systems. At the same time, normal customer requirements for Real Estate have become far more complex in recent years. Requirements for security, physical, human and infrastructure disaster tolerance have increased for all businesses and become the focus for firms who, until recently, did not realize its importance.

The challenge often begins with creating a consensus that Real Estate is a collection of processes with inputs and customers just like those serving external customers. Only by viewing internal users as customers can the process of improving/redesign begin.

Six Sigma is a framework, a method, a philosophy, a set of tools, a way of viewing processes used to create or improve business processes. There are many definitions as it was created by many practitioners with different organizations. Motorola, an early pioneer states on their website “Invented by Motorola, Inc. in 1986 as a metric for measuring defects and improving quality. Since then, it has evolved to a robust business improvement methodology that focuses an organization on customer requirements, process alignment, analytical rigor and timely execution.” GE defines it as “a highly disciplined process that helps GE focus on developing and delivering dependable client-driven services.”

Six Sigma has evolved into a powerful toolset to improve processes through out service organizations as well as its initial applications in manufacturing. As companies realize savings and improve output to external customers, some are starting to apply these tools to internal processes such as Corporate Real Estate. In the last couple of years companies including The Walt Disney Company, Citigroup, and Albertsons have applied Six Sigma initiatives to their corporate Real Estate processes..

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