C your way clear to improved processes
Customer, cost, and compliance are the three Cs to pay attention to when you’re trying to improve processes in your plant, said Gary Reiner, senior vice president and chief information officer of GE during his talk before GE Fanuc Discover 2007 attendees in St. Louis.
He gave his analysis of how his company tackles the three Cs on its supply chain journey, which “by no means” is complete, he said. “We’re in the early stages. And while we’re all struggling with the same things,” the three Cs are the most important.
The change in the cost environment is due to the change in the world of commodities, Reiner said. The dichotomy over the past ten years is anywhere from two times to nine times for the average price of crude oil, steel, copper aluminum, nickel molybdenum, and rhenium (a critical thing for GE because of its high-melt temperature). “I don’t know of a time in history when the world has changed as much as it has in the past ten years,” he said. “This is really unprecedented. It’s the first time in history we’ve had critical components to all our cost structures changing this much, this quickly.”
Why? China has driven 80% of the raw material consumption growth over the past six years of nearly every raw material, he said. And it will be consuming a disproportionate amount until it catches up with other countries–like Japan and Korea. “The other thing about China is not only is it consuming a tremendous amount of raw materials but it’s growing other companies’ economies,” he said. “It’s growing Brazil, Africa, the Middle East. These countries are supplying China with their hunger.”
Normally, what happens is demand goes up and then supply goes up in order to meet that need. And price comes back to where it was. “The challenge we face as customers of raw materials is supply constraints are real,” he said. “Five years ago we never thought this would happen. All these things were slowing down the global economy, so companies didn’t invest.” Now when they go to companies like Bechtel, asking them to build a copper mine or steel plant, they have to wait until 2013 because they’re all busy until then. “Over the next four to five years we see a consistent high-level price with the small possibility that in five years, prices will come down a little bit. Demand will be so persistent though from emerging markets consuming this stuff that it’ll be hard to keep up with.”
Lean Manufacturing from a GE perspective is the best way of getting productivity out of the manufacturing facilities. “We define it as moving material through a factory as fast as possible. We learned it form companies like Toyota and Dell,” he said. And bringing that product to the customer as quickly as possible is what leads to greater customer satisfaction.
“The single thing that matters more than anything else is responsiveness,” he said. “How quickly can we respond to customers’ needs, get a proposal, a service call? More often than not when I place an order, what I want to know is how quickly can I get it delivered? We define that from our customer’s perspective. If it’s a radiologist ordering diagnostic equipment, it’s order to image. When they have it up and running, they can create an image of a patient and get paid.” With energy, it’s order to electricity generation, with aviation, it’s order to fly, with rail, order to power. “We want to make progress on that every month, every quarter, to provide better customer service. Again lean manufacturing is essential.”
‑ Ellen Fussell Policastro
He gave his analysis of how his company tackles the three Cs on its supply chain journey, which “by no means” is complete, he said. “We’re in the early stages. And while we’re all struggling with the same things,” the three Cs are the most important.
The change in the cost environment is due to the change in the world of commodities, Reiner said. The dichotomy over the past ten years is anywhere from two times to nine times for the average price of crude oil, steel, copper aluminum, nickel molybdenum, and rhenium (a critical thing for GE because of its high-melt temperature). “I don’t know of a time in history when the world has changed as much as it has in the past ten years,” he said. “This is really unprecedented. It’s the first time in history we’ve had critical components to all our cost structures changing this much, this quickly.”
Why? China has driven 80% of the raw material consumption growth over the past six years of nearly every raw material, he said. And it will be consuming a disproportionate amount until it catches up with other countries–like Japan and Korea. “The other thing about China is not only is it consuming a tremendous amount of raw materials but it’s growing other companies’ economies,” he said. “It’s growing Brazil, Africa, the Middle East. These countries are supplying China with their hunger.”
Normally, what happens is demand goes up and then supply goes up in order to meet that need. And price comes back to where it was. “The challenge we face as customers of raw materials is supply constraints are real,” he said. “Five years ago we never thought this would happen. All these things were slowing down the global economy, so companies didn’t invest.” Now when they go to companies like Bechtel, asking them to build a copper mine or steel plant, they have to wait until 2013 because they’re all busy until then. “Over the next four to five years we see a consistent high-level price with the small possibility that in five years, prices will come down a little bit. Demand will be so persistent though from emerging markets consuming this stuff that it’ll be hard to keep up with.”
Lean Manufacturing from a GE perspective is the best way of getting productivity out of the manufacturing facilities. “We define it as moving material through a factory as fast as possible. We learned it form companies like Toyota and Dell,” he said. And bringing that product to the customer as quickly as possible is what leads to greater customer satisfaction.
“The single thing that matters more than anything else is responsiveness,” he said. “How quickly can we respond to customers’ needs, get a proposal, a service call? More often than not when I place an order, what I want to know is how quickly can I get it delivered? We define that from our customer’s perspective. If it’s a radiologist ordering diagnostic equipment, it’s order to image. When they have it up and running, they can create an image of a patient and get paid.” With energy, it’s order to electricity generation, with aviation, it’s order to fly, with rail, order to power. “We want to make progress on that every month, every quarter, to provide better customer service. Again lean manufacturing is essential.”
‑ Ellen Fussell Policastro
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