GE Applying Lean Manufacturing to Bring Jobs ‘Home’
Over the last few decades outsourcing has become commonplace, especially in manufacturing, as companies strive to reduce costs. As the travails of Apple and Foxconn have highlighted recently however, this can often place companies into ethically compromising situations.
General Electric are suggesting that process improvement can act as the elixir by not only keeping costs down but by bringing jobs back to the developed world.
Chop Blankenship, the chief exec of GE's appliances business, tells the FT that GE has been able to bring jobs back to America from lower cost nations because they have adopted lean manufacturing.
It represents an interesting shift by GE. Whilst lean manufacturing has been a popular approach for 20 years, with companies like Toyota leading the charge, GE has traditionally used six sigma instead.
Six sigma allows a more top down approach to process improvement, in keeping with the management style at the company under Jack Welch. As Rohit Khanna, Chief Operations Officer of GE Capital, Global Banking Group, said in an interview with PEX Network last year:
"Six Sigma is all that matters was a message that one could just not miss, intensely reinforced by senior leaders walking the talk by embracing Six Sigma themselves, championing projects, visibly celebrating early successes etc"
Whilst both six sigma and lean share a goal of improving production efficiency, their methods of doing so differ significantly.
Professor Jeffrey Liker, a noted supporter of lean manufacturing, says that under Mr Welch, the black belts’ behaviour reflected his "top-down" management style, with heavy emphasis on hitting financial targets.
In the March edition of the Harvard Business Review GE CEO Jeffrey Immelt eulogises about the improvements lean has delivered at the company.
"We have torn down functional silos and replaced them with a "one team" mentality. Designers, engineers, and assembly-line workers together determine the best way to meet their goals; they own their own metrics. They take pride in this ownership, and the results speak for themselves." he says.
Jeffrey Immelt, CEO of GE
As a result of this effort, a 2008 redesign of a 25-year-old dishwasher line produced the following operational improvements:
- 30% improvement in labour efficiency
- 60% reduction in inventory
- 68% less time to produce
- 80% less space required
A contributing factor to these improvements has been the move to locate all functions associated with manufacturing at the same plant. This means design, quality control, engineering, production and product development are all on the same site, which makes spotting opportunities for process improvement much easier. When manufacturing is outsourced across the globe this closeness is much harder to achieve.
The video below provides additional insight into how GE are employing lean at Appliance Park.
If you would like to find out more about how you can break down silos and employ a ‘one team’ approach this free webinar from might be of interest: Breaking Down Functional Silos to Achieve Integrated Process Improvement