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April 10, 2012

GE and Lean Innovation

By Esteban Pedraza April 10, 2012

The opening of GE’s new GeoSpring Hybrid Electric Water Heater plant in Kentucky isn’t just a great endorsement for American Manufacturing but an affirmation of Lean’s ability to help improve a company’s competitive edge in today’s global marketplace. The events that have taken place at GE and GE’s Appliance Park in Louisville read like a case study straight out of a Lean handbook.

In the 1980s America was in an industrial decline and when the GE facility could no longer compete with production costs in Asia, for reasons such as an increase in wages and a decrease in the selling price of products, GE began moving production to the Asian plants. As expected GE was able to reduce labor cost and save on materials, but over time the cost savings from outsourcing was outweighed by the negative impact on GE’s competitiveness. The following examples are just a few problems GE encountered:

  • A longer and more complex supply chain emerged; this slowed the information feedback loop and impaired the company’s ability to respond to problems and customer needs in a timely manner.
  • Cycle time was affected.
  • GE had to carry more inventory in the U.S. for products made in China.
  • A lack of communication due to functional departmentalization led to some loss of overall product knowledge (core competencies) by employees.

What did GE do to address these problems? They invested millions of dollars in Appliance Park.   In addition to the problems brought on by outsourcing, two major events helped initiate the investment. The first was the availability of job-creation incentives from the state and federal governments and the second was a competitive labor costs as a result of the 2009 Competitive Wage Agreement between GE and IUE-CWA Local 761. But according to GE the company had not invested in Appliance Park because the culture “wasn’t right to invest”. How did GE address the culture problem? They embarked on a lean initiative that “maximizes customer value while minimizing waste and identifies employees as the most valuable resource a company has”, said a GE spokesperson.

GE’s upper management is showing their commitment to changing the company’s manufacturing culture by investing not just in the building with a multimillion dollar renovation but in their people. Investment in the people has been done through lean training and employee empowerment. The empowerment has removed barriers that would keep any employee from taking positive action that would lead to better quality and/or performance.  According to GE’s Appliance Lean Leaders and employees, the way of thinking and the way things are done at Appliance Park have changed:

  • Everyone is involved in the manufacturing process setup from Engineering to sourcing to production. (cross functional approach)
  • We focus on removing non-value added work from the design process through production
  • One team with one goal mindset
  • Communication is essential (information boards, visual tools, etc.)
  • Everything is built around supporting the operator getting the product out the door
  • Focused on greater customer satisfaction
  • Renewed emphasis on quality and technology
  • We Learn by doing and leverage the power of collaboration
  • Operators take pride in what they do

Using lean practices and tools, GE has reported cutting cycle time by 50%, eliminated 20% of the parts included in the GeoSpring final assembly, and reduced equipment investment by 30%.  GE’s lean journey is demonstrating that Global competitiveness can be accomplished when the right tools are used in the right way.

According to a report by Boston Consulting Group (BCG), labor cost in China have risen dramatically and shipping and fuel costs have skyrocketed, this means China is not as cheap as it used to be and the United States is poised to bring back jobs from China. The report also points out that by 2015, it will only be about 10% cheaper to manufacture in China. If the BCG report is correct then the question for the United States will not be what company’s want the jobs but what companies have the capability (structure and culture) to compete in a global market.

With the freedom that a consumer has, in today’s global market, to go almost anyplace for a product that meets their quality and price requirements companies must be agile enough to meet consumers changing needs. As GE is showing us, the place can be the United States and the way to get it done can be through American Manufacturing.

March 20, 2012

Achoo! Uh-oh, I think it’s the flu

By Esteban Pedraza March 20, 2012
The flu shot prevents recipients from contracting the flu.

Have you gotten your flu shot?

According to the Centers for Disease Control and Prevention (CDC), in 2003 American businesses lost earnings due to influenza illnesses and loss of life was $16.3 billion. What does this figure mean in a day to day business context? In 2005, the average per-employee cost of absenteeism was $660 a day in lost productivity according to CCH incorporated (a leading provider of human resources and employment law information). How can companies eliminate this loss of money, this waste?

The single best way to prevent seasonal flu, according to the CDC, is to get a yearly flu vaccine, but good health habits and antiviral medications are other measures that can help protect against the flu. Studies have shown that American companies have had some success reducing the number of sick days taken by workers by offering the flu vaccine at the plant or office, not only is this more convenient for employees but it also reduces the time employees have to take away from work to receive the vaccination.

Whether the flu vaccine is offered through an employer sponsored event or off site one of the biggest barriers for employees to taking the flu vaccine is lack of information/understanding about the flu and flu vaccine. Some misconceptions regarding the flu vaccine are that you can get the flu from the vaccine itself or you are protected from the vaccine you received three years ago. One of the company’s measures to prevent seasonal flu should always include educating the employees on what the flu is, how it can hurt you and how the flu vaccine can help.

Companies should always educate employees on good health habits and strategies to prevent the spread of germs.

Always Remember:

  • Wash hands with soap and water and/or use an alcohol-based hand rub
  • Cover your mouth and nose with a tissue when you cough or sneeze & throw the tissue in the trash after using it
  • Avoid touching your eyes, nose and mouth. Germs spread this way
  • Try to avoid close contact with sick people
  • While sick, limit contact with others as much as possible to keep from infecting them

The CDC has put together a FREE toolkit for businesses and employers that provide educational material that can be used to fight the seasonal flu and help companies eliminate the loss of money caused by the flu (http://www.cdc.gov/flu/business/).

November 1, 2011

Slips and Trips and Falls – Oh MY!

By Esteban Pedraza November 1, 2011

According to OSHA slips, trips, and falls constitute the majority of general industry accidents. They cause 15% of all accidental deaths, and are second only to motor vehicles as a cause of fatalities. It’s no secret that slip, trip and fall accidents increase substantially during the winter months. However, Slip, Trips and Fall incidents during inclement weather are preventable if we have a system in place to assess and manage the risks.

Caution: Wet Floor Sign

The system should identify the outdoor areas used by employees/ pedestrians most likely to be affected by water and ice, for example: – building entrances, parking lots, walkways, shortcuts, sloped areas and areas constantly in the shade or wet.

The following are recommendations to help guard against Slips, Trips and Falls during inclement weather:

Always try and wear the best non-skid shoe possible, especially paying attention to the type of weather you will be exposed to. Shoes that have worn, slick soles should not be worn. Avoid high heels during inclement weather. Select something that has a large surface area, which has good traction. If you work in an area where there is a lot of water, then pay special attention to brands that have superior anti-skid properties.

Action should be taken whenever wet/freezing temperatures are forecasted. Local weather stations and their web sites are a great source of information.

  • Designate a Weather Team
  • Encourage employees to monitor weather reports to help prepare the workplace.
  • Increase awareness by posting daily weather briefings.
  • Distribute sand, salt or ice melt before employees are scheduled to arrive.
  • Use salt, sand, ice melt or similar on areas prone to be slippery in frosty, icy conditions.
  • Put a procedure in place to prevent an icy surface from forming and/or keep pedestrians off the slippery surface
  • Divert pedestrians to less slippery walkways and barrier off existing ones.
  • If warning cones are used, remember to remove them once the hazard has passed or they will eventually be ignored.
  • Institute frequent floor surface monitoring by designated staff throughout a weather event.
  • Have dry mops and wet floor signs readily available.
  • Consider closing side entrances if you lack the resources for frequent inspection and maintenance.
  • Post an employee at entrances during peak hours to encourage wiping feet on mats. You can also post a sign to get attention.
  • Purchase entry walk-off mats and make sure that they are not so thick as to block the swing of entry doors.
  • Extend mats 8 to 12 feet into the entrance to allow for the removal of moisture from shoes. A rule of the thumb is to have the mat long enough so that each footsteps on the mat three times.
  • Be sure walkways are clear before releasing staff early from work during storms.
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