A dishwasher assembly line in Appliance Park.
Retooled supply chain is paying big dividends
By Alan Wolf, YSN
GE Appliances (GEA), along with its retail customers and end users, is enjoying the fruits of a yearslong revamp of its manufacturing and distribution processes.
The overhaul began just prior to the pandemic but gained a new urgency when post-COVID product shortages plagued home appliances and multiple other industries. The changes instituted by GEA include an increase in domestic production and a refinement of the vendor’s just-in-time forecasting approach to manufacturing. The latter left retailers, particularly national box stores, scrambling for inventory amid the overseas parts delays and the government-subsidized consumer spending spree of the early 2020s.
Marcia Brey, the vendor’s vice president of logistics, told The Wall Street Journal that fundamental changes were necessary to fortify GEA’s supply chain and grow market share. “It wasn’t a matter of, ‘Well, just incrementally improve what you’ve got,’” she said. “We needed to rethink, take a step back and say, ‘Are we really set up the way we need to be set up?’”
Home Grown
To that end, the company added 4,000 manufacturing jobs across its nine U.S. factories and increased production capacity over the last seven years, which has reduced its reliance on Asian imports and slashed shipping costs.
Related: GE Completes $450M Investment at Appliance Park
The manufacturer also adapted a new approach to production scheduling and inventory management. Plants can now see upcoming orders and plan accordingly, Brey told The Journal, and orders are tracked based on on-time and in-full deliveries, rather than “weeks on hand” tracking, which compares finished products to expected sales over a seven-day period.
Be Here Now
On the logistics side, GEA opened seven new distribution centers to help ensure that the right goods are in the right location, she said, and production and shipping schedules now take into account the type of customer that will be receiving them. For example, national big-box chains typically need their orders on schedule, she explained, while homebuilders tend to run behind schedule due to ongoing materials shortages.
“I want to make product as close to when the customer is going to want it as possible,” Brey said.
All told, GEA and its parent company Haier Group have spent $2 billion on the overhaul. But the investments have improved post-pandemic inventory turns by about 50%, and sales have doubled to approximately $11 billion since the initiative began in 2017, The Journal reported.
Hat tip to The Wall Street Journal.
