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ASCM Insights

Episode 19: Supply Chain Transformation at GE Appliances

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Bob Trebilcock: Welcome to The Rebound, where we'll explore the issues facing supply chain managers as our industry gets back up and running in a post-COVID world. This podcast is hosted by Abe Ashkenazi, CEO of the Association for Supply Chain Management, and Bob Trebilcock, editorial director of Supply Chain Management Review. Remember that Abe and Bob welcome your comments. Now, to today's episode.

Bob: Welcome to today's episode of The Rebound, supply chain transformation at GE Appliances. I'm Bob Trebilcock.

Abe Ashkenazi: I'm Abe Ashkenazi.

Bob: Joining us today is Marcia Brey. Marcia is the VP of distribution for GE Appliances, which is now owned by Haier, and is one of the largest manufacturers of appliances in the US. Marcia, welcome.

Marcia Brey: Hi, thank you.

Bob: Now, GE Appliances is a storied name in manufacturing. And while the company is now owned by Haier, one of the global leaders in consumer appliances, it continues to operate nine US plants, including manufacturing at the company's headquarter complex in Louisville. Now, appliances are an extremely competitive space, one where leaders have to not only compete on quality and price, but also on customer service.

They have to service a variety of channels, from big box retailers, to mom-and-pop appliance stores, to contractors. Now, direct to consumer delivery of everything, from refrigerators to freezers, and ranges to air conditions. Today, Marcia is going to help us understand what it takes to get all of that done.

Marcia, you were recently promoted to VP of Distribution. First, congratulations on the new role. Tell us a little bit about your career path, and then a little bit about the breadth of your responsibilities at GE Appliances.

Marcia: Yes, sure. Again, thank you so much for having me on your show today. Obviously, appliances are near and dear to my heart, so I love that you're devoting some time to this topic. I've worked in the appliance industry for 27 years, all with GE Appliances. I started off as a design engineer, and worked designing washer transmissions and pumps and drain systems for seven years. Ever since then, my career has been very eclectic.

I worked in almost every function at GE Appliances. I moved over to the commercial world, and I worked in customer service and sales and marketing. I've been with to distribution for my first stint in distribution, and I worked in Six Sigma at the time, solving and improving our quality for our customers. I then went on to lead and run our warehouse network in the United States.

Then was the supply chain leader for our aftersales support for parts, so for service parts. Whether it's a distributor, or if it's a mom-and-pop, or just average consumer wants to repair their appliances. My job was to manage the whole supply chain: the fulfillment, the sourcing, transportation and warehousing of our after secondary market.

Then from there, GE Appliances started in-sourcing, which I'm very proud to say, and bringing more manufacturing back into the United States. With that creates some new opportunities with specifically our bottom freezer, refrigeration product. I was asked to go back into quality and back into manufacturing and to be the quality leader for the bottom freezer, refrigeration factory.

A year later, I became the plant manager of that factory. I ran our factory for four years, and so proud of that. It's right here in Louisville, Kentucky. It's a high-end product that we make successfully here in the United States. A lot of transformation to make that happen, but like I said, near and dear to my heart. I'm so glad we could create new jobs and grow that.

From there, all the Lean that we created, I became the Lean enterprise leader for our company and driving process improvements across EDE, the entire business. A lot of people think of Lean and you think of manufacturing, but we believe that you can take those same concepts and apply it to the entire company, and that's what I did.

Last year, I was tapped on the shoulder and asked to help lead our business continuity planning efforts to help support our business and our people with the pandemic through COVID-19. I did that for 10 months, actually just about I guess a year, and the last 45 days, I'm so excited that I got my dream job.

I was asked to be the vice president of distribution, and thrilled to be back in distribution. It's where my passion is. I spent eight years of my career there already. It's just a great time to be in distribution and to be part of a client.

Abe: Marcia, you're describing a journey in careers in supply chain that is just phenomenal. The various roles and responsibilities within supply chain have provided you as sort of the foundation for where you are today. You were just describing the Lean efforts that you are embarking on within your organization. It's interesting that you said it's an enterprise-wide initiative.

More often than not, we see Lean as an efficiency issue for the supply chain and manufacturing. How do you engage an organization as large as your enterprise in a Lean concept and to buy into the concepts that you're talking about and implementing?

Marcia: Yes, it's a great question. I asked that question when they asked me to do the job. [chuckles] How's that going to work? The whole thought process behind it is we had an objective. I was asked to create a Lean enterprise organization at the staff level when Haier purchased GE. The mission behind that thought why we would want to do that is we needed to transform our processes throughout our company, and we need to do it at an accelerated rate.

When Haier purchase us, they had a different objective for GE Appliances than our former parent company, GE. Our new parent company told us that they wanted us to be the number one appliance company in the United States. At the time, which was almost five years ago now, when they told us that, and they said, "We want you to figure it out. We're not going to come in and tell you how to do it, but that's your goal. What are you going to do to make that happen?"

Well, we knew to be number one, we almost had to double our company. When you think about the amount of volume then of appliances and services that would need to happen over the next five years in order for us to achieve that goal, we knew that our processes were not designed to handle that volume in that magnitude.

As our CEO at the time, and the executive staff were looking like where in the company have we been successful at process transformation, and how did we get there? We had been practicing Lean and manufacturing at that time for a good seven to 10 years, and had absolutely seen the benefits of the Lean concept, of how you engage people in problem solving.

How do you go see, how do you look for defect flow through processes, and how do you clearly define problems so that everyone involved in the problem solving effort, involved in that process can contribute to that? That was the thinking behind creating a Lean enterprise. It truly is end-to-end how do we- because processes and supply chain, you want to talk process efficiency, you got to start in commercial.

You got to start with your sales team, your marketing team, and we all have to be bought in to what is getting in the way of us being able to drive the volume that we're going to need and how can we think different. Not just incremental process improvement, but transformational process changes at the speed that we needed to go to.

That was what we did in Lean enterprise. I'll tell you, it was so much fun being able to completely look at the way we stock inventory, the way we fulfill orders, how information flows, how we can be faster at the changes the sales team wanted to go after to double our business and how supply chain responded to it. That's what our Lean Enterprise did. We were the glue that pulled all the functions together to say here's how we're going to think different at GE Appliances.

Bob: Even before COVID, consumer facing manufacturers were rethinking the structures of their businesses as well as their product lines, what's core, what can we expand? Before we talk about your supply chains, since the supply is going to enable those businesses, what's happening at GE Appliances from a business standpoint, your product line, things like that?

Marcia: I talked a little bit about it. I mean, clearly we are on a growth mindset, unlike anything I have seen in my 27 years. I'll tell you, it is so much fun to be growing at this rate versus in the past. I've been through years where you're just trying to eke out every penny you can and trying to get cost out. With that in mind, and our goal, our vision to be number one in the United States, and to grow at the rates that we're growing, we have to have a different mentality. A couple things. Our business transformation starts with us really changing the org, so to speak, and our mentality around we were very financially focused.

I think any GE business, if you've studied that, you start with your finances, and it's almost like every quarter is a mini year. You're ready to hit-- We changed our mindset, and said, "We're going to be product and customer-focused." We call it zero distance. How can we get as close to the customer as possible, understand what she wants, and how can we then drive that and make quick decisions in our company to give our customers what they need, as soon as they need it?

Not the bureaucracy that comes with having a financial platform or functional driven company. Really changing that culture and mindset has been really a big change for us at GE Appliances. Then I would say in order to grow, you have to invest in growth. You have to be able to have the infrastructure to make that growth happen. We are committed to that. I'll tell you too, I didn't realize how risk adverse we were until you have a different parent company that gives you this different vision.

I have seen us drive and take more risk as it comes to capacitizing, whether it's our factories, if it's our distribution network, technology, investing in NPI, at new products, and taking bets on things that we just haven't-- In the past, we would talk ourselves out of it. GE Appliances is a very innovative company. I love working at a company that is so creative, but in the past, we would talk ourselves out of, "Do we want to go into water heaters?" Do we not want to go? We used to do small appliances.

Are we going to do them? We are all in, and we are making bets in so many different places. By the way, we are in water heater, and we're building a phenomenal factory in Camden, South Carolina. We just launched a new line of small appliances over Christmas. We were back in the blender business, in the coffeemaker business, in the toaster business. We're trying things like that out. We are adding capacity.

I think you all have been reading on our dishwasher factory here very recently. I think that was, I want to say, $80 million investments in that plant.

We're adding capacity in laundry. Our refrigeration factories. We are adding the capacity and betting on growth. It's been a lot of fun as we do that. Then there's the whole digital side that comes with it, and how we make sure that we are using information in this whole journey of growth.

Abe: Marcia, you're describing a growth that most organizations would choke on. You've embraced not only the growth in your product line, but the transformation in your organization at the same time. As you're describing, you had very large items, and now you're in a lot of the smaller items as well. This requires different channels. It requires different support for the customers.

As you're describing, if you begin with the customer in mind in terms of servicing them, how do you support all the different customer channels that you have and the demand with e-commerce and a lot of the transformation that's going on in the marketplace right now? Give us a sense of how you're handling that.

Marcia: Yes, it's a great question. The strategy then in how we will go to market and how we satisfy our customers must also evolve. I think it's all about speed, flexibility, agility, and how do we invest in that, but then now, how do we change our mindset around it. I can tell you for a long time, GE Appliances is very process-driven, very data-driven. We like things to be the same. We'd like to go to market one way.

From a supply chain standpoint, especially distribution, I like to be able to give you your product exactly from the same warehouse and transport it pretty much the same way to get it to you. No more can we think like that. The world is changing too fast. We have to be able to make dynamic decisions consistently, every day, based off what's happening.

As the world evolves and as problems happen, which they will in supply chain, we have to make sure that we meet our commitment to our customers, that we have the right product in the right place at the right time, damage-free, at the right cost. That's my commitment from distribution to our business and to our customers. Therefore, we have to be able to create the right processes to be able to support that thinking.

That's what we're doing in distribution is moving away from the one-size-fits-all model of I'd like to go to market this way because that's the most efficient way, and I'm going to try to force everything into that, versus it depends, and it's okay. A customer places an order today, and then maybe, they want it tomorrow, they want it the next day, maybe cost advantage to ship right from the factory and give them a factory direct service.

It might be better to go from an ADC that isn't necessarily the best cost serving ADC, and maybe a different ADC that happens to have the product, and that we can get it there, or the transportation costs. There's advantage to us at the same time too from a business perspective. If we can be more dynamic in our thinking and be able to have our pulse on data and information that says, "Okay, right now, I'm taking all these variables into account. What's the best solution to be able to serve our customer?"

That's what we're trying to move towards, and how do we create not only the process and capabilities, but the mindset within our organization to be able to fulfill that.

Bob: Marcia, you've touched a couple of times on the digital aspect of your supply chain. One of your colleagues, Mark Shirkness, was a keynote at our conference last November. He talked about the digital thread as a foundation of the supply chain transformation at GE. Can you share with us what that means and what it entails?

Marcia: Sure. When we talk about digital thread, we're talking about having information at each node in the supply chain and how do we use that information at each node to make the best decisions for that moment of time. Again, with the end result in mind, I have a promised date I've made to the customer. I need to make sure I hit that promise date damage free, right quantity to that.

When we talk about the digital thread, it's about understanding how information or defects have come up or getting the best information at that moment in time, and adding all of that up to say, "Am I capable of fulfilling my promise to my customer?" If I'm not, what actions can I take so that the customer never feels our pain? Today, I would say we're not great at that.

When our customer tells us we have a problem, or that's when we recognize that we try to take action, it's too late. What we're doing in our digital thread is giving our business options so that we can react, we can move, we can have a playbook that says, "Okay, play A didn't work. We're going to go to play B or play C and still be able to deliver to the customer what they want."

At the same time, being able to optimize costs for us in our supply chain. Digital thread, how we pull all the different data sources together to make the right picture, to create the right exceptions that our teams need to manage, and then we can make the best decisions for our customer and for our business.

Abe: Marcia, let me take you back prior to the pandemic, which I think we all wish that we were back in those times sooner than later. It looks as if we're starting in a point of inflection on the curve that we're changing a little bit. We may be coming out of it. We're seeing a little bit more stabilization of data, which is critical to make the decisions. A little bit more forecasting, a little bit more forward-thinking. Give us a sense of how GE is taking a look at its current environment and what's planning on the horizon look like for you?

Marcia: Sure. Over the last six months, in our business, Black Friday, believe it or not, Black Friday is the time to sell appliances. Every day for the last six months felt like Black Friday to us. Like I mentioned, it's a good problem to have, but it's very different. For an appliance company that's been around for over 100 years, and we've built our foundation on history.

Almost to a fault, I would say, the pandemic has really broke free- I guess, helping us break free of our thinking that we can't rely on the past predicting the future. Instead, we have to be able to have these tools in place to be able to be, like I said, agile, flexible. Whatever happens, right now, we literally are in a place where we, for the longest time, have been a make to stock business.

We'd like to have an inventory across the United States, and we try to use our forecast to predict where inventory is going to be. When the pandemic hit, and it drained all of our inventory because of the great demand that have happened on appliances. Just like in the Lean world, there's no better way to show your problems than you drain your inventory, and you see where your defects are.

Now, our mentality is changing to, "We don't have that luxury of all that inventory sitting around to serve our customers. Therefore, we have to improve our execution. We have to improve our sale DE ratio at our- going all the way back to our suppliers. Are we ordering the right parts? Are they providing the right parts to our factories? Are we making the right product at the right time? It's not within weeks, it's within days. Did you make that product today that I, from distribution now, when I get the product, did I ship it on time today?

The pandemic is really, I think, accelerated the journey that we were already on. That it has forced us to be faster in our using some of these tools that we have. Whether it's the way we decide today, real time, what we're going to ship to which ADC, how we make sure that we notify our carriers, how our distribution system uses real time information when we unload a truck and we scan that model serial number. Instantly, we can look into our system and say who needs that product right now.

It might be different than who needed it two days ago. It's this moment and time. We can make real time decisions to be able to have the best movement of our inventory for our customers. That's what we're doing. It's really exciting time. I think that this is really challenged this environment of the pandemic, and having all of your inventory drained has really challenged us to be even better going forward.

To be more efficient with our inventory, to be more purposeful. Every piece of inventory has a purpose, and it's our job to make sure that that inventory gets where it needs to be at that point in time.

Bob: Marcia, thank you so much. This has been a great discussion. Last question. I know this is important to ASCM, and Abe's organization, also to Supply Chain Management Review. So often we talked about supply chain. We talked about many of the things we just did, which is moving stuff. Making it, getting it from point A to point B.

If you think of that word leader, a supply chain leader, it's also a responsibility to our people, and a responsibility to our communities. I just wondered as someone who's been a supply chain leader for a long time, how do you think of that role when you leave GE and go home to your community?

Marcia: I feel so fortunate in my career to be able to work for a great company and to work with great people. It's the people within GE Appliances that is great. Honestly, I feel like I am a better person because of the challenges I've had, being able to work so many different job. Jobs that I honestly probably was not qualified for, especially the sales and marketing, and to be able to grow in that sense.

It's made me a better leader, a better person because of that challenge, and therefore, I absolutely feel as a leader in a community I have a responsibility to give back. We have resources, we have talent, we have money. A company's worth can't just be defined by the financial results that happen on an annual basis.

The people of a company, they can't relate to that, right? If I'm going to spend as much time as I do in my job, I want to make it meaningful, and meaning means a lot more than what margins did we make for our company, or what was our revenue, or did we double the business. Meaning means, did we make a difference for people in our communities, did we make a difference in people's lives?

I think what corporations owe, honestly, back to those communities is how do we give back? How do we make the community that we live in a better place? For me, I am involved in several organizations in my community. The one that I'll share with you is the American Red Cross. We talked about another logistics philanthropy organization, you will not find a better organization than the American Red Cross.

When disaster strikes, and everybody is sheltering and trying to go to safety and moving away from the disaster, the American Red Cross is running towards a disaster. You never know when tornadoes, hurricanes, things are going to happen, and the Red Cross has- all of its materials and volunteers, 90% of the Red Cross are volunteers, mobilized on a moment's notice to be able to go in. What better logistics company is there in that thinking in that process?

I'll tell you, charities like the Red Cross need corporations’ support. They need volunteers. They need people who have that mindset, whether it's a mindset of process and logistics, or if it's a mindset of heart, and wanting to help others and give back. I've had the great honor of representing GE Appliances on the board for the Red Cross for the last 11 years. I currently am the chair of the board of the Red Cross. My whole family is involved with the work that we can do in the Red Cross.

Whether it's the Red Cross, or whether it's other great charities and philanthropy groups that are out there, there must be a partnership between corporate America and our communities in these great organizations that make our world have better place. Our corporations, like I said, have the resources. They have the talent and the ability to make the difference and to be partners with organizations like the Red Cross to strengthen, and together, we can make a difference.

I've seen it, and it inspires me every day. I'll tell you another thing. It gives you perspective. While corporations can really get you focused on I got to get your microwave to you as soon as you need it, we have to remember that there's other people dealing with a lot bigger problems out in the world, and we owe it to them to help make their lives a little bit better.

Abe: Marcia, a great example of how supply chains can impact the world, not only on an economic sense, but on a personal, and obviously, for the individuals that we impact. Thank you so much for sharing your journey and continuing on the journey. I'm sure we'll check back with you. This is all the time that we have today. Thank you for joining us. We hope you'll be back for our next episode of The Rebound. I'm Abe Ashkenazi.

Bob: I'm Bob Trebilcock.

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