GE 2012 Annual Report Download - page 17

40 PROJECTS
TO IMPROVE
PROCESSES
ACROSS GE
$800 MILLION
INCREMENTAL
INDUSTRIAL
MARGIN BENEFIT
ANNUALLY
1,000
DEDICATED GE
PROFESSIONALS
GE ADVANTAGE
BENEFITS
Increases
our speed to
market
Improves the
quality of our
products and
services
Drives competitive
advantage for
our customers and
our company
Significantly
reduces costs
transportation network, including
railroads, shippers, intermodal termi-
nals and repair shops. They estimate
that every 1 mph increase in network
speed saves them $200 million in
annual capital and operating expense.
In Healthcare, we’ve deployed our
Hospital Operation Management
(HOM) solutions in more than 50 hos-
pitals. HOM tracks hospital assets to
ensure that quality care is delivered
across a patient’s stay, from admission
to discharge. The HOM launch cus-
tomer was Mt. Sinai Hospital, where
we help them track 15,000 assets and
have shown a 10% improvement in
patient throughput.
We are taking a few bigger swings
where we are improving the enter-
prises in which our assets operate. In
Aviation, to address the fleet perfor-
mance of global airlines, we launched
Taleris, a joint venture with Accenture.
This analytical tool will allow air-
lines to predict maintenance events
before they happen. The goal is “Zero
unplanned downtime.” Taleris aids air-
lines such as Qantas and JetBlue with
their fleet performance, maintenance
and operations, allowing them to save
millions of dollars annually through
more efficient use of their airplanes.
Margins grew by 30 basis points to
15.1%. Our goal is to grow another
70 bps in 2013. We will achieve this by
improving processes while reducing
structural cost.
We are in our third year of GE
Advantage, our process-improvement
program. Our teams are improving
on 40 big processes throughout the
Company. I review each of these fre-
quently, and we realized $800 million
of margin improvement in 2012.
One good example is our
“Transportation: Requisition to
Platform” process, which facilitates
our new product launches. Results
so far include: 80% system reuse; six-
month reduction in cycle; and a 35%
reduction in sole-source suppliers and
overtime. GE Advantage helps us sus-
tain a competitive advantage.
We are also simplifying the way we
run GE, with an eye to lowering
our structural cost and improving our
speed. In 2011, our selling, general
and administrative expenses (SG&A)
as a percentage of industrial sales
were 18.5%. We are aiming to reduce
this structure to below 16% by 2014.
This is a total of $2.5 billion of cost out;
by the end of 2012, we achieved
40% of our goal.
Another big contributor to better mar-
gins involves attacking product cost
through better design. In our Aviation
business, where we have a solid back-
log for many years, we are reshaping
our supply chain to increase GE con-
tent. We are investing in advanced
materials, manufacturing technologi-
cal global capacity. In Appliances, we
launched four new products in 2012. In
2013, we will launch four more. All are
increasing share and margins.
We are executing on our commit-
ments. In 2013, we would like to: grow
industrial earnings by 10%; achieve
2%–6% industrial organic revenue
growth; return a significant amount
of cash from GE Capital to the parent;
and return $18+ billion of capital to
investors in dividends and buyback.
WE CONTINUE TO IMPROVE
OUR CULTURE
Over the holidays, I was reviewing
the annual Gallup poll that rates
institutions in the U.S. Once again, big
business has a low overall rating, with
21% favorability, roughly a third of the
approval for small business. The mood
reflects the economic environment.
GE 2012 ANNUAL REPORT 15