GE 2015 Annual Report Download - page 20

$10 billion in sourcing in the near future. The
benefits of long-term investing and partner-
ing are extensive. We work with China EPC
on infrastructure projects in Africa. We can
tap into China Bank financing to get global
projects done. We are working with state-
owned enterprises to build capability in China
for the rest of the world. We are building a bio-
process manufacturing industry inside China,
working with drug companies to create local
capability. China will remain an important
market, and GE is well-positioned.
The Store provides market solutions by tying
together GE businesses. One of the best-
known solutions in GE is to grow in clean
energy and reduce the impact of climate
change. Ecomagination has been a de-
cade-long effort to solve one of the world’s
toughest problems. We work with customers,
like Statoil, to reduce flare gas in oil discovery
or reduce emissions in subsea drilling. This will
use multiple GE products and services for an
innovative solution. In 2015 our Ecomagina-
tion revenue was $36 billion, up sixfold from
where we started.
Increasingly, our customers want flexible
solutions to support their technical programs,
turning capex into opex. We recently com-
pleted an innovative partnership with Temple
University Health System, a three-hospital
academic health system in Philadelphia. Like
most health systems, they are grappling with
increased volume and lower reimbursement.
GE Healthcare worked with Temple to focus
on strategy and collaboration, not just equip-
ment replacement. Using an outcomes-based
approach, both Temple and GE are reward-
ed by lowering costs and improving patient
care. Together, we are targeting $40 million
in operational savings, which will help fund
new technology. As part of the plan, we will
provide Temple with comprehensive service,
equipment, analytics and financing, totaling
more than $80 million of future growth for
GE. GE’s people are working in the facility to
deliver outcomes. The GE Store is packaging
financing, analytics and innovation to solve
customer problems.
The Store spreads intellect by convening fo-
cused and accountable horizontal councils.
Our Service Council has been operational
for about 20 years. It is charged to grow our
dollar per installed base by 3–5% and $1 bil-
lion of productivity. This year we will focus on
gaining share of aged fleet, service analytics
and advancing repair technology. Our busi-
nesses learn from each other.
The Store is backed by process tools. We are
in the third year of training our teams on
FastWorks, a tool that combines the best
of lean manufacturing and entrepreneur-
ial speed. We have trained 30,000 of the GE
team. This work is being applied to increase
NPI capacity, operational speed and variable
cost productivity. FastWorks is becoming
the way we work.
The Store is built on a legacy of leadership
development. We have a common set of
leadership expectations, framed by the GE
Beliefs. We have contemporary leadership
programs through our Crotonville learning
center and globally develop the best and
the brightest for our talent pipeline. We are
constantly looking outside GE to recruit new
knowledge and capability that will make the
Company stronger. At the heart of the Store is
a robust meritocracy.
We are driving margin programs at the Store.
While we have made progress boosting ser-
vice margins and lowering structural cost,
our product costs are too high. At GE, we
work with an $80 billion pool of product and
service costs. Our plan is threefold: double
our backward integration; expand our sourc-
ing deflation to $1 billion, nearly twice what
it was in 2014; and target $900 million of
manufacturing productivity. In businesses like
Healthcare and Power, we believe our product
costs can be substantially lower in the future
through improved design and advanced
supply-chain strategies.
Working on product cost is forcing us to
change the way we think about backward
integration. We currently source about $30
billion in parts we design, and we pay sub-
stantially more than they should cost. With
a huge and predictable backlog, backward
integration offers incremental margin oppor-
tunity. In Power, we plan to leverage Alstom
capability to grow our content. In Aviation, we
have invested $5 billion in vertical integration
at high returns.
We typically run our businesses well, but
there is still room for improvement. In 2015,
we invested in Renewable Energy, Energy
Management and parts of Healthcare to re-
store them to the competitive position you
expect from GE. We believe there is substan-
tial earnings power from improved operating
GE Health Cloud
The GE Health Cloud is a scalable,
secure and connected cloud
ecosystem designed to deliver
healthcare-specific software
applications as-a-service. It will
connect to thousands of medical
devices from multiple vendors
and will host apps from GE and
thousands of independent software
vendors. Applications will range
from visualization to life sciences to
monitoring to asset management.
It is designed to improve patient
care and drive improved clinical,
financial and operational outcomes.
CUSTOMER
OUTCOME
National Health Service Trusts in the
UK are using the GE Health Cloud as part
of a complete enterprise imaging solution
across their facilities. The GE Health Cloud
will help improve clinical collaboration
and lower operating costs.
500,000
GE Health Cloud will
connect to hundreds of
thousands of medical
imaging devices from
multiple vendors.
Collaborate
Connect
Visualize
Consistent User
Experience
Deployment &
Service Models
Interoperability Analytic
Services
Data
Management
Industry-Compliant
Security & Privacy
Workflow Archive
Compute
18 GE 2015 ANNUAL REPORT