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Fueling the Future with APICS

GE Oil and Gas pioneers a winning innovation
  • Elizabeth Rennie
July/August 2015

GE Oil and Gas created its Turbomachinery Solutions (TMS) and Downstream Technology Solutions (DTS) business units in 1994 when the company acquired Nuovo Pignone, a manufacturer of turbomachinery equipment. Since then, the organization has continued to expand through internal growth and further acquisitions. Today, it includes business units across all sectors of the oil and gas industry.

TMS and DTS operate in a complex supply chain, offering a wide range of products with high degrees of customization. Materials management professionals are responsible for developing key processes, as well as designing, refining, and validating them before adoption by other GE Oil and Gas and GE businesses. “We place a great deal of focus on materials management excellence, and we are continually innovating to improve our competitive advantage,” says Lorenzo Romagnoli, TMS/DTS materials management and logistics executive. “In recent years, we’ve drawn extensively from the APICS body of knowledge to improve the efficiency and overall quality of our operations.”



In 2013, decision makers identified a need for an innovative solution that would enable employees to better align operations with customer needs. The organization launched a large-scale transformation that put APICS education at the core of the program. The next year, the company won the 2014 APICS Corporate Award of Excellence in Innovation for its groundbreaking achievements.

Achieving worldwide collaboration

The winning initiative was one that involved cross-functional teams composed of employees from materials management, manufacturing, sourcing, logistics, and demand management. Participants progressed through all five modules of the APICS Certified in Production and Inventory Management body of knowledge. In addition, Romagnoli notes that the Basics of Supply Chain Management module became a fundamental requirement for all new materials management employees. 

 

The project’s central aim was ensuring that the company’s 11 global TMS and DTS manufacturing facilities operated at the highest possible levels of efficiency and quality, regardless of location or corporate heritage. To that end, GE Oil and Gas made significant investments in six broad and highly interrelated areas: materials management, information technology (IT), strategic procurement, lean manufacturing, logistics excellence, and workforce education. Although company leaders report that all have been crucial to performance improvements, the innovations achieved in materials management and IT are most noteworthy. 

“Our objective was to create an organization capable of performing with greater consistency across all plants and in accordance with a global strategy coordinated by the core materials management team,” Romagnoli explains. “Scalability was top of mind as we created the new processes, procedures, and tools.”

TMS and DTS materials management professionals created a process that combines four centers of excellence based on the APICS pillars of master scheduling and configuration management, production control, inventory, and logistics and warehousing. The new cross-function and cross-plant methodologies facilitate more frequent and effective collaboration among teams, define key performance indicators and best practices, set standards to be followed, and serve as central reference points for materials management expertise. “We put APICS theory into practice within the TMS and DTS businesses,” Romagnoli says. “This helps us continuously deliver improved performance at local and global levels.”

The final step in the materials management transformation was achieved in mid-2013. However, company leaders soon recognized that new IT capabilities would be required to support the advancements. By working closely with software partners, a multi-plant suite was developed that combined an Oracle-based enterprise resources planning platform, CyberPlan Advanced Planning and Scheduling, and Oracle Primavera P6 for project management. “This was not simply an integration exercise; we redesigned many of the existing features and added new ones, taking functionalities to an entirely new level and tailored to our complex supply chain,” Romagnoli explains.

The result was tremendous improvement in capacity management through advanced simulation capabilities, more intuitive operation, rapid execution, and easy configuration. Before long, the platform was extended to all TMS and DTS locations, ensuring that the same procedures, processes, and tools would be used across the diverse operations and enhancing the organization’s ability to centrally coordinate and benchmark local performance.

Implementation began at the plant in Florence, Italy, and migration was completed in just 12 months. The program has since been extended to installation, planning, and control processes, as well as other GE businesses including GE Power and Water and GE Measurement and Control. “The Florence pilots are now being expanded to all our manufacturing facilities around the world,” Romagnoli says. “We are installing the same innovative IT tools, putting the same new processes in place, conducting the same training, et cetera—while ensuring the necessary customization takes place at each plant to reflect their different characteristics and production portfolios and interconnecting all sites in a truly singular global network so that we are all always on the same page.”

Simplicity, consistency, and speed

GE Oil and Gas professionals have found that the greatest strength of the new materials management organization and IT platform rests in the concept of integration and collaboration among employees on five continents. “We are seeing astonishingly positive effects from the APICS educational program,” Romagnoli says. “Improvements include overall process simplification and greater dependability; higher quality; and improved speed, cost, and flexibility.”

 Specifically, TMS/DTS professionals report that the following benefits have been achieved as a direct result of the new materials management program and supporting IT infrastructure:
  • The average time required to construct a baseline schedule for a new project has been reduced by more than 50 percent.
  • Time to assess the complete status of all project activities has dropped from hours to seconds.
  • The new software solutions facilitate the generation of complex reports that have considerably expanded employees’ abilities to track project progress, highlight and monitor potential risks, and measure overall project performance.
  • There is a 30 percent reduction in slotting lead time.
  • There is 50 percent increased capacity.
  • They have reached 96 percent on-time delivery compared with 63 percent in 2009.
  • Inventory turns are up 30 percent. 

In addition, Romagnoli has witnessed significantly heightened levels of employee engagement and improved performance, as well as more cross-functional collaboration in day-to-day operations—and in a remarkably short period of time. “Our materials management and IT innovations were not only transformative in their capabilities, but also were executed with tremendous speed,” he says. “In just five years, we successfully developed, tested, validated, and activated critical new processes and tools, replacing ways of operating and thinking that have been around for decades. The result is a unique, integrated approach that strengthens the supply chain and increases certainty, laying a foundation for even greater innovation as we move forward.”

He goes on to note that the organization’s APICS affiliation had significant positive impacts on critical aspects of human resource management and many operating and cultural characteristics. Core knowledge and competency alignment to international best practices were significantly improved, and there is faster and clearer communication through standardized terminology. Plus, the organizations are using more effective hiring processes and career development roadmaps.

“We are creating a pipeline of supply chain management specialists. This is key to long-term employee retention. And many employees from our materials management organization also go on to lead teams in other areas of GE Oil and Gas, sharing their knowledge throughout the company,” Romagnoli says. “We will continue to draw on APICS resources to ensure lifelong learning for our operations and supply chain management people to keep our company moving forward.”

Elizabeth Rennie is managing editor for APICS magazine. She may be contacted at editorial@apics.org.

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