GE aims to reduce inventory, manage supply chain 'rigorously'

Dive Brief:

According to a new investor update posted to General Electric's website, the company plans to streamline operations and its supply chain through a variety of changes designed to broaden profit margins and cut costs.
Some of the big takeaways from the update include GE's intention to reduce inventory, cut costs through "rigorous" supply chain management, and "revamping" the supply chain so that it is "aligned direct to CEO." The update also included a note regarding GE's plan to acquire companies to improve its own supply chain.
GE also extensively discussed its plans to grow its additive manufacturing business, which the company believes is the future of industrial manufacturing and more profitable than conventional manufacturing.

Dive Insight:

GE's investor update is quite lengthy, and it's worth diving into for a variety of industries — what's interesting is what is found in GE's notes about its supply chain. Following McCormick & Co's lead, GE is reorganizing its supply chain so that it is led from the top down. That's a growing theme in companies to enhance visibility, as is the inventory reduction strategy.

TJX Cos. is known for its fast inventory turnaround: it's supply chain is nimble and its inventory levels are exceptionally fluid and tightly controlled. This combination allows the company's retailers — TJ Maxx, Marshall's and Home Goods — to turn such big profits. By reducing inventory and producing to meet exact demand, GE could broaden its profit margin as well.

The investor update doesn't include many details about GE's plan to acquire companies to improve its supply chain, so that's something to watch in the coming months. Regardless, the plan speaks to GE's serious imperative to overhaul its supply chain.

GE's additive manufacturing segment launched in 2016 and, according to this investor update, it's doing so well that it's a main focus for company growth. GE believes additive manufacturing cuts costs and allows for a more agile supply chain, greater productivity and more creative solutions. GE is so confident in additive manufacturing that it's targeting $1 billion in revenue by 2020.

That's a statement on the state of manufacturing: it suggests a shift from conventional to additive, and it gives more credence to small-parts manufacturers and tech startups seeking to disrupt the small-part manufacturing space.

The investor update is purposefully vague because it is intended as a forward-looking statement, but it does provide a rough sketch of GE's plans for revamping its supply chain. From what the update has told us, it looks like GE's plans are right in line with current supply chain trends.