CASE STUDY $11\mathrm{.}1$: GENERAL ELECTRIC$$S LEAN JOURNEY IN THE AGE OF DIGITAL TRANSFORMATION

General Electric Co$.($GE$)$ is a multinational technology and financial services company headquartered in Boston, Massachusetts. The company has a diversified portfolio of businesses organized under the following divisions: additive, aviation, capital, digital, health care, lighting, power, renewable energy, and research. It offers a wide array of products and services, including aircraft engines, wind turbines, hardware and software, financial services, and medical imaging products, and it also has licensed consumer brands such as GE Appliances $($a Haier company$)$ and GE Silicones.

GE has a long history of applying the Six Sigma methodology in its company$-$wide processes. Pioneered by manufacturers like Motorola in the $1980$s$,$ Six Sigma is a system focused on improving quality through reducing the number of defects in a given process. It was adopted by GE in $1995$ under the leadership of its former CEO, Jack Welch. The motivation for the implementation of Six Sigma came after realizing the company had a great deal of defects that led to waste buildup, resulting in slowed production and financial losses. With the goal of eliminating waste and making the company more efficient and productive, the methodology was applied to every GE business unit and fully integrated into all operations. The implementation put great emphasis on employee training. Supported with an investment of more than $$1$ billion, employees were trained in data$-$based problem analysis including identification of critical process inputs and measurement of process outputs to achieve process improvements. The program was also promoted with a program of strong mentoring and leadership within the company. GE used three key implementation approaches. First, the company focused on cutting costs to compete in price$-$sensitive markets, which was accomplished through improving quality by removing defects. Second, the company extended the Six Sigma improvement initiative efforts to all components of production and business. This implied that the suppliers were expected to participate in these initiatives so quality could be assured from start to finish for each product. Third, the company used Six Sigma tools, such as process mapping, to align the projects to specific business goals of the company. The efforts improved the quality of its products and reduced production costs, resulting in an annual profit increase of $66\%$ by $2001.$

Due to the adoption of Six Sigma, GE has long been exposed to concepts such as lean and total quality management. In fact, Six Sigma and lean methodologies share similar objectives as they both seek to improve efficiency, which led the company to use the hybrid term Lean Six Sigma to describe the set of methodologies in use at GE$.$ Six Sigma methodology continued to be utilized as an important tool at various GE business units; however, after the retirement of Jack Welch and with the success and popularity of lean manufacturing pioneered by Toyota, the company shifted its focus toward lean thinking, and specifically a lean manufacturing philosophy. With this shift, the company sought to apply lean thinking not only in manufacturing but also in design and management to be able to offer high$-$quality products with short lead times and less waste. Utilizing lean principles also meant that the company put strong emphasis on just$-$in$-$time delivery and reduced inventory as well as involving employees at all levels in identifying problems and solutions on a continual basis. One example of these initiatives took place in GE Appliances$$ Louisville plant. The company co$-$located all functions associated with manufacturing $($design$,$ engineering, quality control, production, and product development$)$ on the same site, enabling the company to quickly act on opportunities to improve the process or respond to market changes. The benefit of this lean production approach was reported to be a $68\%$ reduction in the time taken to build a dishwasher.

Today, GE is reshaping its lean journey by incorporating the advancement of new manufacturing technologies and the availability of industrial internet. GE thinks $$advances in technology enable lean to take on a deeper meaning beyond improving just processes.$$ The GE report titled $$Lean Manufacturing in the Age of Industrial Internet$$ notes,

The benefits of Lean have yet to reach their full potential. Today$$s technology, powered by the Industrial Internet, allows enterprises to drive even more value and reach new levels of performance to accelerate their competitiveness. Now manufacturers can leverage data intelligence to revolutionize their operations for significant improvements, including greater productivity, less waste, and lower costs.

GE Appliances gives a glimpse of GE$$s vision on lean. Marcia Brey, Lean Enterprise Leader at GE Appliances, defines it as a journey to become a lean enterprise in all aspects of