GE uses Six Sigma to tackle MRO buy
By Staff -- Purchasing, 11/19/1998
When GE Aircraft Engines (geae) tackled MRO in its efforts to launch its Six Sigma quality initiative, it needed to work with a supplier that was willing to continuously examine and improve its own business. The hook for the supplier was the chance to enhance its relationship with geae and to improve its own procedures as well.Robert Whitehouse, director of purchasing at geae, wanted to deploy Six Sigma in MRO to achieve certain goals:
* Reduce stockouts.
* Eliminate receipt of wrong material.
* Optimize inventory turns.
The supplier that stepped up to the plate was F.W. Webb, a plumbing-equipment distributor. First, the two companies measured and analyzed data to determine causes of stockouts. John Blades, an F.W. Webb sales rep, worked closely with Whitehouse's team. By running tests on data accuracy, Blades found a high proportion of errors in inventory identification. Whitehouse's team identified what was usable inventory and what was obsolete. The companies cut 200 stock items as a result.
To eliminate the receipt of wrong material, F.W. Webb dug into its own processes. It reviewed and assigned part numbers to the equipment that geae orders. The distributor now cross-references its part numbers with those of geae to ensure accuracy. It also provides aisle and bin locations and minimum/maximum quantities to support electronic data interchange between geae and F.W. Webb. Upshot: Delivery accuracy levels sprang from 70% to 98%.
Once geae raised accuracy and streamlined inventory, it turned its attention to optimizing inventory turns. geae consolidated plumbing supply in one stockroom that also holds electrical, janitorial, and paint supplies, saving 315 feet. The products also are in a more accessible location in the stockroom.
F.W. Webb holds and manages inventory for geae. The distributor doubled the number of inventory turns that it now stores for its customer. F.W. Webb also added to its own holdings the handful of items that it did not keep in stock in the past, says Blades.
This portion of geae's Six Sigma process was tested from December 1, 1997, through June 1998. The project is now in the control phase and geae is evaluating the benefits for expansion. For its part, F.W. Webb has contributed to a written procedure manual for plumbing supply management as a model for the next three stockrooms and possibly other divisions of General Electric.
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