GE GETS IT RIGHT
Recently GE's Jeffrey Immelt announced that, due to perceived world-wide increases in protectionism, GE is changing its globalization strategy. Instead of specialized production centers and world-wide exporting, it will transition further towards localized self-contained production.
That means that (e.g.,) railcars for the (e.g.,) Asian market will be fully built from a local supply chain and production facilities to meet the needs of that market. Similarly, (e.g.,) jet engines for the (e.g.,) US market will be built and sourced here. Flows of money and jobs will follow.
Immelt added that this manufacturing and sourcing strategy requires a commensurate shift from centralized control to decentralized decision-making. Several challenges must be overcome, but it's all very doable. For example, standards in quality and technical knowledge must be spread and implemented among more operations and cultures, but the means to do that have existed for years. It's more about organizational willpower than method availability.
As GE continues this now publically announced shift, memories of industries nationalized over the years resurface. While government philosophies can change decade by decade, businesses must take control of their futures and make decisions they believe correct. Business owes as much to employees, communities, customers and supply chain partners, and governments that provide required supporting infrastructure as it does to investors. I do not find this strategic shift inconsistent with that definition of success.
Whether or not GE chooses to behave that way is a different question. Whether or not a potential return to nationalization strategies by struggling countries results in usurping of one or more of these localized "production system capabilities," GE is creating a valid operations strategy to support business goals. In this case there is as much risk in doing nothing as in doing something dramatic.
Never a fan of Jack Welch or GE's treatment of its supply chain, in this case GE under Immelt is getting it right for its businesses.
Your business may be smaller than GE, but your operations strategy is equally critical to the success of your organization. Are you asking the right big questions and reaching the right big answers for your future?
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