The Paragon Project The New Breed Zip
GE Appliance Park is an icon of American industry in Louisville, Kentucky. Photo: Jason Hiner'IT can't be what holds this project back.' That’s what Charlene Begley, CEO of GE Home & Business Solutions told CIO Alan Kocsi.The project she was talking about has become the poster child of the 'Revitalization of U.S.
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That's how it’s hailed by politicians, business leaders, and workers. They view it as proof that America is still a great place to make things. At its core, the project is about manufacturing refrigerators, water heaters, and washers at GE's historic Appliance Park in Louisville, Kentucky - a plant that was on the verge of shutting down just four years old. In 2009, General Electric Chairman and CEO Jeff Immelt said that GE was committing to a $1 billion re-investment in U.S.
Factories and the creation of 1,300 new American jobs by 2014 - mostly manufacturing jobs returning from China and Mexico. As a result, GE's Appliance Park has sprung back to life, sprucing up its warehouses, retraining workers, and purchasing the latest manufacturing equipment so that it can launch new product lines of appliances from the Louisville plant.However, the company had an IT problem that threatened to derail its ambitious plans for 21st century manufacturing. The GE Appliances division was running outdated software and systems that were cobbled together over decades. It was a tangled mess of custom apps that didn’t talk to each other and the result was that it took way too long to get reliable information about the state of business processes and the overall health of the business.The systems were simply not nimble enough to support the kind of lean manufacturing operation that GE needed in order to make it economically viable to build appliances in America. IT was a game-stopping obstacle.How GE Appliances overcame that obstacle - or, more accurately, is still in the process of overcoming it - says a lot about where GE is going as a company and how today’s enterprise IT departments are having to make radical changes in order to adapt to the relentless pace of a faster, leaner, and more global business environment. Inside GE, this initiative has been dubbed “ERP+” and TechRepublic interviewed executives, IT leaders, and key employees at GE Appliance Park to get the story on how they are pulling it off. The near-death experience.
The Paragon Project The New Breed Zip Store
GE had the first commercial UNIVAC computer in the 1950s. Photo credit: GEGE broke ground on Appliance Park in 1951.
Just two years later, the site employed nearly 10,000 workers and became a paragon of American industry when GE purchased a UNIVAC computer to handle payroll for all those employees. It was the first business in the world to own a computer - only governments had owned them up until that point - and Appliance Park was the first non-governmental site to host one. Appliance Park was a beacon of progress in America’s post-World War II manufacturing boom.By the 1970s, Appliance Park was churning out millions of appliances - from washers and dryers to refrigerators to air conditioners - and employment at the manufacturing facility peaked at almost 20,000. With that many employees, the site became a hotbed for labor disputes and was the site of several highly-publicized worker strikes.But, by the 1980s, GE began shipping some of its manufacturing work overseas to Mexico and China to reduce costs, and Appliance Park started to shrink and wither.
The Paragon Project The New Breed Zip Line
From 1994 to 2007, GE avoided hiring new hourly workers at Appliance Park. Employment dropped to about 5,000 workers.Then, the 2008 global recession nearly wiped out the facility. Housing market collapse brought new home construction to a halt and since over 95% of the sales of GE Appliances are to the American market, it had an immediate and devastating effect.In 2007, the appliances business had been the business of the year inside GE, riding the hot U.S. Economy and the red-hot housing market to strong sales. But when the bubble burst on U.S. Housing, the weakness of being so dependent on a single market led GE executives to consider spinning off or selling the appliance business to one of its appliance competitors that was more diversified globally. However, when GE shopped around its former golden child, it didn’t find any buyers.
It was too expensive and the long-term prospects of the U.S. Market were too uncertain.Those were dark days in Appliance Park. No one knew which company might end up owning the business and there were serious doubts about whether any buyer would want to keep the aging facility open. Employment at the plant dropped to under 3,000.But, then came a ray of light. When GE failed to find a buyer, Immault announced in 2009 that not only was the company keeping its appliance business, but it was going to make a dramatic reinvestment in Appliance Park and bring a lot of the product development and manufacturing for appliances back to Louisville.There were three factors behind the startling about-face:1.) The federal government stepped in and provided assistance from the Recovery and Reinvestment Act of 2009 and ultimately gave a slew of tax breaks and incentives for GE to build a new breed of energy-efficient appliances using U.S. Labor (a.k.a.
“green jobs”). The Kentucky state government and the Louisville city government also put together aggressive tax incentive plans. 2.) The local union in Louisville agreed to a wage reduction in which new manufacturing employees would start at $13/hour (roughly $26,000/year), or the same wage that workers at the plant received in 1980.
That was down from $22/hour, as the union and the community made the trade-off of more work versus higher paying jobs.3.) GE decided that it could change its business model for appliances. It had previously outsourced much of its product development and manufacturing to overseas suppliers (many of whom were now entering the market with their own products). GE had relied on the strength of the GE brand and the company’s distribution to make money. However, GE made a bet that it could “invest, in-source, and innovate.” In other words, by bringing product development and manufacturing back to the U.S. It could decrease the time it would take to bring new products to market and out-innovate its competitors in the appliance market. GE's Appliance Park campus is 900 acres and has its own zip code. Photo credit: GEThe IT problemEven with the victory of keeping Appliance Park open plus all of the excitement around bringing jobs back to the U.S.
And launching new product lines from Louisville, there was a dark cloud that threatened to rain on the parade. The existing IT systems in Appliance Park were not prepared to support the kind of hyper-innovative environment that GE Appliances was staking its future on.' We didn't really invest in IT for 20 years,' said Kevin Uhls, IT Director of GE Appliances.GE Appliances had 2,673 disconnected workflows, 530 applications, 444 IT platforms, and thousands of different databases. The integration between these systems was almost non-existent. Uhls characterized the IT environment as 'very good silos and very little trust.”It was mess. And it couldn’t support the high-tech manufacturing juggernaut that GE wanted to create at Appliance Park.So, GE went hunting for a CIO who could lead an IT transformation. Photo credit: Jason Hiner'We rolled up an original estimate of what this was going to cost.
It was in the neighborhood of $150 million,' said Kocsi. 'We sat down with the business and we said, 'Look. We're going to stop working on a whole bunch of other things that are not strategic to the business and we're going to replace about 75 percent of the environment.' The reason Kocsi was able to do that without freaking out the entire business unit was that he went to Mark Shirkness, General Manager of Appliance Distribution Services, and made him a partner in the project. Kocsi said he had heard a lot of great things about Mark as a leader, so he went directly to Mark's office and sold him on the plan. Then he got the CEO to appoint Mark as the business leader for the ERP+ project.By the end of the first quarter of 2011, Kocsi and Shirkness had their plan.' We pushed about 70 percent of our resources to ERP+,' said Kocsi. 'We looked at licensing costs and we said 'If we stop doing the other work, it's about $40-60 million' at the time over a five year spread and we said, 'That's not bad.
The business can digest that.' 'But, as part of the overall technology plan, GE Appliances would also need a modern data center to support the kind of cutting edge systems that it would need to run this type of environment, and that was going to add additional cost to plan.So, at a time when more and more American companies were outsourcing their data centers to the cloud, right in the middle of Appliance Park - not far from where it had implemented the world's first commercial UNIVAC computer five decades earlier. GE workers consult on how to solve the latest challenge. Photo credit: Jason HinerKnowing that it needed to create business value much faster than the usual enterprise IT project, the team decided to try a mashup of bleeding-edge techniques from several different playbooks - business management, manufacturing, and software development. The result was creative, risky, and highly unorthodox. But, it has been so successful that it may turn out to be a new model for how to run business technology projects and how to organize IT. A decade from now, I expect you’ll find a full description of it in college courses and textbooks on business management, and it will be filled with fancy jargon about Agile, Gemba, Lean Manufacturing, Moonshining, and Andon.
For now, we’ll mostly try to sum it up in simpler terms.What GE Appliances decided to do was break up the project into smaller chunks. Things that essentially would have been software components or features in a bigger rollout were now treated as individual products, and as they were completed, they were rolled out into production so that users and the business could start benefitting from them - and improving them - right away. This approach is based on from the software programming world, where the focus is on a continuous set of incremental releases rather than one big software release.' We started the process in the April/May 2011 time period,” said Uhls. “The team went through the Agile process and getting into their sprints and builds and releases.
We had our first release in late October.' In other words, within six months of starting the project, the group was already pushing out new pieces of the platform for employees to begin using.
But, part of the formula was that they pushed out the release to a department or subset of users, who used it and gave feedback. Then the release got refined and improved and the rollout went out more broadly to the rest of the company.Uhls said, 'Instead of pushing it out to everybody, we push it out to one product at a time. That gave us the ability to learn quick and fail fast.
We learned that there were issues with some of the things we needed to do. We were able to work quickly to get that fixed within two weeks and then continue the rollout process.' One of the challenges of the incremental approach is that some processes were moved to the new system while other processes a.
Friday December 06 2019, 12.01am, The TimesThe tranquillity of Loch Leven is usually stirred only by the ducks, meandering otters and majestic ospreys that patrol its marshy edges where the scent of holy grass perfumes the air.However, the Highlands nature reserve, often described as one of Scotland’s top natural assets, is set to welcome a new breed of visitor: the thrillseeker.Plans to create the longest zip wire in the country over the loch would mean adrenaline junkies hurtling 1,480 metres across the shallow waters to a pontoon from which boats would ferry people back to shore.