Multinational conglomerate General Electric (GE) may reduce the number of its suppliers in India to about 150 from the existing 300 within three years as part of an ongoing exercise.
Multinational conglomerate General Electric (GE) may reduce the number of its suppliers in India to about 150 from the existing 300 within three years as part of an ongoing exercise, reported Mint.
“Having begun a supplier consolidation last year, we will aggressively continue it over the next three years to scale up with our strategic (supplier) partners and drive more volumes to get the best outcomes,” Amit Kumar, vice-president, global supply chain, GE South Asia and Asean told the paper.
Kumar explained that the company has acquired many industrial businesses in India over the past five years as a result of which new suppliers came in. Now, however, the company wants to ensure that there is not more than 10 suppliers for the same product as none of them is operating at a large scale and gaining significant volume growth from GE.
Suppliers who do not meet the industrial manufacturing giant’s expectations of cost-quality integrity and fulfilment excellence will also be dropped.
"We are a project-based business; so, we don’t always need the same kind of components. A significant portion of the solutions we provide is driven by customer designs, which are redesigned often. Therefore, we need suppliers who can quickly adapt at the lowest cost," Kumar added.
GE has a supply chain footprint in India that is worth close to USD 4.2 billion in raw materials and finished products, Kumar said.
Nearly 60 percent of the output goes to the 20 Indian factories for industrial projects in the sectors of transportation, oil and gas, power, aviation and healthcare, while the rest goes to its American and European facilities.
Kumar told the paper that supplier consolidation will help the company reach a target of USD 4 billion in terms of raw materials over the next three years. The overall supply chain footprint in the country is expected to reach close to USD 7 billion during the same time frame, he added.
GE is planning to invest over USD 500 million in the next two years to a build a greenfield facility in Hyderabad to manufacture CFM International LEAP engine components in a collaboration with Tata Advanced Systems.
In the span of past three years, GE has invested neary USD 400 million to enhance supply chain capabilities, with close to USD 250 million invested in the company’s “lean and digital” multi-modal facility at Chakan near Pune, which serves all of GE’s India business.
A diesel locomotive manufacturing facility was also set up in Marhowra district, Bihar, as well as maintenance sheds were built at Bathinda in Punjab and Gandhidham in Gujarat to cater to a USD 2.6 billion Indian Railways order won at the end of 2015.
Kumar added that the company is also making “significant investments” to participate in the government’s USD 6-10 billion programme to source military aircraft and engines locally and increase overall localisation.
