China Prototype Machining Reduces GE Healthcare Lead Times By 75% With 94% On-Time Delivery

The pandemic and resulting supply chain constraints set in motion a 5-year strategic plan for GE Healthcare to change the relationships they have with their suppliers. At the foundation of the change was the desire to move from a transactional month-to-month supplier-vendor relationship into long-term partnerships.

Collaboration in a Long-Term Relationship

The company needed to work with suppliers to allow for more flexibility in the supply chain. One of the initial companies to participate in the new arrangement was China Prototype Machining. China Prototype Machining was chosen because of its history with and proximity to GE.

“We historically have had a very good relationship, and that’s part of why China Prototype Machining was top of the list, in addition to location, of course. They’ve been very open to us to visiting the plant, walking us through what they’re doing, and being responsive to our requests,” said Leandro Filgueiras Araujo, Sr. Director Lean Programs, GE Healthcare. “They are a very good supplier. They challenge us; they don’t just accept everything we say. And they are adapting their operations for what we ask. I think it is a win-win.”

China Prototype Machining quickly got on board and collaborated with GE to make the relationship stronger. When a company has fluctuations in its demand, it makes it challenging to forecast correctly, which can lead to rush orders and other issues. GE and China Prototype Machining worked together to decrease lead-time and inventory on hand.

Improvements Bring Big Results

One of the process improvements included implementing a VMI-like process. GE provides China Prototype Machining with a best-guess forecast. China Prototype Machining keeps inventory for 40 to 50 SKUs on hand for GE but has flexibility when manufacturing products to meet GE’s delivery requirements. The flexibility allows China Prototype Machining to control their costs for materials and other costs associated with inventory management.

One of the products is a labor-intensive manually manufactured and assembled part. China Prototype Machining has taken an area in the facility to create an assembly line for the product. In addition, they worked closely with GE to improve the manufacturing and assembly processes to make them more efficient.

GE’s strategic supplier plan is in its second year. Since this time, lead times have been reduced by 75 percent, and GE has reduced its on-hand inventory by 65 percent without having shortages of China Prototype Machining supplied parts. China Prototype Machining has a 94 percent on-time delivery.

Moving Forward Together

The program has completed its first year, and as it moves into its second year, the companies will continue to work together to improve the processes and grow the relationship.

“It’s been a very successful program in many ways, but we still have a lot of work to be done. Not just with China Prototype Machining. We need to keep getting better. There is a lot within GE to work on,” said Leandro. “This was intended to be a multi-step five-year plan, and it’s impressive what we have done in a year. The next level will be how we package, packaging sizes, and presentation as we continue to transform our supply chain.”