GE Goes E-Commerce

Asian airlines are poised to go online with one of the newest and most sophisticated e-commerce systems in the world.

No, it's not ticketing: it's the latest development in GE Aircraft Engines' drive to make business cheaper and faster for its customers. Three or four airlines have already gone online in the US and Europe, and the network will spread to Asia-Pacific in the next few weeks. All are looking for the system to save them money.

Driving the e-commerce vision is GEAE president and CEO Jim McNerney-who began his GE career in information systems-and he's driving it hard.

"By end of the first half of this year most of our big major customers will have their personalized web environment, with about two thirds of the features we envision-and they will have the rest over the balance of the year.

"This is not just another information systems product-it is a major initiative, a major function with hundreds of people and a general manager who reports directly to me, who reviews it with me daily," McNerney said. He would not confirm reports that GE expects to pump at least $50 million into the project, but admitted to investment of "tens of millions of dollars every half year."

The world's No. 1 engine manufacturer aims to provide every major customer with a personalized website that acts as access to GE. But it will allow far more than just ordering parts. McNerney's vision goes further, beyond instant access to engineering bulletins and configurations, airworthiness directives, and tracking engine information.

"Speed, and quality of information are crucial. But speed is the main thing," he said. As an example he cited component repair, where negotiations over whether a customers' part is repairable or should be scrapped can take weeks of back-and-forth, and lead to billing disputes. "Over the web we will be moving images of their parts we want to repair right back to them in real time and getting a sign off," he said. "We will provide real time visual evaluation at both the shop and the customer-do it at 11 am in the morning and get on with it."

McNerney believes the speed at which orders will be filled and components repaired will enable customers to cut costs by managing their inventories better, and enable GE to save money by improved forecasting. But that's just the start. "Because its all computer-based we'll be able to put value-added services on to these basic ordering systems, such as inventory management kinds of capability," he said.

Then comes training. McNerney believes online training of engineers will be a powerful tool, taking the classroom into each airline's home base instead of them sending students on long courses in Cincinnati or Singapore.

"My vision is that one half to two-thirds of that training could be done over the Internet, so the trip to Cincinnati or Singapore takes one-third the time and can be done sooner. There are little inflexion points all around the system that have us very, very excited. We have a very broad vision here," McNerney added.

GE's emphasis on helping customers stems from the fact that fully half of its $11 billion in revenues comes from servicing engines already in use, and McNerney believes there is more potential yet, as he puts it, "in leveraging the installed base." But in driving speed of service through the web, GE itself has had to change.

"For example, in information systems. We don't develop anything in-house now that isn't web-based," McNerney said.

And as customers are offered services at lightning speed, so GE has to deliver ever more quickly. While "clicks can go fast, bricks take a heck of a lot longer to catch up," McNerney said. "One's ability to develop these systems can happen at a much faster rate than the ability of an organization to change." He estimates that the ability to fulfill real-time promises depends one third on systems applications, and two thirds on changing fundamental processes within the company to accelerate the end result.

But GE has another secret weapon here ­ its Six Sigma quality program, which has been used for the last few years to drive change and improve efficiency with customers as well as in the engine company's factories, customer centers and distribution networks.

"You couldn't do any of this without Six Sigma," McNerney said. "One of the real competitive advantages we have right now is the ability to understand and to manage process change. We have a history of our best people working on that, and now it is regarded as highly valued work. So I think Six Sigma gives us a leg up on driving this change."

"I am," McNerney added, "a little evangelical about all this."

By John Morris