Making the Link

With total assets nearing three quarters of a trillion dollars, total revenues (in 2004) of $152.4 billion, and earnings of $16.6 billion, General Electric has become one of the world’s largest, most powerful companies.

However, for all the monetary wealth GE has amassed after doing business for more than a century, the intellectual capital it has compiled may be even more impressive.

The knowledge and know-how of a corporation that has more than 320,000 employees worldwide is a powerful thing. That power increases exponentially when a system is in place that recognizes the value of such knowledge and strives to learn and improve from it.

GE is on the cutting edge when it comes to operating its businesses in just such a manner, using tools like Six Sigma or Lean. And, as many businesses in the marine industry are beginning to find out, the company is more than willing to share that knowledge.

In fact, its At the Customer, For the Customer program may be one of the best deals in the marine business. Because, while GE will be happy to loan out some of its monetary wealth through its Commercial Finance division, the company is just as pleased, if you are a customer, to give you its intellectual capital for free.

Linkage
Link Recreational, one of the premier boat dealerships in the upper Midwest, learned that first-hand late last summer. The Minong, Wis.-based company, which has seven locations throughout Minnesota and Wisconsin, asked GE to lend it a hand in streamlining and standardizing its boat delivery process companywide.

After an initial conversation to determine what specifically was needed, and if, in fact, the ACFC program could be helpful in that regard, GE sent ACFC Black Belt Rick Hersey to Minong to moderate a Work Out that sought solutions to what the company felt were delivery inefficiencies.

Link assembled people from each of its seven stores — 15 in all, that it called the breakout committee — for the meeting. Some were office managers, others were service technicians or operations specialists, but all were the people most familiar with how boat delivery was handled at the location where they worked.

For two days Hersey gathered the committee together in a large conference room at the front of the company’s headquarters building behind its Minong dealership and helped steer the search for a better way.

ACFC
It’s a journey he has taken many times before.

When GE launched the ACFC program in 2001, Hersey worked with a broad spectrum of customers throughout a variety of businesses and industries. As ACFC began to prove its worth and gain popularity, however, he found himself specializing more and more. And when word of the program spread throughout the marine industry, Hersey was soon working exclusively with boating businesses.

The relationship has proven successful for those who have called on him for help.

“I’ve touched over 40 marine customers in the last year or so, and I’ve probably improved their business processes to the tune of, oh, 4 million bucks, something in that range,” Hersey says. “The customers have, generally, very reasonable expectations and are blown away by the result. They always underestimate what benefits they can come up with.”

The communications director for GE Commercial Finance, Stephen G. White, says that his branch of the company has worked with more than 1,500 customers, across all of the industries it serves, since ACFC began. And the monetary savings GE has been able to realize for the companies that participate in the program have been impressive.

“The customers tell us that we’ve helped them realize a benefit of, or a savings of, what they quantify, if you added it all up, well in excess of a billion dollars,” White says.

History
The ACFC program began as an idea that occurred to GE’s current chairman, Jeff Immelt, in 1999, when he was running its medical systems business. Immelt realized that all the time and resources, both financial and human, which the company had invested in developing processes to make itself smarter and more efficient — exemplified by the Six Sigma culture and push for quality that then-GE-chairman Jack Welch was working to instill in the company — could be very valuable to GE’s customers as well.

“So you’ve got that drilling down internally into the makeup, the DNA of GE, and you’ve got Immelt in ’99, saying ‘Why don’t we tap into that well that has been drilled and provide this to our customers externally, to help them learn and grow?’” White explains. “And when Jeff Immelt became chairman in September of 2001, this was one of those initiatives that was kicked off and taken companywide. It got a lot of traction here at GE Commercial Finance.”

ACFC works mainly with a toolset that includes things like Six Sigma, a fact-based methodology that uses data to analyze and improve business practices (see Value Warriors, Page 18); Lean, which focuses on eliminating waste from business practices and Process Mapping, a tool that charts a work process with the goal of eliminating non-value added work.

GE sends out specialists — called Black Belts and Master Black Belts, after the terms used to describe Six Sigma experts — to help customers try to solve problems both big and small.

“We trace our roots all the way back to Thomas Edison, and over the last 125 years, there aren’t too many issues or challenges, or problems, that we haven’t encountered ourselves,” White says.

General Electric has built airline engines and has decades of experience in the aerospace industry, for example, so it had the necessary expertise to help when one of its airline customers asked for assistance optimizing takeoff procedures in order to increase fuel efficiency.

Or, when the Red Robin restaurant chain asked for assistance in improving its business practices, GE was able to come in and help double the efficiency in delivering milkshakes — one of the restaurant’s signature offerings — to the customer on time.

With the many successful outcomes ACFC has achieved, Hersey says the program has evolved in the past year or so, beyond just the Black Belts, to include other employees who are now sharing their knowledge with customers. Even GE’s human resource experts are now sharing expertise under the ACFC banner.

Uncovering the process
The meeting at Link was typical of the projects Hersey has worked on and began the way many do, by getting all the players in one room and physically mapping out the process by which a certain action takes place — in this case boat delivery.

The technique is called, logically enough, process mapping and is one of the most effective tools in the ACFC arsenal. Because, while a true Six Sigma analysis can involve reams of data and take months to complete, the answers to many problems are usually more obvious. Process mapping is a straightforward method of uncovering them.

For nearly two days, Hersey led the Link team through a painstaking reenactment of how the boat delivery process works their business throughout the company. Using Post-it notes, one for each action in the process, and the input of those present, Hersey filled an entire wall of the conference room with all the steps Link currently takes to deliver its boats. Orange Post-its signified steps that were being taken but weren’t working, while pink Post-its contained those steps that worked well, but might not be done the same way at every store.

They were labeled with an “E” for essential.
On a second wall, a new process for delivering boats was compiled.

“Most of the things I’m walking into the dealerships and helping them with are fairly obvious,” says Hersey. “It’s their service operation or their inventory operation, and it’s staring them in the face. They’ve got too much of this or too little of that. It’s not something they can’t find the source of, they just don’t know how to take what they see and turn it into a solution.”

That was exactly what was happening at Link.

Kurt Dvorak, Link Recreational chief financial officer, says the company knew through the weekly matrixes it keeps of its financials and operations that some stores would be doing certain things really well while others would lag behind in the same area.

“So that kind of led us to the processes within each one of our stores and what’s the easiest way to spread that?” Dvorak says. “We have six different stores and when you chart it all out, we have six different processes, getting from A to Z, one at every store. Everybody was doing things differently.

“And you can see why employees are getting confused and customers are getting confused, because if you tried to work between stores, one is saying, ‘Well, we do it this way,’ and the other is saying, ‘No, we do it this way.’ So it’s really hard to track.”

Link still has the original process maps it created last July. The first is a jumbled mess with lines and boxes so thickly packed that just trying to follow it with the naked eye requires considerable effort. The second map, which contains only the essential steps the company uses now, is cleaner and much better organized. It just looks more efficient.

Dvorak estimates the second process map contains only about 25 percent as many steps as the first.

“What’s really impressive and empowering is when you get everybody together and they’re now looking at the same process, and they start talking amongst themselves and start interacting,” Hersey says. “It’s just incredible once everyone sees the challenge, how much the obvious solutions are very present and visible.”

With the process mapped, Link, with Hersey’s help, developed a list of 25 action items, best practices or simplified procedures, for the company to adopt and implement. Dvorak compiled those action items in a three-ring binder, made copies and distributed them throughout the company.

He then spent a couple of weeks traveling to the different Link stores and writing down the names of the people responsible for the implementation of each action item at each location. This was done to develop accountability, to ensure the items were done in the beginning and to help manage the process going forward. The binder will also serve as a training document, so that when one employee takes over for another, he or she knows exactly what’s expected.

The results
It’s still too soon to judge how much, if at all, Link will benefit from the new delivery system. The company worked to implement the changes during its slow season and needs to see how things unfold when business heats up.

However, the benefits of simply participating in the ACFC program have already become evident.

“I think this has opened up some relationships that wouldn’t have been opened up if we hadn’t gone through this process,” Dvorak says. “The people that are on this committee are kind of the drivers of [boat delivery] at each store. If we would have done this all at [one location], those people would have been OK there, but it never would have gotten to the other stores. And now you’ve got the cross sections. Even on these action items, we would assign them and now those people are working together over the phone or over the Internet, so I think a lot of good came from that.”

Those relationships and the familiarity with problem-solving methods like process mapping are one of the lasting benefits ACFC specialists like Hersey want the program to instill.

“Our goal with ACFC is knowledge transfer,” he says. “The intent is that we want to bring our toolsets and our characteristics and ideas into their environment and have their people absorb what makes sense. So what we tend to try to do is both solve a problem, but move some of the knowledge of how to do that — teach them how to fish.”

White emphasizes that what GE does not want to do is create thousands of mini-GE clones, but when it comes time to refinance he hopes they remember who it was that gave them a hand.

“The customer comes back and says, ‘GE Commercial Finance really went the extra mile, they cared about me and my business and made an investment to make us get better,’” White says. “So that’s really what this is all about. That can take time, but we’re willing to make that investment in our customers.”

Sidebar:
Defusing GRENADES
Marine industry newcomer removes boater hassles through process mapping.

Bill Fraine spent most of his life moving boxes around. As senior vice president sales, at FedEx, he was responsible for the global shipping company’s sales and strategy around the world.

Five years after leaving FedEx and then a post as CEO of a dot-com hospitality company, Fraine now has the time and ability to “do what I’ve always wanted to do — work in the marine industry.” So it probably wasn’t a coincidence that he walked into Destin, Fla.-based Legendary Marine last October looking for a job.

He started off as one of the company’s forklift operators, but it didn’t take long for Legendary Marine Managing Partner Fred Pace to discover him. The two bumped into each other and talked for a while out in the yard, and it concluded with Pace telling him, “I want you here, but [driving forklifts is] not exactly what I want you doing.”

Fraine had spent the better part of the past 30 years developing the processes and teams that built and now dominate the transportation industry. And Pace brought Fraine on board to be a critical set of eyes in the mapping and execution of more efficient processes.

“What Fred and the team have built at Legendary is amazing,” Fraine says. “The team is dedicated to the customer and jumps on grenades to help them. The agreement that Fred has with me is that we will discuss these grenades and how they are being caused.

“We discussed well before I agreed to come on board the fact that I was going to call his baby ugly.”

Truth be told, Legendary’s baby isn’t that ugly.

The recipient of a spot on Boating Industry’s Top 100 Dealer list has developed a fine reputation in the Florida panhandle. But nothing’s ever perfect. And after spending time driving forklifts, working in the marina, service and sales departments, Fraine began mapping the processes where the customers were seeing the most hassles.

And in his first implementation of process mapping, the newly appointed general manager has “added” an hour to the company’s day by making boat delivery more efficient. Customers had been coming in to see a boat, but with a large inventory and an enormous warehouse where they’re all stored, the company was having trouble locating the right boat in a timely fashion. The sales, service and rigging departments would work together to find them, but it was an inefficient process. And it was wasting time for multiple parties.
Now, having mapped the process and begun the implementation, the company is moving closer and closer to its goal of having boat delivery on time, every time.

“The fun part is, you need to do this stuff anyway,” Fraine says. “But if you’re not doing it, then I’ll be telling you that your baby’s ugly.” — by Matt Gruhn