GE TO HALVE SUPPLIERS IN INDIA WITHIN THREE YEARS
MUMBAI: Multinational conglomerate General Electric (GE) is planning to halve the number of its suppliers in India from the existing 300 within three years as part of an ongoing exercise, a top company executive said.
“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 said.
“In the past five years, we acquired many industrial businesses in India, so their suppliers just came in. Now, we want to ensure that we don’t have, say 10 suppliers, for the same product because none of them is operating at a large scale and gaining significant volume growth from GE,” Kumar said on the sidelines of GE’s seventh suppliers’ conference in Pune.
Of course, 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.
“Vendor consolidation has been a part of most heavy engineering companies’ strategies for a while because most mature companies have always pushed for as few vendors as possible since they would like them to co-invest in the firm for the long term. Therefore, such a move is not bucking the trend, so to speak,” said Kumar Kandaswamy, senior director, Deloitte Touche Tohmatsu India Pvt. Ltd.
GE’s supply chain footprint in India is worth close to $4.2 billion in raw materials and finished products, Kumar said. Sixty percent of this output feeds GE’s 20 Indian factories, catering to industrial projects in the sectors of transportation, oil and gas, power, aviation and healthcare, while the rest goes to its American and European facilities.