Gems Case Study

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Group
 8:
  Sven
 Hampus
 Björkman
 (T01701122)
  Agathe
 Giner
 (A01627201)
  Henrik
 Sanden
 (T01701220)
 
 
 

 
 
 

Daniel
 Campo
 (A01724102)
  Jonghyup
 Lee
 (T01701104)
  Carlo
 Schmitz
 (A01741103)
 

Assignment
 3
  General
 Electrics
 Medical
 Systems
 -­
 Case
 
 
 
 Q1.
 
 What
 is
 the
 underlying
 logic
 behind
 the
 Global
 Product
 Company
 (GPC)
 idea?
 
 Generally
 GPC’s
 Philosophy
 was
 defined
 “to
 concentrate
 manufacturing
 -­‐
 and
 ultimately
  other
  activities
  –
  wherever
  in
  the
  world
  it
  could
  be
  carried
  out
  to
  GE’s
  exacting
  standards
 most
 cost
 effectively”.
  This
  was
  specifically
  done
  by
  the
  use
  of
  centres
  of
  excellence
  (COE).
  Each
  product
  of
  the
  General
  Electric
  Medical
  Systems
  (GEMS)
  portfolio
  was
  manufactured
  in
  one
  to
  two
  centres
 of
 excellence.
 From
 there
 the
 products
 were
 shipped
 all
 over
 the
 world.
 The
 case
  states
  that
  60%
  to
  96%
  of
  products
  made
  in
  a
  centre
  of
  excellence
  were
  eventually
  sold
  in
 a
 different
 part
 of
 the
 world.
  At
  this
  point,
  with
  regard
  to
  the
  manufacturing
  strategy
  we
  think
  it
  is
  important
  to
  mention
  that
  GEMS
  only
  manufactured
  the
  most
  decisive
  parts
  of
  their
  products
  themselves,
  the
  so-­‐called
  “crown
  jewels”.
  This
  took
  place
  in
  the
  centres
  of
  excellence.
  The
 rest
 of
 the
 process
 was
 mainly
 assembly
 of
 parts
 they
 bought
 from
 outside
 vendors.
  Therefore,
 the
 vice
 president
 of
 GEMS,
 Marc
 Onetto,
 points
 out
 that
 it
 is
 “mainly
 a
 supply
  chain
 game”.
  However,
 for
 the
 most
 vital
 parts,
 where
 all
 the
 technology
 and
 knowledge
 of
 GEMS
 was
  concentrated
 the
 COEs
 were
 the
 main
 pivotal
 point.
  Coming
 back
 to
 the
 centres
 of
 excellence,
 it
 is
 evident
 that
 GEMS
 or
 General
 Electrics
 in
  general
  was
  in
  a
  very
  preferable
  position
  to
  try
  something
  like
  the
  Global
  Product
  Company.
  Due
  to
  its
  size
  and
  the
  according
  marketing
  and
  sales
  organisations
  it
  was
  very
 easy
 to
 implement
 the
 structure
 needed
 for
 the
 shifting
 of
 production
 locations.
  Around
  85%
  of
  product
  inputs
  were
  manufactured
  in
  high
  cost
  countries,
  meaning
  developed
  countries
  with
  high
  costs
  of
  labour
  and
  resources
  and
  extensive
  regulatory
  work.
 The
 current
 cost
 structure
 was
 divided
 into
 around
 80%
 material
 cost
 and
 20%
  labour
  cost.
  Through
  the
  GPC,
  General
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