Bringing good things to life
GE is forging ahead to make all its customer-related processes electronic. Just another way of shutting out the competition.
Roger Torres is a good indicator of the way e-commerce can boost a company's competitive position. "Life is very good," says Torres, VP of purchasing for U.S. Home, a US$2 billion home-building subsidiary of Lennar. "But the only problem is that when life is good, time becomes a precious commodity. And getting through to suppliers when we want to buy product can be difficult."
Torres, speaking from his office in Silver Spring, Maryland, says U.S. Home and Lennar build roughly 22,500 homes per year, each of which is filled with appliances the owner chooses from a short list the company provides. In past years, his eight purchasing employees would call GE's customer service line to place orders ranging from $1,500 to $3,000. "It was sometimes difficult to get through," he says, adding that even then the process was flawed.
Last year, GE set up a customised online ordering system for U.S. Home on its GE CustomerNet site, which has been running since 1996. "We wanted to figure out if this was just a new toy or whether there's real value here, so we measured it," Torres says. Making a single order on the Web "is about 15 minutes faster" than calling customer service. But using the call centre for larger orders pays off.
Torres says U.S. Home's online ordering "has taken a lot of pressure off" his staff, but it hasn't let him trim payroll. At the same time, he says, his company won't necessarily order more appliances from GE because of the service.
How, then, does one measure the difference the online ordering system has made?
"Ask me what other appliances I sell," Torres says. The answer? "Zero. If somebody asks for another brand, we try to steer them away, because we don't need the extra hassle."
The online ordering system in particular--and the effort GE's corporate sales staff makes to improve the site for its customers--helps insulate GE from competitors, Torres says. In the case of just the Washingon, D.C., division of U.S. Home, that translates to about $1.4 million in sales GE has sealed off from the competition.
GE's appliances division comprises $6 billion of its total sales, but it is under more pressure than many other divisions to find cost savings and establish competitive beachheads via technology. Because increased competition has forced price cuts on virtually all products, the division has to trim $150 million to $200 million a year in costs just to stay even.
Enter the Web. Almost 100 percent of GE Appliances' sales now come over the Internet. The cost difference between a phone order and a Web-based order is $5 versus 20 cents. And although those savings are real, they have not allowed the company to shrink or close call centres--the black holes of corporate spending.
The question of when to make substantial reductions in call centre infrastructure and other redundant systems, says Reiner, "is one of our biggest challenges. In order to get the kinds of productivity we want out of this, we need to be able to shut down the parallel process.
"When it involves customers, we won't do it until they're ready. The hardest thing is to pick a date and say that [now], no other thing will be allowed except doing it over the Web."
Reiner says it's impossible to say when GE will require all orders to come in via the Net. But the move toward that day is on: Starting November 1 all GE's suppliers and internal purchasing agents must be ready to invoice and receive payments electronically--or they won't be doing business with GE.
"The task--and I'm totally confident we can do it--is to shut down all the other ways of doing it," he says.
