GEs Rotary Compressor Case Solution: Question 1: What factors in the product development process caused this disaster?

Answer: Development Phase Customer requirements Design Factors which caused disaster Usage difference: GE failed to understand the difference in the requirements of rotary compressor for air conditioner and refrigerator Misjudging needs: GE took decision completely on their own without involving customers, hence misjudged the needs of consumers Ignorance: GE management ignored the fact that rotary motor will run hotter immediately and hence not suitable for refrigerator Noise: The new design will be making much noise, this fact was not considered No learning from mistakes: They overlooked the recent failure Avoided Outsourcing: They didnt evaluated option of outsourcing against the option of in house manufacturing Over Confidence: They avoided the offer of consulting from ex supervisor Lack of established testing process: There was no established process to test the working of the designed rotary compressors Lack of supervision: Supervisor in place avoided the finding from the testing process which were showing the fault in rotary compressor

Implementation

Testing

Question 2: Which individuals were responsible for this disaster and why? Answer: Individuals who were responsible Manufacturing Engineers Design Engineers Management Reason Nothing had been mass-produced with such precision of a tolerance of only 50 millionths of an inch before, but manufacturing engineers felt sure they could do it. Which they failed to achieve. Powdered metal had been tried a decade earlier on air conditioners but did not work. The design engineers who were new to designing compressors did not consider the earlier failure important. A consultant suggested that GE should consider a joint venture with a Japanese company that had a rotary refrigerator compressor already on the market. This idea was rejected by management. In addition to this the original designer of the air conditioner rotary compressor, who had left GE, offered his services as a consultant. GE management also declined this offer. The technician who disassembled and inspected the parts thought they did not look right. The technicians supervisors discounted these findings and did not relay them to upper levels of management. About 600 compressors were tested in 1983 without a single failure. This statistics suggests that there must have been a conceptual fault in the testing precedure

Supervisors Testing Staff

Question 3: How might this disaster have been prevented? What lessons do you think GE learned from the future? Answer: Prevention: Cost Benefit Analysis: They should have done cost benefit analysis of both the options available to them to get a deeper perspective of which one to implement. Quality System: There should be quality system in place to check quality of product being designed at every phase i.e. from product requirements, design to implementation Design for test market (Product Screening): They should have designed only few products first to test them against the customer requirements, working and reliability Outsourcing: This was the best option available to them. They were an established player in this product line. They would have easily prevented this by outsourcing manufacturing of rotary compressors Lessons from failure: 1. Continuously improve the manufacturing operations according to the customer requirements and changes in technology and other external environment to compete with competitors 2. Role of management in particular operations management is centre to the product success and a small overlook can cause a great damage 3. Evaluate all the available options thoroughly before implementing 4. Evaluate selected option at every stage of product manufacturing and not in the end only 5. Notice all the small suggestions from the people involved in the operations of product development Question 4: On what basis was GE attempting to achieve a competitive advantage? How did it fail? Answer: GE tried to achieve competitive advantage through product differentiation by improving current process of manufacturing. They analyzed that their product is not matching on many parameters provided by their competitors. E.g. making refrigerator compressors required 65 minutes of labor in comparison to 25 minutes for competitors in Japan and Italy. Moreover, GEs labor costs were higher. They planned following improvements in current operations: to build a new rotary compressor in-house A rotary compressor weighs less, One which has one-third fewer parts, The one which is more energy-efficient than the current reciprocating compressors. The rotary compressor which also takes up less space, thus providing more room inside the refrigerator and better meeting customer requirements.

Reason for failure: They did not evaluate the option of outsourcing against the option of in house manufacturing correctly. While considering the option of making is weight less they overlooked the noise made by current design and the heat generated by current design They did not learn from their previous mistake and continued with the suggested process and design Management overlooked the doubt by consultant regarding the testing results showing zero failure rates, management also didnt involve the person who designed rotary processor and showed overconfidence on its technical staff