Localization: A Supply Chain that Shines for Everyone It Touches
One of the most inhospitable environments you’ll ever find is inside a gas turbine, where tremendous temperatures, pressure and speed require turbine blades to perform flawlessly. As part of its efforts to extend its local supply chain, GE Gas Power is collaborating with MEI, a subsidiary of the Sonelgaz group in Algeria, to support them in developing the necessary capacities to manufacture complex turbine components. MEI is expected to start supplying GE with parts such as nozzles for gas turbines as early as mid-2020, post the final assembly qualification process.
In Saudi Arabia, Woodward, a multinational company, worked with GE to open up a facility in Saudi Arabia to repair gas control valves, a component at the heart of gas turbine operations and to provide other services for various power generation equipment.
“We collaborated with GE to meet their rigorous quality certification requirements for our Middle East facility,” said Rajagopal Ramesh, Middle East & Africa Business Leader of Industrial Control Systems at Woodward. “This was an extremely valuable process and provided us a good template to repeat in other regions where GE has a significant presence and local support is required.”
These are just two of more than 1,200 suppliers working with GE Gas Power across the Middle East, North Africa and South Asia (MENASA). In fact, in Q1 2020, in Saudi Arabia alone, GE’s sourcing quality team qualified more than 20 new suppliers and SMEs in Saudi Arabia covering services ranging from inspection and testing to air conditioning and other mechanical equipment. These numbers reflect the large scope of work that GE Gas Power performs in the region, including setting up new power plants, delivering equipment for greenfield and brownfield gas power plants, providing long-term operations and maintenance services, as well as carrying out rehabilitation works and implementing upgrades to enhance the performance of existing power projects.
“GE leverages a global supply chain to deliver the best value and technology to serve our customers’ needs. However, this work also requires a strong local supplier network,” explained Mofeez Murtaza, Sourcing Leader for GE Gas Power MENASA. “We have developed this network over decades, not only to provide manpower services for construction and commissioning but also to provide balance-of-plant equipment such as valves, bearings, piping, pressure vessels, tanks and increasingly, to supply more complex equipment like boilers, electrical equipment, switchgears, breakers, transformers and batteries.”
Building this supply chain in the region with local and multinational organizations has been a strategic priority for GE as localizing the supply chain provides customers multiple benefits such as greater cost efficiencies, reduced lead time and faster turnaround time for emergency work and unplanned outages. Recently, this regional supply chain has also proved to be invaluable during the COVID-19 outbreak. The presence of local capabilities on the ground helped to reduce the impact of various travel restrictions and logistical challenges on GE’s service, maintenance, repairs and other projects across the region.
These localization efforts are also a clear demonstration of GE’s long-term commitment to the region and efforts to support government and customer in-country local value add initiatives, such as Saudi Aramco’s In-Kingdom Total Value Add (IKTVA) program and ADNOC’s In-Country Value (ICV) Program in the UAE, as well as other ICV programs in countries like Oman and Qatar. The company even has a dedicated ICV team to monitor and grow its localization efforts.
“GE has supported the development of the energy sector in the region for over 80 years. Our teams are on the ground every day, rehabilitating power projects that were damaged during the war in Iraq, servicing plants in remote communities in Pakistan, working through the harsh summer temperatures in the GCC and more,” said Mofeez. “When you’re committed to delivering results for communities in the long run, no matter how challenging the circumstances, it makes sense to invest in building local capabilities across the supplier ecosystem.”
In most cases, GE’s quality team audits, inspects and helps local companies improve several aspects of their operations and production processes, including manufacturing plans and production flows, quality assurance and control plans, environment, health, safety and integrity standards, and security protocols before qualifying them as a supplier. Ultimately, local suppliers need to be competitive in terms of quality, process, speed and costs with global suppliers and GE works with them to help enable that process. By building these capabilities, local suppliers can also grow globally.
Moreover, they also often benefit from the reputational boost gained from being a GE supplier.
“GE is a multinational company, so it’s a big benefit to be recognized in the market as a qualified supplier. Not only can we access opportunities to work with various GE businesses around the world but we also have greater credibility with other customers,” explained Varma Dantuluri, CEO of Diligent SCM Solutions, another regional supplier for GE Gas Power.
Read more about GE’s contribution to the power sector across the Middle East, North Africa, Turkey and Pakistan region.