Execution & Financial Discipline For decades, GE has unleashed the power of its processes to drive profi table growth. Our reputation for operational rigor is as much a key to our future as it is a legacy of our past. Beyond merely maintaining an unrelenting focus on financial discipline and execution, we are enhancing these capabilities, measurable through key metrics such as operating profit margin and return on average total capital (ROTC). GE is enriching its services capabilities across businesses and focusing on product innovation to expand individual margin rates by as much as 30%. These efforts together with overhead cost reductions and high-return business investments have increased ROTC, positioning us to reach our goal of 20% by 2008. OPERATING PROFIT MARGIN RETURN ON AVERAGE TOTAL CAPITAL (Excluding Pension) 2004 2005 2006 2007* 2004 2005 2006 2007* (%) 13.5 14.8 15.2 ~16.2 (%) 16.2 16.6 18.4 ~19.0 *Forecast *Forecast 24 ge 2006 annual report
Transportation A great example of a business that is demonstrating reliable execution and financial discipline is Transportation. In 2006, Transportation conducted 200 Lean workouts. Customers saw improved reliability and on-time delivery of GE products, while the Transportation business created additional manufacturing capacity. The team has reduced locomotive build time by 16% as it increases deliveries to emerging markets worldwide. Previously it took us 31 days to manufacture a locomotive. We are now at 26 days, with a target of 10 days. pictured left to right Todd Wyman, Brett BeGole, John Dineen, Julie DeWane, Steve Gray, Tina Donikowski, David Tucker LEAN: 10 DAY LOCOMOTIVE 31 Days 10 Days* A. Major components B. Assembly C. Paint D. Test *Goal ge 2006 annual report 25
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