By David Sedgwick and Mike Colias, Crain News Service
DETROIT (March 10, 2014) — Among the big questions surrounding General Motors Co.’s new initiative for building stronger supplier relations: How will it affect the 2,300 smaller suppliers that didn’t get an invite?
The answer goes something like this: There is room for the little guys — especially if they bring cutting-edge innovations to the table.
After a year at the helm of GM’s massive purchasing operation, Global Chief Grace Lieblein recently outlined the Strategic Supplier Engagement program, her strategy to repair fractured supplier relations that she acknowledges have prevented GM from accessing the supply base’s best innovations.
The program will offer such perks as better access to GM purchasing brass, earlier looks at GM’s product and technology plans, and even training to those suppliers that rate highly on several key measures—from cost containment and other basics to “cultural” aspects such as transparency. Of its 2,700 direct-materials suppliers, GM will include its largest 400 in the program, representing about 90 percent of its purchasing spend globally.
The move underscores how GM is leaning on its suppliers more than ever to deliver technology in areas such as safety and fuel efficiency that are becoming the key competitive battlegrounds for auto makers.
“It’s a framework for how we want to work with suppliers and strengthen our relationship with them to become the customer of choice,” Ms. Lieblein told Automotive News in a recent interview.
While GM’s program is aimed at its biggest suppliers, Ms. Lieblein said GM does not intend to earmark a bigger portion of its overall purchasing budget to those companies—the 90 percent figure shouldn’t change much. She said smaller suppliers can request to have their performance assessed and potentially earn the benefits, too.
Those with cutting-edge technology will have an opportunity to participate earlier in GM’s product planning under the program.
One example: Plasan Carbon Composites, a small company in the Detroit suburb of Wixom that produces carbon-fiber hoods for the Chevrolet Corvette. Plasan CEO Jim Staargaard said GM appears to be committed to this technology for the long haul, declining to discuss specifics.
“Let’s just say they wouldn’t be helping us if they didn’t believe in the technology,” Mr. Staargaard said.
Plasan makes the parts at a new plant in Walker, Mich.
Better insight into GM’s future plans—not only for certain models but also for specific technologies—is perhaps the main carrot for suppliers, said Mike Martini, president of the original equipment division of tire maker Bridgestone Americas and a member of GM’s supplier council.
“We don’t want to be working on innovations that the (auto maker) will ultimately have no interest in because they found some different solution,” Mr. Martini said.
GM will assess suppliers annually in two broad areas. The first is business performance, including quality, cost containment, performance on vehicle launches and supply chain efficiency; the second is cultural performance, which will measure transparency, effective communication and innovation in engineering.
Only those suppliers deemed “prime” will qualify for the program’s incentives. Suppliers that fall short will have a chance to work with GM to improve their performance in time for the next annual assessment, Ms. Lieblein said.
GM seems to covet the same access to supplier technology that BMW A.G. currently enjoys. In a survey of North American suppliers conducted for Automotive News last year by Deloitte & Touche, BMW ranked highest among 14 auto makers for its support of suppliers’ innovations, in part because it involved them early in product development. Ford ranked second, while GM was ninth.
This report appeared on www.autonews.com, the website of Automotive News, a Detroit-based sister publication of Tire Business.
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