GM takes next step to strengthen relationship with suppliers

Mike Colias
AUTOMOTIVE NEWS

Published: February 26, 2014 10:40 am ET
Updated: February 26, 2014 10:43 am ET

Image By: General Motors Co. Grace Lieblein, GM purchasing chief, is laying out new strategic supply proposals.

Related to this story

Topics Automotive
Companies & Associations General Motors Co.

DETROIT — General Motors Co. is rolling out an initiative to forge deeper strategic partnerships in its supply base, promising a better business relationship with suppliers that work more closely and openly with the automaker to speed innovations to market.

The Strategic Supplier Engagement program will offer such perks as better access to GM purchasing brass, joint strategic planning and even training to those suppliers that rate highly on several key measures -- from cost containment and other basics to "cultural" aspects such as open communication and technology sharing.

GM purchasing chief Grace Lieblein was expected to outline the plan during a conference call today with about 400 of GM's largest suppliers, which represent about 90 percent of GM's global spending.

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 automakers. GM risks losing out on those innovations unless it can transcend its historically fractured relationships with its supply base and become a go-to customer for suppliers.

"It's a framework for how we want to work with suppliers and strengthen our relationship with them to become the customer of choice," Lieblein told Automotive News in an interview this week. Automotive News is a sister publication of Plastics News.

Report cards

Among the 400 direct-material suppliers included in the new program, only those deemed "prime" — those that earn high ratings from GM on specified metrics — will qualify. Suppliers that fall short will have a chance to work with GM to improve their performance in time for the next annual assessment, Lieblein said.

GM will assign ratings to its 200 largest suppliers starting in April, while the remaining 200 will get their evaluations in June. A spokesman said GM does not have target for how many of the 400 suppliers will end up with a prime rating. He said the company hopes to work with all 400 to eventually get to that level.

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. The cultural ratings will come from a standard survey of GM's purchasing teams around the world.

Kim Brycz, executive director of global product purchasing, emphasized that the ratings will be transparent and that suppliers will be able to see how they stack up against their competitors.

"We're not just defining our strategic suppliers," Brycz told Automotive News. "We're helping others on how to get there as well."

Benefits of prime

A formal system to improve supplier relations is not a new concept. Ford Motor Co. last summer launched the "2.0" version of its Aligned Business Framework, which began in 2005 as a way to speed innovation by strengthening long-term ties with key suppliers, steering more business to those companies while narrowing its supply base. Ford said last year that 104 suppliers are in the framework, which eventually would represent about 70 percent of its purchasing budget.

Lieblein said the goal of GM's effort is not to pare GM's network of 2,700 direct-material suppliers; smaller suppliers can request to have their performance assessed annually and potentially earn the benefits, too. She also said that prime suppliers aren't guaranteed future contracts, but they will be better positioned to earn future business.

Among the benefits that the prime suppliers will get, Lieblein said:

• Regular access to GM leadership in purchasing and engineering

• Technology "visioning" sessions to hash over GM's future needs for parts and commodities

• Joint planning on "opportunities for growth" for both GM and the supplier

• Training sessions that aren't offered to other suppliers

'We've missed out'

Lieblein acknowledges that GM might have missed out on product technologies because of its lack of a formal system to engage suppliers and access their innovations and ideas before they are scooped up by competitors.

"When we're able to engage them early in the product development process, that allows us to leverage all of that knowledge," she said, rather than GM "handing it over and saying, 'Go make this.'"

"Frankly I think we've missed out -- whether it's on cost, quality or technology -- by not engaging parts suppliers as early as we're doing today," she said.

She pointed to a recent example of how the fresh approach could lead to better features in GM's cars and trucks: an industry-first center airbag for the front row that was introduced on the GMC Acadia, Buick Enclave and Chevrolet Traverse in 2012. TK Holdings Inc., the North American subsidiary of Japanese airbag maker Takata Corp., enlisted GM early in the development of the airbag, which protects the driver and passenger in side-impact crashes.

'A very strong move'

John Henke, president of Planning Perspectives, a suburban Detroit consultancy that conducts a closely watched annual survey of supplier-automaker relations, said GM's plan has the potential to transform its relationships with suppliers -- if it's executed as outlined.

"I don't think there is any other OEM that matches the openness and transparency that this system is set up to achieve," Henke said. "This is a very strong move that shows Grace's concern about building more trusting supplier relations."

GM was long a laggard in Henke's survey, but has improved its standing with suppliers in recent years. Still GM was rated fifth last year out of the six largest automakers, as the sharp gains it had made since 2009 leveled off. And rebuilding trust with suppliers remains a work in progress. Last week, the company moved to quell an outcry among suppliers by reversing or clarifying certain contentious terms that were added to its base purchasing contract last year.

Henke said GM's latest initiative proposes to fix a key flaw in how it and other automakers interact with suppliers: Inconsistent feedback and evaluations that too often seem arbitrary.

"For the first time, they'll have a global, standard process to tell suppliers how GM perceives working with them," he said, "and to tell them what they need to do to improve."


Comments

GM takes next step to strengthen relationship with suppliers

Mike Colias
AUTOMOTIVE NEWS

Published: February 26, 2014 10:40 am ET
Updated: February 26, 2014 10:43 am ET

Post Your Comments


Back to story


More stories

Image

Automakers look under the hood for the next lightweighting opportunities

August 20, 2014 1:06 pm ET

The automotive industry's current favorite target for lightweighting efforts is the powertrain, according to a recent survey.    More

Image

Cooper-Standard JV to focus on Asia

August 20, 2014 10:17 am ET

Cooper Standard Automotive Inc. is forming Cooper Standard Inoac Pte. Ltd. — a joint venture with Inoac Corp. of Japan — to expand the...    More

Image

Ohio molder sold to private equity firm

August 19, 2014 5:23 pm ET

Private equity firm TVV Capital of Nashville has acquired injection molder Design Molded Plastics Inc. for an undisclosed price.    More

Image

Germany's Bolta building $50 million plating plant in Alabama

August 19, 2014 2:21 pm ET

A German company is setting up a plastics chrome plating plant in Tuscaloosa, Ala.    More

Image

RTP expands very long fiber thermoplastic production to Mexico

August 19, 2014 9:47 am ET

RTP Co. has introduced very long fiber reinforced compounds at its Monterrey, Mexico, facility.    More

Market Reports

Thermoformed Packaging 2014 Market Review & Outlook North America

This in-depth report analyzes economic and market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as growth strategies being implemented by thermoformed packaging companies.

Learn more

Pipe, Profile & Tubing Extrusion in North America 2014

U.S. demand for extruded plastics is expected to grow by 3 percent in 2014, with PVC remaining the largest segment.

Plastic pipe will post the strongest gains through 2018, continuing to take market share from competing materials in a range of markets.

Our latest market report provides in-depth analysis of current trends and their financial impact on the pipe, profile and tubing extrusion industry in North America.

Learn more

2014 Injection Molding Industry Report

GROWTH, OPPORTUNITY IN SIGHT FOR INJECTION MOLDERS IN 2014

In the wake of the economic turbulence earlier in this decade, molders today find themselves in much better shape. Molders are gaining a competitive advantage by investing in people, equipment and seeking inroads into new markets on a global scale.

Growth in the injection molding industry is going to be driven by low financing costs and a continued move to reshore some business.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events