Image By: General Motors Co. Grace Lieblein, GM purchasing chief, is laying out new strategic supply proposals.
DETROIT — Grace Lieblein has been doing a lot of the right things to repair General Motors’ strained relationship with its suppliers during her 18 months as global purchasing chief. Even suppliers say so, according to a closely watched industry survey.
So why did that survey, released last month by Detroit consultancy Planning Perspectives, conclude that GM’s relationship with suppliers is worsening, slipping to dead-last among the six largest automakers?
“Good leadership,” the report concluded, “but poor execution by buyers who interface with suppliers on a daily basis.”
In an interview last week, Lieblein acknowledged the difficulty in driving her message of nurturing supplier relationships through GM’s 6,000-employee purchasing enterprise. She is emphasizing greater collaboration with suppliers on technical innovation and eliminating waste, rather than simply squeezing them for price cuts.
“We’re trying to understand from the suppliers’ viewpoint what some of the big issues are, so we can go after them,” said Lieblein, vice president of global purchasing and supply chain since December 2012. “Part of it is getting the cultural change all the way through the organization. “
The difficulty in getting her message to filter down through the ranks is a microcosm of GM’s broader cultural problems, says John Henke, president of Planning Perspectives. Too often, the gospel espoused by executives is not heeded by the rank and file, he says.
GM CEO Mary Barra “keeps talking about cultural change,” Henke says. “But this is an example of how difficult that will be. Grace faces these impenetrable walls at several stages going down” through levels of management.
Lieblein engendered some goodwill with suppliers in February, when she agreed to roll back some contentious contract terms and conditions that GM had implemented last summer, which suppliers believed exposed them to greater warranty liability and put their intellectual property at risk.
Since then, GM has implemented its Strategic Supplier Engagement program, aimed at enhancing relations with its largest 400 suppliers by offering perks such as better access to GM purchasing managers and executives and an earlier look at GM product and technology plans
Lieblein believes that the program, met with initial praise by many suppliers, eventually will transform the supply base’s perception of GM.
“I really believe that we’ll look back three years from now and say ‘This was a turning point,’” she says.
In the meantime, her team has been relying on GM’s supplier council, a group of executives from large and small companies, to help zero in on areas of friction. Her department also is conducting internal surveys and focus groups “to identify some things that aren’t hard to do to encourage our folks, while they’re thinking about their business deliverables, to also spend time building those relationships.”
Henke believes GM will get buyers and commodity managers to work more collaboratively with suppliers when they are “motivated sufficiently by raises or chances for promotion.”
Lieblein said that “nurturing supplier relations” was added to employees’ annual objectives last year. But she acknowledges that it is a difficult criterion to measure and tie compensation to.