WARREN, MICH. - The lights blaze at 6:30 on a Friday morning in the conference room at General Motors Corp.'s North American Operations headquarters in Warren. The room seems to hum in anticipation of the $83.5 million that will be saved here today. Here is the sourcing table, the GM sanctum sanctorum. Here months-long preparations come to fruition, with the single goal of making the world's largest automaker more competitive.
The focus is on quality and savings rather than the hundreds of millions of dollars that are spent during the day. The world's largest industrial corporation knows it must buy parts and supplies; the key is to spend as little as possible.
``We want to take advantage of global commonality, even on cars that aren't alike,'' says Harold Kutner, vice president of worldwide purchasing. ``The goal is to get the highest quality at the lowest cost possible.''
Today's meeting is special because GM has admitted a reporter to watch the process. The reporter has agreed not to disclose supplier names and other key details that might hurt GM competitively.
Warren Turski, global sourcing manager, makes final preparations. He makes sure each seat in the room has a copy of the lengthy agendas for the day's meeting and that communications equipment linked to three other continents is working.
Included on the agenda: awarding contracts for interior trim for GM's full-size pickups.
By 7 a.m., 47 men and women representing a broad cross-section of disciplines such as purchasing, finance, quality assurance, engineering and design are crammed into the room. They ring the 36-foot-long table and line three of the four walls.
Today the team sits in judgment of their co-workers' preparations, rapping knuckles on the table top when satisfied that GM's goals are being met.
Most of the people here believe the sourcing meeting is where GM rose from the dead. They saved $4.5 billion at the sourcing table in 1992 and 1993.
Today's gathering is really two meetings in one: an international strategic conference call followed immediately by a North American sourcing meeting.
At 7 a.m., Marcos Munhoz, the purchasing department's executive director for electrical supplies, calls the international conference to order. The 47 people ringing the table are joined by voices from a speaker phone.
The voices come from fellow buyers in SÃo Paulo, Brazil; Melbourne, Australia; Mexico City; Russelsheim, Germany; and Oshawa, Ontario. GM's global co-op is on the line.
Munhoz, a transplanted Brazilian, is running this meeting because electrical items are the focus today.
Munhoz is typical of the type of people Kutner has working for him. Of the 18 executive directors of purchasing, 15 have worked overseas, live there now or are foreign nationals.
``We make some sourcing decisions at the international meeting, but they're predominately strategy and coordination,'' Turski said.
Commodity manager Gloria Kesseler leads off with an update on the activities of purchasing's worldwide creativity teams. These are groups of buyers; engineers; financial, quality and legal officials from different continents who share ideas. Generally, their goal is finding the fewest parts that will satisfy the most people.
The international call wraps up with presentations on how GM plans to tackle purchases of airbag sensors, anti-lock brakes and traction control, followed by updates on total savings achieved around the world.
In about an hour, GM has spent more than $50 million, but saved more than $25 million from the estimates of the finance people.
After international callers sign off, Turski takes control of the room as the North American Operations sourcing meeting starts. Much of this meeting will be devoted to purchases related to the late 1990s replacements for GM's high-volume, high-profit, full-sized pickups.
Buyer Karen Moorman is awarding interior trim business. Of the 26 suppliers GM approached to bid, 14 responded. Moorman says a review of each supplier's quality record and capabilities whittled the list to 10 that were qualified.
Her team decides that dual sourcing is the way to go in this case, with one major supplier getting a lifetime contract for one part, and a minority supplier getting a four-year pact for another. GM is aiming to outperform its 1994 minority contracts, which amounted to $1.35 billion.
Although the savings off the cost-book value are not dramatic, Moorman was able to wring out more than $5 million.
She ends her presentation by displaying a standard form now used for every purchasing decision. It shows that key executives from purchasing, quality, production control and engineering all signed off on the decision.
Then, she reviews the lessons learned from the process and summarizes the strategy used inmaking the decision. Cheers erupt, followed by energetic knuckle-rapping to hail her thorough research and ability to answer follow-up questions.
By lunch time, 12 buyers will have made presentations on 19 items, and GM will have spent several hundred million dollars, while saving $83.5 million from finance department projections.
The mystical, charismatic Jose Ignacio L¢pez de Arriortua made the sourcing table famous when he came over from GM Europe in 1992 to unify 19 separate North American purchasing departments and instill a sense of mission in his workers.
In GM's post-L¢pez era, worldwide purchasing serves the whole corporation, rather than individual fiefdoms.
The table embodied teamwork, focus and doing business fairly and uniformly, out in the open before a jury of peers. Kutner now carries on those policies, with even more openness.