GM Puts Laser Focus on Improving Supplier Relations

TRAVERSE CITY, MI – General Motors is working to improve relations with its suppliers while at the same time reduce costs and waste, says Grace Lieblein, vice president-global purchasing and supply chain.

GM, along with Ford and Chrysler, traditionally has rated poorly in studies that rank OEM-supplier relationships. But Lieblein says improving cooperation with suppliers is an ongoing effort started by her predecessor, Bob Socia.

If GM is to succeed, it must work with suppliers in a collaborative manner, forging an “open, honest, trusting and mutually beneficial” relationship, she says.

But the auto maker isn’t there yet. “We wouldn’t claim victory by any means,” Lieblein tells WardsAuto at the Management Briefing Seminars here. “To think we could transform relationships overnight would be naive of me.”

One of the steps the auto maker is taking is involving supplier partners early in the product-development process. Lieblein says companies now are brought in up to two years sooner and often are asked for input when parts are being designed.

With suppliers onboard early, GM benefits from their valuable input, best practices and latest technologies. In the past, the auto maker did not involve suppliers until the parts already were designed.

When an auto maker has poor relations with a supplier, they often receive nothing but what’s outlined in the contract, Lieblein says. “If you don’t have a great relationship with a supplier, it’s hard to get solutions to improve your product. That’s all discretionary. They give you what you pay for, but nothing more. You’d be amazed what you can get when you ask for their input.”

Improved supplier relations help GM reduce material and logistics costs, Lieblein says. The auto maker can’t “squeeze” its way to cost reductions, a strategy employed in the past that ultimately failed.

Rather, by working with suppliers, GM wants to cut costs by attacking waste in the system, while also helping suppliers drive waste out of their processes.

“Overall, the total amount of waste we intend to take out of the system is plentiful, believe me,” Lieblein says, declining to say how much.

“We want to understand all the cost-drivers, including logistics and materials,” she adds. “And then we are working with our suppliers to drive the waste out of the entire system, including the designs, processes and containers. We want to be completely transparent with our suppliers and we expect the same from them.”

GM is counting on its suppliers to help improve quality as it launches a number of new volume products over the next 18 months in order to turn 70% of its North American lineup.

With U.S. light-vehicle sales continuing to surge to pre-recession levels, suppliers have been scrambling to maintain the growth pace. But Lieblein says none of GM’s partners have had major problems with capacity constraints.

“The supply base has sufficiently recovered (from the recession),” she says. “The economic crisis put scars on everybody, including suppliers, but the supply base is much healthier than it was in 2009 and 2010.”

To help alleviate future supplier-capacity limitations, GM is sharing more information with all tiers of its supply chain and has developed internal tools to eliminate bottlenecks. The auto maker also has hired about 200 supplier-quality engineers, some of them GM retirees, to share best practices and assist in operations and program management.

Lieblein expects some will be skeptical that GM truly intends to improve supplier relations, as it has failed to do so in the past. This time is different, she maintains, because it now is the auto maker’s primary focus.

“I’ve been at GM for 35 years,” Lieblein says, “and I’ve heard us say things are different before only to find that things were more or less the same. But that was then and this is now, and I’m going to say without hesitation that things are different.”

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