Analyzing GM's New Procurement and Supply Chain Leadership

I recently came across this article in Supply Chain Digest which suggests that Bo Andersson's departure from GM and the entrance of Bob Socia as the new VP of Procurement and Supply Chain could signal a changing of the philosophical Spend Management guard at the venerable Detroit automaker. One source quoted in the SCD article suggests that "Andersson's hard-line approach might have been a short-term win for GM, but resulted in long-term supply chain problems and risk." But this behavior was nothing new in the halls of GM, as it dates back to the philosophy espoused by Jose Ingacio Lopez who saved money in part from strategies like "voiding existing contracts with suppliers and developing the 5% year-on-year cost reduction model for parts being sold to GM."

In other words, Lopez is the one who fouled the Detroit procurement waters. And Andersson did little to curb the pollution (even if his team did not perpetuate such behaviors to the same degree ). But might change finally be in store for GM's procurement and supply chain function now that Socia is in charge? ADR's Bill Michaels suggests it might be, if GM changes five things about how it approaches procurement and supplier relationship management. For Spend Matters readers, a number of these suggestions are nothing new, but they're interesting nonetheless.

These include focusing on how best "to rebuild the supply chain" beyond "choosing winners ... based on the simplistic price formulas of the past" to those built on "deep analyses of the long-term prospects of a supplier delivering innovation, sustainable prices and low risk." In addition, GM must "recognize that suppliers are an extension of GM's manufacturing capability" and "stop looking at the supply base as a source of incremental profit by insisting on price cuts every year". Third and fourth, GM should "develop suppliers with the capability to generate high productivity and automation" and "launch a formal supplier development and support program focused on supply chain optimization". And last, GM should "build a better risk management program with predictive modeling".

While these are all good suggestions, Rome was not built in a day. Nor will the new "Government Motors" rebuild itself in a single quarter. With much of GM's supply base in shambles, I suspect a lot of these suggestions will be easier said than done, even though the rumor is that Socia is much more open to change than his predecessors. But just as in politics, hope is not an answer.

Jason Busch

Discuss this:

Your email address will not be published. Required fields are marked *