General Motors and Lyft — Pierre Mitchell Investigates Repercussions for Procurement and the Supply Chain

Spend Matters Chief Research Officer, Pierre Mitchell, over in the US, has produced a very interesting and rather important article following the announcement that US car manufacturing giant General Motors (GM) has invested $500 million in car-sharing startup Lyft, as part of a $1 billion fund raising initiative to develop a fleet of driverless cars nationwide. Says Pierre: "... Lyft now has a valuation of about $5 billion to $6 billion, while its main competitor, Uber, is at roughly $65 billion. Uber now has a market cap larger than GM or Ford."

Do take a look at the whole article in which Pierre adds his own analysis of the partnership arrangements; he comments: "... This is a smart move for both firms, and especially for GM. While Tesla and Google may have the advantage in self-driving cars right now, GM — as well as Ford — is really trying to assert itself as a “mobile platform” and use Lyft as a strategic partner — customer, channel partner, supplier, development partner — rather than just let Apple and Google dictate the future of the dashboard with Apple CarPlay and Android Auto ..." Pierre goes on to examine exactly what it is that GM and Ford are doing with their own core mobile platforms.

He then explores the significance for procurement and supply chain professionals: "The “platform wars” are raging now across many areas as current and future technology titans are trying to establish dominant positions and de facto standards in areas, such as Internet of Things ... But for procurement, the broader picture is that everything is becoming a service at all layers of the Everything as a Service (XaaS) world ... Procurement and supply chain professionals," he says, "simply won’t be relevant if they can't bring a basic understanding of these technology trends to the table to help either inform the strategy or to execute the strategy."

His prognosis is that alongside understanding the trends in digital innovation, the procurement profession "... even at the most basic level, needs to help the organization best commercially engage the massive ecosystem of providers in an XaaS world ... they’re going to have to be very intelligent in how to harness the digital innovation happening for their own benefit."

So, 'interesting' because of all that Pierre has deduced from the announcement, and 'important' because, in a recent Spend Matters/ISM survey it was revealed that of procurement functions targeted, "Less than a third formally measure suppliers on innovation — or themselves on the supplier innovation they help tap for top line growth. The No. 2 and No. 4 technology-related interest areas cited by procurement groups were centered on disruptive technologies and digital platforms."

The No. 1 issue was how to get aligned with IT departments to help better manage technology in the supply chain. To this end, Spend Matters and ISM are hosting The Global Procurement Technology Conference, on March 14-16 in Baltimore. It will be two days of open discussions with expert research, commentary and analysis, and will feature companies such as Amazon and IBM, which are very familiar with making supply chain and digital work together. So if you do happen to be in the States around that time, it will be well worth a visit. If not, keep an eye on Spend Matters as there will be plenty of coverage.

In the longer-term, industry forecasts are that people will 'own' fewer and fewer personal vehicles, owing to individual debt (especially for post-graduates) and lingering effects of recession, and that on-demand driving take up will grow. Pierre believes that GM’s move has many lessons for procurement and supply chain organisations. He will be discussing them shortly in more posts on this subject -- so do tune in.  In the meantime, his whole article can be read here.

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