New Ideas at GM?

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I was reading Bill Michels' latest writing over at Sourcing Guy.  Bill is a very bright guy and if you don't read his stuff regularly I strongly suggest you do.  Bill picked a small part of a Times story on GM and expounded:

Talking about a new Cadillac in the works that is supposed to compete head-to-head with the BMW 3-series of sports sedans, Mark Reuss was quoted as saying, “G.M. will pay top dollar if it gets the most advanced technology before other automakers.”  That’s a huge break from what the Times described as the old GM tactic of writing out a spec for a part, and shopping for the lowest bid.

Of course, he is talking about one model car in a premium brand. The real test will be if GM spreads this approach across its brands, and if the supply chain be able to support and contribute to the innovation.

Truer words have rarely been spoken.

General Motors supply management was a contradiction in terms.  The entrenched draconian attitude towards their suppliers has raised red flags for years.  You can't beat your suppliers to death and expect them to help you innovate.  Tim Minahan predicted a reckoning way back in 2006:

Upshot: If Shakespeare wrote business books, GM would be the perfect foil for a morality play centering on the need to be good to your suppliers. GM’s heavy-handed supplier tactics in Acts I may come back to haunt them in Act III. I can hear it now, “A chassis, a chassis, my kingdom for a chassis.”

Shockingly prophetic.

The automotive industry has entered a phase of forced evolution.  Upgrading suppliers across the board is going to be a part of it.  Price is going to be important, as it always is, but it is going to be just as important to find suppliers that have invested in themselves, their technology and their people. Smart people, good technology and open conversation leads to true innovation.  Innovation will lead to a healthier auto industry. GM needs to accelerate their attitude adjustment.

David Landsman

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