B.V.

U INSTITUTE OF MANAGEMENT KOLHAPUR

B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

A
WINTER PROJECT REPORT
ON

ORGANIZATION STUDY ON General Motor

SUBMITTED
TO
Bharati Vidyapeeth University
Institute of Management, KOLHAPUR
FOR THE AWARD OF
MASTER OF BUSINESS ADMINISTRATION
(MBA I, TRI III)
BY

PATEL APPALAL D
UNDER THE GUIDANCE OF

Dr. Q.J Tamboli

THROUGH THE DIRECTOR
BHARATI VIDYAPEETH UNIVERSITY

INSTITUTE OF MANAGEMENT KOLHAPUR

2006-2007

B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

Table of Contents
Sr. No.
Topic
Page No
1
Executive Summary
1
2
5
WORK SYSTEM
3
GMs History
6
4
IT Tools for Success
6
5
Joint Venture-Vector SCM
7
6
Supply Power
8
7
The Trade Exchange
8
8
How it Works
9
9
Supply Chain Management System
11
10
12
CONVINCING THE SUPPLIER
11
External Environment
13
12
SWOT Analysis
15
13
Implementing Information Technology
17
14
Suggestion
18
15
Conclusion
20
16
Reference
22

B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

Executive Summary
General Motors is the most successful vehicle company in the world.
General Motors has made it their goal to be number one in the automobile
industry. General Motors has successfully became a world leader since its
birth in 1897.

Over the years the company followed the Global Sullivan

Principles and has developed six core values that have led to its success.
General Motors products consist of GMCS high performance trucks and
SUVs, the Chevrolet line, Pontiac, Buick, Cadillac, Oldsmobile, Saturn,
Hummer, and the Saab line. GM owns the popular Good wrench auto care,
plus, the company provides auto service at any GM dealership.

GMs

financial annual reports show the companys growth in revenue and sales
with a market share of 15.1%. General Motors uses advanced technology to
create the best product to meet the demands of todays consumers and
tomorrows environment.

GM takes advantage of todays technology to

provide the best communication within the company and outside the
company. None-the-less, a company that is as successful as GM does have
some weaknesses. General Motors employees lack job security. Between
the years 2001 and 2002, 15,000 people lost their jobs at General Motors.
After researching articles and reports, job security at GM continues to
decline today.
reputation.

Job security can be very detrimental to a companys

Another weakness GM faces is defective merchandise.

Every

product recall GM has to make costs millions of dollars, and sometimes,

even customers lives. All and all, GM is the leading automobile company in
the world. The company has triumphed over obstacles in the past, and GM
plans to do so in the future.
GMs vision is to be the world leader in transportation products and
related services. The GM Corporation claims that it was built on six core
values:

Continuous

Improvement,

Customer

Enthusiasm,

Innovation,

Integrity, Teamwork, and Individual Respect and Responsibility. These

values are the basis upon which all GM employees conduct their day-to-day
business, and the foundation for the guideline of employee conduct. GM also
follows principles called the Global Sullivan Principles. The objective of
these are to support economic, social and political justice by companies
where they do business; to support human rights and to encourage equal

B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

opportunity at all levels of employment, including racial and gender
diversity on decision making committees and boards; to train and advance
disadvantaged

workers

for

technical,

supervisory

and

management

opportunities; and to assist with greater tolerance and understanding

among peoples; thereby, helping to improve the quality of life for
communities, workers and children with dignity and equality.
GM has also been doing very well the past couple years as far as
profit performance goes. The following is a chart of economic indicators for
GM:

Economic Indicators:

2006

2005

$186.8 billion

$177.3 billion

Earnings/(loss) (U.S.$)

$1.7 billion

$0.601 billion

Dividend (U.S.$/share)

$2

$2

Revenue (U.S.$)

Motors

is

advanced

General
also using

Vehicle sales

8.5 million

7.8 million

15.1

15.1

(cars and trucks)

Market Share %

technology to make vehicles that create lower emissions and better fuel
economy than traditional internal combustion vehicles. Most importantly,
these advanced technologies will mean better performing vehicles for their
customers. The auto industry is challenged with meeting governmental
regulations and societal concerns by both improving current technology and
creating new solutions. These new solutions will have to be developed at a
cost that meets consumer, shareholder and societal needs. GM has invested
hundreds of millions of dollars in fuel cell research with the ultimate goal of
removing the auto from the environmental equation, because they believe
the automobile leads the way to the hydrogen economy and a truly
sustainable future. As alternative technologies to the internal combustion
engine evolve, their strategy is to develop a portfolio of options. GM is also

B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

improving current engine technology with Displacement on Demand,
Continuously Variable Transmission, and lightweight and more aerodynamic
vehicle bodies. They have begun offering hybrid engines on their most
popular trucks and will expand their hybrid offerings in the 2004 model
year.
As far as employment information goes, in the following chart you
will see from 2001 to 2002 there were many people who lost their jobs at
GM.

Social Indicators:

2006

2005

Community donations

$80.5

$82.7

and sponsorships (U.S.$)

million

million

Employees

350,000

365,000

20.7%

20.6%

23.2%

23.2%

245

310

Global

Global

census

census

to be

to be

completed

completed

in 2003

in 2003

3.8

6.1

Diversity: % female employees

(U.S. workforce)
Diversity: % minority employees
(U.S. workforce)
Discrimination charges
(GMNA only)
Employee Satisfaction
(% of employees satisfied with their
organization as a place to work at
the present time)

Recordable injury rate

(per 100 employees,
GM Global)

B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

Lost time accident rate

0.3

0.6

(per 100 employees,

GM Global)

General Motors Corporation is successful in the global business

climate due to several factors. GM invests in cultural, economic, educational,
environmental and social organizations and projects in the communities
where they operate. They support numerous charitable causes through the
GM Foundation and corporate contributions in the form of cash donations,
as well as in kind gifts and participation in various charity events.

B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

Work System

Work Organization
-Computer Integrated Operations
-Overseas Allocation
-Outsourcing
-Flexibility
Control System
-Network
Management
-Culture
Management
-Knowledge
Management
-Information
Infrastructure

Business Strategy
-Mass Customization
-Innovations
-Productivity
-Growth

Human Resource Practice

-Learning Organization
-Integration of thinking and doing
-Routine Workers
-In-person service workers
-Information workers

Industrial Relations
-Downsizing

Enterprise Organization
-Local
-Informated
-National
-Global
-Networked
-Integrated

B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

GMS HISTORY
General Motors (GM) is recognized as one of the worlds largest
automakers today and has been the global industry sales leader since 1931.
GM was founded in 1908 and was controlled by William C. Durant. A
strategy that GM utilized greatly was the acquiring of smaller vehicle
makers such as Oldsmobile, Cadillac and Oakland. During the late 1920s
and 1930s, GM bought out a bus company named Yellow Coach. In addition,
it helped create Greyhound bus lines and replaced intercity train transport
with buses. Their influence on the overall transportation market was
tremendous. GM continued to strive towards maintaining its strong asset
leverage its brand name. The firm employs approximately 325,000 people
around the world and has manufacturing operations in 32 countries its
vehicles are sold in 200 countries. (GM Corporate)

IT TOOLS FOR SUCCESS

GM implemented visibility systems, as Brad Ross, Executive Director
for Order and Delivery, suggests, help to reduce overall costs by replacing
inventory with information and by improving overall operational efficiency
(SCMR). In addition, these systems help the entire supply chain to focus on
the ultimate customer and improve its responsiveness to customer needs
(SCMR). Harry Allen, CEO of SCM company Clear Track, strongly believes
that visibility tools can deliver quick and profound results in four major
areas of a firms operations; lower inventory, reduced cycle times, better
deployment of personnel and use of more cost-effective transportation of
finished goods (SCMR). This IT approach connects GM to its supply base via
the Internet. As a result, information will be shared quickly in order to
support a one-piece flow. This system will ensure that GM and its
suppliers are viewing the same information including inventory status,
schedules,

history

of

transactions,

reporting

capabilities,

alerts

to

exceptions, replenishment triggers, and supplier performance ratings, to

name only a few. (Handfield Optimize)

B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

GM also uses a process which allows the learning of how one
companys

supply

chain

performance

compares

to

that

of

other

organizations a valuable tool known as benchmarking. Performance gaps

are identified and GM can shift their attention to focus their supply chain
management efforts on areas that need improvement the most (SCMR).

JOINT VENTURE VECTOR SCM

In December 2000, GM and Vector SCM formed a joint venture to
manage GMs global supply chain (Menlo Worldwide). Vector SCM offers
superior

solutions

that

will

help

provide

its

customers

supply

and

distribution chain end-to-end visibility of all materials and finished products

(Vector SCM). It uses its engineering expertise, process management and
web-based information technologies to create efficient networks and cost
reduction. Vector SCM accomplishes this complex task by refining a
companys

logistics

networks

and

enhancing

their

existing

business

processes (Vector SCM). This is exactly what Vector SCM provided GM with
the results were astonishing.
The overall objective of having Vector SCM streamline GMs supply
chain management system was to implement an order-to-delivery initiative
that would help cut the overall time it takes to deliver a customized vehicle
(Handfield Optimize). The phases through which a customized vehicle must
go through were re-created so that from the time the order is received until
the customer drives the vehicle off the lot is significantly reduced.
With the advent of specialized IT systems, GM was able to take
advantage of the solutions offered by Vector SCM. Whereas in the past, a
customer would have to wait approximately 70 days to receive a customized
vehicle, IT systems instilled in GMs new and efficient supply chain
management have allowed this wait-time to be significantly reduced (Vector
SCM). Customers were becoming more demanding and GM was responding
by providing customized vehicles. However, their previous system of
delivery was characterized by long lead times and poor delivery reliability.
These resulted in higher costs and significantly lower customer satisfaction
(Handfield Optimize).

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SUPPLY POWER
In 1999, GM began connecting suppliers to their common technology
backbone through their virtual private network (VPN) and their supplier
portal called Supply Power was developed with the assistance of Vector
(Gutmann). They began by putting the necessary infrastructure in place by
increasing the number of connections their suppliers had to their VPN. Then
they began to make more of their applications, such as design standards
and libraries, available through their product development and supply
power portals (Gutmann). Finally GM began increasing their suppliers
access to business and technical systems such as project schedules,
engineering change requests, technical specifications, test requirements
and quality controls.
The new system allows GM to synchronize their files with their
suppliers so that they are working with the same data and three
dimensional

virtual-reality

designs

as

their

own

internal

engineers

(Gutmann). They are able to synchronize their files daily for large suppliers
and for smaller files, they are able to synchronize their files weekly. This
system improves their product development cycle greatly. To improve their
order cycle time the information about inventories and processes are
updated in real-time therefore GM and its suppliers will have the accurate
information at any point in time (Prewitt).

THE TRADE-X-CHANGE
This new system is fully implemented through the web under a secure
VPN. An extra feature that was added to the system in the year 2000 was
called the Trade-X-change (Gutmann). This was a web auction and catalog
procurement system. Trade-X-change allows GM to reduce the cost of
processing an order from an average of $100 to $10, by channeling most of
its $87 billion in annual supply purchases through the website (Copeland).
This new feature allows GM to conduct reverse-auctions with its suppliers.
GM lists the supplies that they need and their suppliers bid against each
other and the supplier with the lowest price wins the right to sell the

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B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

product to GM. The Trade-X-change also allows GM and its suppliers to sell
or request used and new equipment from each other (Copeland). This is
clearly important to GMs supply chain management system.

HOW IT WORKS
The new system integrates a huge number of databases and data
warehouses into one simple to use interface that can be accessed from
virtually anywhere and at any time (Leahy). For this reason the system
fulfills all three types of the personal dimensions of information:
Time:

having access to information when you need it and having

information that

describes the time period you considering.

having access to

information no matter where you are and form: having

information in a form that

Location:

is most usable and understandable by you

(Haag et al 6-8).
Refer to Figure 1.1 to view a visual representation of the system. The
system works by beginning with a user who wishes to conduct business
with GM or find out information about GM. The user then has to log on to the
internet and is sent to the VPNs login interface. The user enters their ID
and password and logs into the Supply Power and TradeXchange interface,
where he/she enters his/her request. The Supply Power and TradeXchange
interface is connected to the databases of different suppliers and also the
main database of GM (Gutmann). From here the process differs depending
on what the user wants to do. For example if the user wants to purchase a
metal cutting machine from one of GMs other suppliers, then the system
will connect the user to information about that particular supplier and to its
database. From here the user can complete the transaction with that
supplier. Another example is of a marketing executive for GM wanting to
find out information about a particular customer while he is away on a
business trip in another country. He would also have to log on to the
internet and go through the VPN. Then Supply Power and TradeXchange
would carry out his request by accessing GMs database and retrieving
information from the customer data warehouse. When it comes to carrying

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B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

out inventory replenishments, the Supply Power interface is connected to
the databases of all of GMs suppliers which are in turn connected to GMs
central Database (Gutmann). The system is set up so that if one of GMs
supplies is running low, a message is automatically sent from GMs
inventory data warehouse which is relayed to the appropriate suppliers
databases (Copeland).

Then the suppliers send bids to GMs central

database through the TradeXchange system and the system selects the
lowest priced bid and replenishes the companys inventory from that
particular supplier (Gutmann).

13

Figure 1.1: GMs

Supply Chain
Management
System

B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

Suppliers

Logistics

Inventory

Customers

GMs Central Database

Suppliers

Suppliers

Supply Power
and TradeXchange

Virtual
Private
Network
(VPN)

Internet

User

User
User

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B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

CONVINCING THE SUPPLIERS

After aligning their internal structure to be more adept at utilizing its
new supply chain system, the next step was to get the suppliers to buy in to
this new system. Initially the suppliers were very cautious about the new
system and were concerned with how much they might have to invest in the
new technology (Gutmann). However as the main strategy behind the new
system was explained more thoroughly they began to accept it (Gutmann).
They saw how it was a move forward and like any other business; you
always have to be a step ahead to be competitive so they accepted the new
plans. Suppliers did have to make some investments in the form of licenses
and hardware to use the proposed system (Prewitt). GM however tried to
reduce the cost of this investment by using more Windows and PC based
technology. To familiarize and educate their suppliers, GM involved them in
several design pilots (Waters). After the suppliers completed these pilots
they realized that some employees had to be retrained to be able to use the
new system effectively (Gutmann). These pilots also allowed several design
problems to be attended to and fixed early on so as to save time and money
down the road. GM also provided training through outside services as well
as through Web and CD based offerings (Gutmann).
Creating an online supply chain management system requires not
only technological changes but also changes to the suppliers current
processes (Copeland). Main suppliers have to try to keep processes leaner
within their own companies if they are to keep up with the demands of GMs
new system (Copeland). If they do not have the parts ready when GM
requires them then they will be losing a substantial amount of their profits.
GM also has its responsibilities, which are to identify which data the
suppliers needed for a particular process and only offer the required data so
that suppliers are not overwhelmed with information.
All of these changes had to take place for the new online supply chain
management system to work. However, the success of the system proves
that these changes were well worth it. GM has managed to reduce it product
development time from 60 months to less then 18 months as projected (See
Table 1.1) and also reduced the order cycle time from 60 days to 15 to 20

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B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

days, with the implementation of this new online supply chain management
system (Leahy).

EXTERNAL ENVIRONMENT
Automotive companies function in a cut-throat price market where
margins are getting lower by each progressing year and new additions are
consistently added to increase the value for the customer. GM operates in
such an external highly competitive environment as well. During the past
few years, the automotive market has evolved at an exponential rate. No
longer are people buying gas-guzzling V8s for performance and speed.
Instead, with the rising gas prices, more and more people are opting for fuel
efficient vehicles.

Paul Ballew, chief market analyst at GM even admitted

that "we're not ignoring the fact that some shifts have occurred in terms of
consumer attitudes," and consumers are not buying what the American
automotive industry has produced for over a century (Tinery). According to
FuelEconomy.gov, US governments own initiative, the top economical fuel
efficient cars are non-American and are from manufacturers such as Honda,
Toyota and Mini. However, Ford has its hybrid SUV in the listing as well. To
encourage buyers to invest in Hybrid Vehicles, the US Government even
offers one-time federal income tax deduction of up to $2,000 to its citizens
(FuelEconomy.gov).
In today's competitive market, new products must be exceptional to
get and hold consumers' attention in any significant way," explained
Edmunds.com Director of Pricing and Market Analysis Jesse Toprak. Hence,
products that stand out and are innovative end up at consumers garages
(Fallon) In recent years, American consumers have witnessed global
events that have made many think twice about the excesses of large,
underused SUVs and trucks," said Toprak (Fallon).
The

current

automotive market

is

definitely

stiffer

than ever.

Manufacturers are offering more value for the dollar spent and that is
cutting into the profits of the companies that have relied upon previous
economical models and have not integrated systems to be more efficient in
their

processes.

This

has

caused

various

companies

that

relied

on

economies of scale to get the product out to the public to suffer losses. For

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B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

example, recently GM reported earlier this year that it lost over $1.2 Billion
dollars in just three months (Schneider). Industry experts analyze that The
marketplace is changing faster than the companies areGM has resisted
jumping into the market for gas-electric hybrid vehicles, for instance, even
as Toyota's Prius has become a huge hit (Schneider).
Asian companies are leading the automotive trends with their small
compacts.

Most of the current award winners are cars from Japanese

manufacturers (MotorTrends.com). This has caused the sales of domestic

vehicles to dramatically decrease, particularly GMs sales. However, this has
motivated GM to work even harder to recover its market share.

THE COMPETITORS
GM is one of the largest automotive companies in the world. GM
literally defined the American economy during the 1950s. By the 1960s,
General Motors controlled over half of the automotive market in the United
States. GMs growth was not a result of superior technology or managerial
ability. It was the end result of unification of various small companies such
as Chevrolet, Pontiac, Oldsmobile, Cadillac and Buick. All of the firms were
independent corporations before General Motor taking over. By eliminating
local competition, GM became one of the three largest American automotive
companies to operate in North America. The other two Detroit automotive
companies include Daimler Chrysler and Ford Motors.
The American automotive philosophy has been that bigger is better
and if properly applied, it does have its advantages. The North American
industry was under the impression that a big enterprises economies of
scale, ability to undertake bold research and development and apply it to
better products and increasingly efficient process technology ensures
managerial efficiency. However, the real truth is that the big corporate
world primarily evolved from mergers and conglomerations, not excellence
in the market and this proved to be GMs main weakness.
Hence, the main competition of General Motors in North America
includes the other big two automotive manufacturers, Daimler Chrysler and
Ford, along with competition from the overseas companies such as Toyota,
Honda, Mazda (partly owned by Ford), Hyundai, Volkswagen, Mercedes-

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Benz (Partially owned by Daimler), BMW and others. The fact is that GM has
lost its market share from 50% of the cars during the 1960s to less than
25% in the recent years.

SWOT ANALYSIS
STRENGTHS
It is obvious that such a drastic overhaul of GMs supply chain
management system has many benefits (strengths). There will be increased
customer

satisfaction

from

all

participants

in

the

supply

chain.

Communicating effectively and maintaining relationships with suppliers is

crucial for GM the new system allows for effective and efficient
communication among all key players. This style of a supply chain
management system proves to be flexible as opposed to the traditional
system. The new system will allow for a significant decrease in inventory
and fewer expediting activities. As a result, the system will allow GM to
focus efforts on collaboration and proactive activities that pertain to other
critical parts of the organization. Another strength is the new online system.
The new online system provides a common place for GM and its
business partners to do business. It is available 24 hours a day and
anywhere in the world, since it is on the internet. Due to this similar
platform, the different suppliers have internal processes and business
practices that a very similar to GM.

WEAKNESSES
Some potential weaknesses of the new supply chain management
system are that it may become too complex and could possibly overwhelm
the company. Also, as mentioned earlier in this section, it is quite difficult to
change a firms internal culture. By implementing this new system,
personnel within the organization may not react positively. They may find
the

system

too

complex

over

the

traditional

one,

perhaps

become

discouraged as a result of slow learning of the new system or become

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B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

completely dissatisfied by the new operations, which ultimately affects their
performance and contribution to the company.

OPPORTUNITIES
There are several opportunities as a result of the implementation of
the new SCM system. GMs major overhaul of their old SCM was undertaken
in an effort to satisfy their customers. For this reason, GM can build on
newfound customer confidence. In other words, GM strongly believes that
the new system will imprint a positive picture in their customers minds as a
result

of

their

quicker

order-to-delivery

initiative.

Furthermore,

GM

acknowledges that customers demands are changing and they are in need
of newer models and styles of cars. The new system will allow for more
efficient operations, which will in turn allow GM more flexibility to expand
its product line and become an industry leader. With the new system in
place, GM has to focus on becoming world class in every respect if it intends
on maintaining a solid reputation among customers and a leader in the
automotive industry. Among the areas in which GM must excel in are
products, manufacturing, financing, operations and distribution GM should
consider creating a stronger competitive advantage for itself with the
advent of the new system.

THREATS
There are a few potential threats that GM should watch out for and
attempt to regularly monitor and take the necessary steps to reduce the
likelihood or mitigate potential consequences. Such factors include domestic
and foreign competition. GM is aware of their competition; however, it must
utilize the new system and create a strategy that will not only target their
customers in North America, but also those in the foreign market, in which
it also operates. Another threat may be new legislation or regulations that
could be introduced, both nationally and internationally. Although GM
cannot prevent the passing of legislation or regulations, it can however
monitor the progress of bills and prepare strategies accordingly. A risk
binder pertaining to the system, should be constructed. It should outline

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B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

what might happen [if a bill is passed], why or how it might happen, what
the consequences are and what GM can do to prevent or mitigate the
consequences.
The main purpose of implementing Supply Power and Trade-X-change
was to streamline GMs current supply chain management system.

The

reasoning being that the new system would give GM a competitive

advantage in the industry. Though they were first to implement this new
type of system, it does not mean that they will be the only ones that will
utilize it. In fact a few months after GM introduced their system, Ford
unraveled their very own.

Therefore, their competitive advantage was

slightly reduced. However what if more companies began using the same
type of system?

IMPLEMENTING INFORMATION TECHNOLOGY

GM soon tried to address the problem of producing cars that
customers did not want by making e-business a strategic priority, and as
already mentioned, hired its first CIO. These actions led to GM developing
an integrated supply chain management strategy and developing Supply
Power and TradeXchange. These were important steps in GMs attempt to
regain a competitive position in the automotive industry. GM realized the
potential of the Internet and other communications technologies (Nohria et
al). By incorporating a tight supply chain and the Internet, GM has gained
the ability to easily keep in touch with its suppliers. For example, with
TradeXchange, GM has streamlined production. By sharing information
electronically with its suppliers, GM knows exactly when to expect the parts
needed to assemble a particular car, and they can schedule assembly
accordingly. Also, suppliers can tap into GMs order system to find out what
is required even before the parts order comes through. This helps ensure
that they have the parts ready to ship as soon as the order is placed (Nohria
et al). This seamless operation is extremely important, especially since GM
was trying to cut the date-to-order time on its vehicles.
NEEDS

OF

CUSTOMERS

Another issue that GM has tried addressing is being sensitive to what

customers want. If GM did not gather information regarding customers

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B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

wants, the efficiency of their supply chain would not matter because they
would be creating cars that no one wants, but at a faster rate. By focusing
on reducing their product development cycle times and order cycle times,
they have essentially increased customer satisfaction. Customers do not like
to wait. No one wants to walk into a dealership, order a specific automobile,
and then have to wait almost three months to receive their vehicle.

SUGGESTION
MANAGING

THE

SUPPLY CHAIN

GMs supply chain has helped the organization cut costs and decrease
delivery time. Regardless, GM should continuously monitor the system and
strive to make it even more efficient. GM should engage in trying to reduce
the number of suppliers from which it procures materials, components and
the alike. This is not a simple task but it could reduce the chances of major
supply chain disruptions (Christopher 239). In other words, if there are
many different suppliers, there are many different points of failures. Also,
with too many suppliers, the supply chain becomes overly complex.
On the other hand, having too few suppliers can be equally damaging.
Toyota experienced this problem in 1997 when there was a fire at one of its
affiliated suppliers which effectively brought all of its Japanese assembly
lines to a halt. (Christopher, 249)
As mentioned earlier, the failure of GMs past supply chain was
caused by its unorganized structure, its complexity and lack of integration.
GM hopes to avoid problems it faced in the past when implementing the new
system. The new supply chain should be constantly improved by striving to
make

it

simple,

improving

process

reliability,

and

reducing

process

variability and reducing complexity.

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B.V.U INSTITUTE OF MANAGEMENT KOLHAPUR

DIRECT LINK

BETWEEN

SUPPLIER/END CUSTOMER

GM has already taken the initial step by introducing an online

interface where customers can choose an automobile and its options online,
send it to a local dealership, and then take delivery of the automobile
(Eisenstein, 2000) . However, this can be taken a step further by creating a
direct link between the end customers and suppliers.
In the traditional system, GM places orders with its suppliers who in
turn supply GM with the materials needed. The logic is obvious but can be
seen

as

inefficient.

The

supplier

has

no

advance

warning

of

the

requirements, and so it is forced to make forecasts, and as a result may end

up carrying unnecessary stocks (Christopher 203). As mentioned earlier,
excess inventory is the reason GM lost such a large amount of its market
share. The supplier could also face the reverse situation where it is faced
with higher than expected demands, and does not have the materials on
hand.
By improving GMs end to end supply chain efficiency, GM can provide
customers the cars they want, when they want as efficiently as possible.
GM has successfully decreased its development cycle times. Moreover, by
providing customers with the automobiles they want, GM can effectively
create a stockless supply chain. This could be accomplished by linking a
customers

showroom

orders

directly

with

production

scheduling

(Christopher 139). The demand data information of the customers order

could be fed in real-time directly into production slots which would
eliminate the need for inefficient forecasting.

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MARKET-DRIVEN SUPPLY CHAINS

Even with its supply chain system, GM still has some problems with
aligning their products to meet the needs and wants of its customers.
Recent news of major job cuts at GM production plants echo this problem.
One of the leading causes is the fact that GM focuses on forecasting
rather than on the market or customer demands. GM tends not to be
customer centric, which leads to excess inventory. By using a market driven
approach, GM would have a better chance at supplying automobiles that
customers want. For example, GM had skewed its automobile lineup to
produce SUVs during a time of increased fuel prices (Olive D6). If GM had
paid attention to the market, and noticed the beginning trend of shifting
from SUVs to station wagons and vehicles alike, GM probably would not
have skewed its lineup.

CONCLUSION
GM has lost a large amount of its market share but it is on the right
track with respect to its information systems. The supply chain, Supply
Power and TradeXchange, has allowed GM to create automobiles at a faster
rate, cut costs along the way, and create a seamless connection with its
suppliers. The company has recognized the need for new technologies to
help increase its sales, and has also created an in-house information
technology team to help run and maintain its information systems. GM has
learned many lessons from the failure of its past supply chain and has so far
made sure the same problems do not plague the new system. GM is not
quite like it used to be in the 1960s. GM has taken the right steps in
decreasing costs and increasing efficiency, but saving money and becoming
more efficient is not all thats needed to sell automobiles. The company still
has a lot of other non-technology based issues to iron out before it can take
back its crown as king of the automotive industry.
A leader in the automobile industry, such as GM, enjoys success, high
reputation, high profits, and the joys of good business making.

GM has

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come a long way since it began 107 years ago. Throughout the companys
107 years of service, GM has developed a mission, a vision, a goal, and six
core values to live by to keep the business going. GM has experienced 107
years of creating the best transportation vehicle and services to meet the
demands of its customers all over the world. GM has discovered advanced
technology to provide top quality vehicles that will help preserve our
environment. As an employer, GM still struggles with issues of job security.
Using GMs communications department, GM plans to overcome this
problem before the issue deteriorate the companys reputation.

For now,

GM enjoys high revenues, sales, and good market share. Many businesses
can benefit and learn from General Motors.

General Motors has the

experience and its numerous successes to encourage a company to keep

going.

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References

General Motors Website http://www.gm.com

News Paper (Business Standard)

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