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May 16, 2017 02:00 AM

GM gets its groove back with suppliers

David Sedgwick
Automotive News
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    DETROIT—General Motors Co. has buried the hatchet with its suppliers.

    According to the just-released Henke survey, which evaluates the purchasing policies of North America's six biggest auto makers, suppliers ranked General Motors just behind Toyota Motor Corp. and Honda Motor Co. Ltd.

    Ford Motor Co. and Fiat Chrysler North America L.L.C. ranked fourth and fifth, while Nissan Motor Co. Ltd. plunged to last place. The report drew its conclusions from questionnaires filled out by 652 salespeople that work for 108 Tier 1 suppliers.

    GM's ascent and Nissan's decline have gained momentum over the past two years, according to the survey.

    GM "is making really great strides in their overall relations," said John Henke, author of the survey and president of Planning Perspectives Inc. of Rochester, Mich. "The suppliers are saying, 'We can really do a great job.'"

    In 2011, GM began to roll out more collaborative policies such as no-bid contracts. In 2015, the company followed up by asking approximately 500 suppliers for feedback. Vendors filled out scorecards that rated GM's purchasers.

    The auto maker included those responses in its job reviews, said GM purchasing chief Steve Kiefer.

    "We made some personnel moves based on that feedback," Kiefer said. "Some of our people have adapted really well [to GM's new purchasing policies], and some have been moved to other areas."

    On a year-by-year basis, auto makers rarely make big moves up or down Henke's rankings. That's because their purchasing reforms can take effect only as each new model is designed.

    Which is why GM's sharp improvement is so noteworthy. Just two years ago, GM was tied with FCA in last place.

    At the time, suppliers were still riled up about GM's revised terms-and-conditions contract, which some vendors believed left them exposed to greater warranty liability.

    GM subsequently backtracked, but relations with suppliers were still poor in 2014, when Kiefer was named vice president of global purchasing. Kiefer soon afterward pledged to:

    • Involve suppliers earlier in the vehicle design process.
    • Award long-term contracts with higher production volumes.
    • Improve sales forecasts to help suppliers plan for realistic production volumes.
    • Introduce a no-bid contract dubbed One Cost Model.

    Henke says Kiefer kept his word. "General Motors is still asking for cost-downs, but in a nonadversarial way," he said. "They aren't just demanding lower prices; they are helping suppliers to figure out how to take cost out."

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