How General Motors raised its profile with its suppliers

How General Motors raised its profile with its suppliers

An important survey which invited suppliers to rank its North American OEM customers' purchasing policies makes for interesting reading as Simon Duval Smith reports.

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According to the survey, overseen by John Henke, president of Planning Perspectives Inc. of Rochester, Michigan in the US, suppliers ranked General Motors just behind Toyota and Honda.

Planning Perspectives' 16th Annual North American Automotive OEM – Supplier Working Relations Index Study has evaluated and ranked Ford, General Motors, FCA US, Nissan, Toyota and Honda on their working relations with their suppliers.
Ford and Fiat Chrysler ranked fourth and fifth, while Nissan has fallen to last place. The report drew its conclusions from questionnaires filled out by 652 salespeople that work for 108 tier one suppliers. The report says that both GM's ascent and Nissan's decline have accelerated over the past two years.
GM "is making really great strides in their overall relations," said Henke, "From 2014 to 2015, it improved considerably, and in 2015 to 2016, it did phenomenally well."

 

Rationalising the supply base

Speaking of the need for rationalisation of their supply bases, Henke told me: "My experience is that the better OEM purchasing organisations, the people who really understand the process, have for the last several years, begun really serious rationalisation of their supply base. In the long term they feel that they are better off sticking with a supplier than going from one vendor to another. One of the main pluses is that they can work with the supplier from a strategic standpoint." This reflects the views of Steve Kiefer of GM, when he talked proudly of the effectiveness of GM's Strategic Supplier Engagement (SSE) initiative in an interview with Automotive Purchasing and Supply Chain magazine in early May 2017.

 

Reasons (for GM) to be cheerful

Part of the reason for GM being praised in the report is that it has come into line with some other carmakers, as Henke told me: "General Motors started to do what Honda and Nissan have been doing for some time,GM started this movement with their SSE supplier programme; its goal was 400 suppliers and what they have ended up doing is, for the large multi-product suppliers such as Magna, Bosch, Siemens, and Continental, to conclude that for brake systems for example, 'we only really need three suppliers'. GM then would promote one large supplier to be its premier brake supplier but not necessarily offer them more brake business because it has also selected some other vendors in this area. The supplier would of course be alarmed but would reassured that GM would look favourably at other products from it, safety systems etcetera. The OEM would then award the same or more overall business to that supplier."
Ford have been doing this for many years through their Aligned Business Framework (ABF) system, as have Honda and Toyota. Henke said there are a couple of reasons behind GM's and other OEM's success: "These automakers have about 360 suppliers and it has been that way for decades. At GM, several things have happened: the SSE supplier programme is now in its third year and it is working pretty smoothly. Secondly, when Bob Socia came in after Bo Andersson left and the bankruptcy was resolved, and he firmly believed that good collaborative relations were important and he introduced more of that philosophy."
After Socia left, Grace Lieblein came in from quality and tried to continue Socia's initiatives. Now we have Steve Kiefer who, as an ex-Delphi executive really understands suppliers' activities and needs."
Kiefer has really powered the programmes on, and made some changes in purchasing at the OEM, as he told me: "We made some personnel moves based on that feedback," he said. "Some of our people have adapted really well [to GM's new purchasing policies], and some have been moved to other areas."

 

Commodity scores

The Henke survey analysed each purchasing operation's relations with suppliers by component segment.
Best and worst performers in each segment include:


Purchasing segment                Best                 Worst

Body-in-white                                      Toyota                   Chrysler
Chassis                                                  Toyota                   Nissan
Electrical                                               Toyota                   Nissan
Exterior                                                 GM                         Nissan
Interior                                                  Toyota                   Nissan
Powertrain                                            Honda                   Nissan

  

From this simple chart, it is clear that Nissan are in some turmoil, as Henke told me: "Nissan aggressively demanded price cuts but it failed to give suppliers the right tools to reduce their costs and as a result, suppliers are reluctant to share new technology and make price concessions.
"Kiefer's team at GM has definitely empowered suppliers better and made them feel more part of the process."

 

Investment in programmes and people

"Going forward, automakers will have to invest heavily in new resources and training
programmes to improve their working relations with suppliers because suppliers have a
significant impact on an automaker's profits," said John Henke, president of Planning
Perspectives, Inc. "Currently this investment isn't happening across the OEMs with sufficient
focus."
"The positive results for GM track our research which has conclusively proven that the more
collaborative a company's supplier relations are, the more suppliers will contribute to its
profits," said Henke. "With the significant demands facing the industry, no automaker can
afford to marginalise its supplier relations. Every OEM must begin working today to ensure
it will have significantly improved collaborative relations in the next several years."
To read more of this survey including detailed charts, please visit www.ppi1.com

Constellium opens new plant for advanced aluminium automotive structures in Georgia US

Constellium opens new plant for advanced aluminium automotive structures in Georgia US

Constellium has announced the grand opening of its new plant in White, Georgia, dedicated to the production of advanced aluminium automotive structural components and crash management systems.

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The 135,000 sq. ft. facility is strategically located to supply automakers in the Southeast US and may be expanded to 220,000 sq. ft. to meet customers' supply needs in the future. Constellium expects to have 150 employees in White, Georgia, by 2019.

"I am very pleased to be in Georgia today to celebrate the opening of this new plant, its state-of-the art manufacturing capability and world-class team that is committed to work in partnership with our automotive customers," said Paul Warton, President of Constellium's Automotive Structures & Industry business unit. "Being closer to our customers' assembly plants will allow us to better serve automakers in their mission to make vehicles lighter and safer and to respond to the industry's growing demand for aluminium structural parts."

"On behalf of Constellium, I would like to extend our gratitude to the State of Georgia, Bartow County, our local partners and employees for their strong support in establishing the White, Georgia, plant," commented Eric Krepps, Vice President and General Manager of Constellium Automotive Structures North America. "We are honoured to be part of your community."

Schuler wins order for 15 presses from US/Mexico supplier

Schuler wins order for 15 presses from US/Mexico supplier

The world's largest press manufacturer will deliver a total of 15 machines including automation with a press force between 400 and 2,000 tons to the customer's sites in the US and Mexico.

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The package will include transfer, ProgDie and stamping presses. The Schuler Weingarten site played a substantial role in acquiring the major project.

"This is an important order for our team in Weingarten and proves once again that we have competitive international expertise at this site," explains Managing Director Johannes Linden, who heads the Division Industry located there. "With quality and dedication, we have shown that we here in Weingarten are very much capable of winning major international orders. This clearly underlines the business potential inherent in our excellent team."

This is the fourth order from this customer within two years: In 2015 and 2016, the US supplier ordered several transfer presses including automation.

Tenneco recognised by FCA US as a 2016 Supplier of the Year winner

Tenneco recognised by FCA US as a 2016 Supplier of the Year winner

Tenneco Inc. was named Diversity Supplier of the Year by FCA US LLC during its annual Supplier of the Year awards ceremony held on Tuesday, May 2.

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FCA US honoured 16 North American supplier partners that have shown an extraordinary commitment to innovation, quality, warranty, cost, delivery and the FCA Foundational Principles.

"We're extremely honored to receive this important recognition from FCA US," said Brian Kesseler, Tenneco chief operating officer. "This award demonstrates Tenneco's commitment to organizational and supply chain diversity that encourages creativity, fosters collaboration and creates greater value for our customers."

Award recipients were determined based on an evaluation of each company's supplier scorecard performance in 2016 – a rating system that evaluates supplier performance in areas such as quality, delivery, cost, warranty and partnership – and input from FCA senior leadership. Suppliers nominated themselves for the innovation, sustainability and diversity award categories.

"We honour those who continue to fuel our momentum by providing us not only the best ideas and cutting-edge technologies, but also the suppliers who consistently exceed our expectations," said Scott Thiele, Chief Purchasing Officer, FCA – Global.

(pictured left to right above: Sig Huber, Director, Supplier Relations and Risk Management, FCA – Global ; Susan Ulrey, Tenneco Vice President FCA customer business unit; Fernando Ronderos, Tenneco supplier diversity manager; Scott Thiele)

Lear hosts groundbreaking ceremony for its new Asia headquarters and technical centre in Shanghai

Lear hosts groundbreaking ceremony for its new Asia headquarters and technical centre in Shanghai

Lear Corporation has broken ground for its future Asia headquarters and technical centre located in the Yangpu District of Shanghai, China.

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Construction of the building started in February 2017. The expansion of Lear's Asia-Pacific administrative infrastructure, engineering capability and product innovation resources in a central Shanghai location will allow the Company to continue to develop new products and grow its sales in China and throughout Asia.

"The Asia-Pacific region continues to be the largest and fastest growing region of the world. We are very pleased to be building a new regional administrative and technical center in Shanghai, as China is Lear's fastest growing market, and our business in the Asia-Pacific region is expected to continue to grow rapidly," said Matt Simoncini, Lear's president and chief executive officer. "Over the past three years, Lear's total sales in China have grown at an average annual rate of 8%."

The new Asia headquarters will support over 39,000 Lear employees in 11 countries in Asia, including more than 27,000 in China. Lear manufactures products in Asia at 67 locations and has engineering teams at 16 locations throughout the region. In 2016, Lear's consolidated sales in Asia grew to $3.4 billion. Lear also supports Asia through 9 unconsolidated joint ventures in the region. Sales in these unconsolidated joint ventures were $2.0 billion last year, bringing Lear's total sales in Asia last year to $5.4 billion.

"We have an excellent record of sales growth and financial success in Asia. The investments we are making in a new headquarters building and Technical Center reflect our confidence in future growth and success in this region of the world," added Jay Kunkel, Lear's president of Asia-Pacific Operations.

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