GM – Moving to Customer-Centricity

General Motors is reinventing itself in a far-reaching strategy which will affect everyone who does business with the company.
Gary Cowger President, GM North America, told the Automotive News World Congress in
Dearborn, Michigan, that every division in General Motors was undergoing a revolution. “A revolution in our products … and a revolution in how we’re bringing them to market. The first revolution is about product. And let’s cut to the chase: You cannot compete without great products. And, as competitive as things are today, that means every part that goes into those products – has to be outstanding, too.”
General Motors is not alone in rethinking its business model, he pointed out. “sThe revolutions taking place at General Motors are just part of the larger revolution in the relationship between car companies and car buyers. And over the years, we as an industry have done an incredible job of rising to that challenge. Which is why so many of us have stood the test of time. Ford just celebrated its 100th anniversary. Buick hit the century mark last year as well. Corvette turned 50, and Honda marked its 20th anniversary in Marysville in 2002.
Cowger paid tribute to the company’s suppliers and workers. “Over the past five years, we and our unions and our suppliers have cooperated in unprecedented ways. Together we’ve introduced more new cars and trucks than anyone – at any time – in automotive history.” In 2002, GM rolled out 14 “all new or improved vehicles,” followed by 16 in 2003, and 29 in 2004 – 13 of which are all new.”
“And the product revolution just keeps rolling. In the 2006-2007 model years, we intend to introduce 35 more new or significantly updated cars, trucks and crossovers. For each of our brands, the key to revival is great products top to bottom, not just one or two new “flagship” vehicles here and there. All told, 24 percent of our GM portfolio volume is new in 2004 – basically one out of every four vehicles we’ll sell.
“But, the product revolution at General Motors is only half the story. The other revolution is the way we’re bringing those vehicles to market. Because the reality is that there are a lot of great products out there. I’ve often said that at the end of the day, the best product wins. But the landscape has changed: Great products alone aren’t enough anymore. Customers have almost too many choices. And that’s a challenge if you’re trying to get them to buy yours.
“The old marketing model is dead. The new model is diversity – in 3D. Diversity of customers. Diversity of products. Diversity of media. Thirty years ago, most of us were marketing, basically, to white males. Mainstream America is changing, and we have to change, too. Only 10% of today’s families are defined as traditional, down from 80% in 1950 … Second marriages … Adopted children … Grandparents as principal caregivers.
“Offering a wide range of products is a good thing. Up to a point. But are there too many great products out there? For many consumers, buying a car used to be like the Dating Game. You remember that. Girl had three guys to choose from, and usually two of the three really weren’t that great anyway. Pretty simple. Today it’s like The Bachelorette. Girl has 20 guys to choose from, they’re all great, and just trying to decide on two or three is exhausting. It’s too much work. And if you’re one of those 20 guys, you know you have to do something pretty extraordinary to get her attention.”
Doing “something extraordinary” has become a mantra within GM. Bo Andersson,
GM Vice President, Worldwide Purchasing, Production Control and Logistics, says “at GM we want to Be the Best Right Now. Part of that means a sharp focus on what our customers want on new vehicles from GM. Today, consumer demands for new technology on vehicles has increased and our competition is moving as fast or faster than we do. That means that to differentiate ourselves and provide an advantage we need to have the best new technology on our vehicles to grow market share and win new customers. Worldwide Purchasing, together with Engineering support this by working with our best suppliers to get their best technology first. One of the ways we achieve this is through events like TechWorld.
TechWorld is a three-day private trade show held three times a year by GM to give suppliers the opportunity to share their latest ideas for products, processes and services that can make GM better. “In recent years, we have improved the event and made it better for all involved. Engineering and Purchasing work jointly upfront to focus supplier proposals which improve cost/mass or are customer perceived feature enhancements. Disciplined reviews are structured by cross-functional teams to give suppliers targeted access to the appropriate people within GM.
Past innovations first seen at TechWorld include climate-controlled seats, adaptive cruise control and DVD/navigation that are now featured on the Cadillac XLR.
“Today we also make sure the right suppliers are invited to TechWorld and only the best performing suppliers receive an invitation. Typically, this includes Suppliers of the Year and other top-performing companies,” he says.
Global suppliers
Top suppliers to GM enjoy a number of benefits, Andersson told the Supplier of the Year banquet. “Our top performing suppliers will get a first look at new business opportunities on our global architectures Epsilon, Theta and Zeta. If you are a top performing supplier it will be natural for us to look to you first as we source this business. However, we will have different expectations of the supply base when it comes to global architectures.
Suppliers that have global capabilities and are already engaged in BOM reuse are going to have lower investment costs, fewer execution risks, and be ready for global architectures.
Global architecture allows GM to source the best part from the best suppliers, in high volumes and have suppliers build it their most competitive facilities. This is good for GM and it is good for our suppliers. In fact, we have already sourced business to six suppliers on Theta 13 on the Zeta platform.
“The important things to keep in mind when you approach GM for an opportunity on Epsilon, Theta or Zeta is to engineer it once, validate it once, tool it once, reduce investment cost and manufacture it globally. That is our plan. The top performing suppliers will grow and win with GM. Congratulations again to our Supplier of the Year winners and our Corporation of the Year, Hitachi Automotive Systems Group,” he said.
Rick Wagoner, GM’s chairman and chief executive officer, emphasised the role of suppliers at Auto Tech 2004. “Today more than ever, the auto business is a team sport. And to win, manufacturers and suppliers have to be on the same team. That doesn’t mean that we shouldn’t expect our teammates to perform at peak levels. No, in fact, we actually help each other more if we have higher performance expectations for each other, and help each other achieve them.
“The sooner we re-commit ourselves to working together. to facing the reality of the competitive environment. and commit to step-function improvements in competitiveness. the better our chances of winning. As an industry, we have some great opportunities and some serious challenges. The question for all of us is this. how can we overcome the challenges and grow profitably in today’s hyper-competitive environment? For me, the answer is clear: we have to think, plan, and act with a much more global mindset than we traditionally have. The days of thinking in terms of a local or national auto business are long gone. To win in today’s auto industry, we have to be able to compete on a global basis. And we do that, first and foremost, through collaboration and performance. To win in today’s and tomorrow’s global auto industry, we – automakers and suppliers – have to work together more effectively than we ever have before, to drive performance improvements like we’ve never seen before.
“There are important issues that manufacturers and suppliers can and must work on together, in order to improve conditions for all of us. By working together to improve the quality and reduce the cost of health care, we can free up billions of dollars that can be re-invested in our companies, in areas like research and development, new product programs, and new customer services. All of which improves our global competitiveness, and drives economic growth.
“Now, having said all this, I would be remiss if I didn’t acknowledge that there are some areas of the OEM-supplier relationship that can be improved. A rapidly changing business environment, intense global competition, and uncertainty about the future have changed, in a significant way, the traditional relationships that manufacturers and suppliers have shared in the past.
“Let’s be honest. Like any business relationship, we will always have challenges and differences – that’s part of the game. But the competitive issues that we face are serious and challenging ones, and they need to be addressed proactively and directly, one-on-one, between partners.
“When you get right down to it, our business is really pretty simple. If we bring out the best products, play aggressively in the marketplace, have the best quality and cost position, then we win. And when we win, we get to divide up a bigger piece of the industry pie among us all – which means bigger bites for manufacturers, for suppliers, for dealers, for our employees, unions, and shareholders. But when we lose, we find ourselves arguing over smaller and smaller bites, from a smaller and smaller piece of the pie. That’s a sure prescription for our mutual downfall.”