Beruflich Dokumente
Kultur Dokumente
and Its
Suppliers
Prepared By:
Abhinandan Singh (MP15003)
Manjesh Jha (15022)
Sabas Navinshore Fernando (Mp15036)
Sushant Kumar (Mp15047)
Case Facts
Percent of Total
Component Sourcing Component Cost
(Price Bidding Model)
Arm's
Internally Externally
length
Sourced Sourced Internally
Suppliers
manufactu
(65-70)% (30-35)% 35%
red
55%
Partner
Key Facts Suppliers
10%
• Adversarial relationship with suppliers
• Short term contracts with focus on lowest
bid price Achievements during Lopez’s tenure
• No focus on relationship management
with prime motive for best production Double digit price reduction in
price some supplies
• Supplier base scattered across country US $4 billion saving in material
• Strict policy to avoid any personal
cost during his tenure
relationship b/w buyers and suppliers
Development cost of new part
was borne by suppliers
GM’s Buyer Supplier Relationship
• Group’s reflection on that ??????????????????
Pros and Cons of GM’s Model
Greater control over suppliers with Lack of trust among Buyers and
more bargaining power Suppliers
Vertical Integration provides more Lower incentive for suppliers to switch
control on company operations companies
Price control mechanism was easy to Lesser Flexibility in negotiations
implement except on monitory terms
Bidding war among suppliers helped Supplier association and connect
GM to get best production prices absent leading to lower service
commitment
Development cost shifted to Suppliers
on new part developed Minimum trust and leverage over
the suppliers
Lower switching costs
Discontent and stringent relationships
Huge savings achieved in first few
with the supplier
years
GM’ Supplier Relationship (recent happenings)
GM’ Supplier Relationship (recent happenings)
• Suppliers ranked General Motors just behind Toyota and
Honda
• In 2011, GM began to roll out more collaborative policies
such as no-bid contracts
• Supplier Feedback mechanism implemented in 2015
Implementation of the below policies helped GM to
achieve this
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
Appointment of executive champion
Recognizing and rewarding supplier excellence
Making supplier performance more transparent
Key Learnings
Buyer Supplier relationship goes beyond price and
supply association
Supplier satisfaction imparts long term growth and
bottom line for a company
Supply chain methodology should match with corporate
strategy
Managing supplier shortcomings is cheaper than new
supplier’s acquisition
Reliability of supplier stems from security of orders
Suppliers can contribute actively in terms of quality,
reliability, technology and knowledge of industrial trends
Greater financial stability and Flexibility can be achieved
with trustable suppliers
In short, building relationship with the supplier pays in the
long run