GM says it treats best suppliers as elite

General Motors has awarded its top suppliers nearly $2.5 billion in future business so far this year.

2001 Management Briefing Seminars index
It's part of GM's strategy to expand the business of its best suppliers by giving them first shot at the automaker's most desirable programs.

Benefiting from the new business -- $1 billion in metal commodities, $835 million in electric commodities and $651 million in chemical commodities -- were GM's 165 supplier-of-the-year winners.

"They are truly an elite group that has proved they want to work with us, rather than against us," said Bo Andersson, GM executive in charge of worldwide purchasing, in remarks prepared for a speech this morning at the Management Briefing.

"We are not just talking about rewarding our best suppliers. We are actually doing it."

Wheel maker Superior Industries Inc. is one highly rated supplier that was given its choice of future GM programs to supply.

GM's top group of suppliers excels in quality marks, with the 165 companies performing 57 percent better than the rest of GM's supply base in defective parts per million, Andersson said.

The supply base is rated on a green, yellow and red basis on measurements of quality, launch, and current and future program performance.

Suppliers can access real-time evaluations through GM's SupplyPower Web site, which gets 5 million hits per week.

As an added incentive to improve, GM is using the same performance data to make sourcing decisions for its joint venture and alliance partners.

With Isuzu, Suzuki, Subaru and Fiat folded in, GM's total purchasing budget leaps from $86 billion annually to $123 billion.

Each GM supplier also has individual performance targets on price and quality improvement that are set using joint input, Andersson said.

"We have not made any demands because it would be counterproductive to our goals," he said.

Said Andersson: "I'm not saying we are doing everything right or that we are where we need to be.

"But, clearly, we are working with our best suppliers on creating a new business model for the future."

You can reach Amy Wilson at awilson@crain.com

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