Lutz speeds approval of cost-cutting ideas

DETROIT - General Motors is paying more attention to suppliers' cost-cutting ideas, thanks to Robert Lutz.

Over three weeks, Lutz had approved more cost-saving measures than GM had approved in the last nine months, GM's purchasing chief Bo Andersson said at an Original Equipment Suppliers Association conference Oct. 22 in Dearborn, Mich.

Suppliers say the relationship with GM was improving before Lutz's arrival, but his focus on suppliers and technology has turbocharged the automaker's willingness to collaborate.

"They were getting it then; now they're just accelerating it," said Lin Cummins, ArvinMeritor Inc. spokeswoman. "They're viewing the ideas quicker and approving or denying them quicker."

GM's plan to cut costs with suppliers, dubbed the Shared Savings Initiative, began in February.

The plan, referred to by suppliers as the 65-35 program, encouraged suppliers to submit proposals for cost savings by offering them 35 percent of the savings if the idea is used. That amount would be paid to the supplier over one year.

But reviewing suppliers' ideas went slowly because GM did not have enough engineers analyzing them.

Ron Zarrella, GM's North American president, told a group of Canadian suppliers Tuesday, Nov. 6, that GM had not moved fast enough to use the ideas that suppliers suggested. GM now has dedicated resources to accelerate that pace, he said.

John Nielsen, director of customer development for safety system supplier TRW Inc., said that in some cases GM would pay attention only to ideas that would achieve major cost savings.

Lutz, who joined GM in September as vice chairman of product development, has worked to revitalize the 65-35 program by matching engineers with the automaker's purchasing staff to ensure that suppliers' ideas are heard and carefully reviewed.

During his career at the former Chrysler Corp., Lutz and purchasing chief Tom Stallkamp were architects of the Supplier Cost Reduction Effort, called SCORE, which encouraged suppliers to come up with cost-cutting ideas and shared the savings with them.

"Lutz has given it definitely some more energy since he's been (at GM) to take a look at these suggestions," said John Smail, vice president of Collins & Aikman Corp.'s GM business unit. "Feedback from GM purchasing is that Lutz is going back through all of the rejected suggestions to try to resurrect them."

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