ANDERSSON'S WAR ON WASTE

Bo uses GM's clout to remake an industry

GM's Bo Andersson: "You always need someone who is hungry." Photo credit: JOHN SOBCZAK
Last October, General Motors purchasing czar Bo Andersson raised eyebrows when he strolled into a black-tie industry dinner dressed like Dracula.

Before the dinner, a supplier had failed to deliver the costume as promised. So Andersson worked the phones until he found false fangs, a shirt, cape and makeup at a nearby Wal-Mart for $20.

"Just like a supplier," Andersson later said. "Overpromise and underdeliver."

With the quip and costume, Andersson jokingly acknowledged suppliers' complaints that he sucks their profits away with his unrelenting demands for lower prices. To be sure, top purchasers at DaimlerChrysler AG and Ford Motor Co. face similar criticism.

But Bo is a bit different because of GM's sheer size and because he has proved so adept at using data to drive down purchasing costs. The 50-year-old Swedish native is matter-of-fact about the power he wields.

"This is a good industry to be in if you are strong, and a bad one if you are weak," Andersson says.

GM's annual purchasing budget is $86 billion, a figure larger than the gross domestic product of 170 nations. Because he picks winners and losers, Andersson has the power to reshape the global supply base.

Winners and losers

And he has used that power. To rein in North America's three leading seat makers, Andersson invited Faurecia SA, a leading French supplier, to the United States. Faurecia, which also makes exhausts, also helped Andersson dilute the pricing power of that segment's leading suppliers.

Likewise, Andersson broke up the tire industry's oligopoly by awarding big contracts to Bridgestone Corp., a Japanese company.

"If you have three or four players, it's very likely they do not compete," Andersson explained in an interview with Automotive News. "You always need someone who is hungry. As a buyer, you want healthy competition."

With savings of $8 billion over the past six years, Andersson can claim results. But those savings carry a substantial cost - GM has suffered a loss of trust among suppliers.

According to a recent survey of supplier attitudes, 67 percent of the respondents said they granted GM price cuts primarily because they feared retaliation. By contrast, only 5 percent of Toyota's suppliers feared retaliation.

Bo Andersson
Age: 50
Title: Vice president, GM global purchasing and supply chain
Education: Swedish Armed Forces Military Academy; bachelor's degree in business administration from Stockholm University; completed senior management program at Harvard University in 1999
GM boards: Automotive Strategy Board, Automotive Product Board and North America Strategy Board
GM career track:
  • 1987 - joined the automaker as a manager with Saab
  • 1990 - appointed vice president of purchasing for Saab
  • August 1993 - moved from Saab to GM as executive director of worldwide purchasing for the electrical commodity group
  • October 1994 - appointed executive director for the chemical commodity group
  • March 1997 - promoted to vice president of purchasing for General Motors Europe
  • 1999 - returned to GM as the executive in charge of worldwide purchasing
Drives: Cadillac Escalade
Source: GM biography, Automotive News research

GM purchasing czar Bo Andersson chuckles when telling a childhood story about stealing a neighbor's cat and selling it for $5 to buy chocolate. The cat came back the next day.
Selling the cat

Two factors helped Andersson become one of the industry's most powerful figures: a remarkable affinity for data and the ability to think "out of the box."

He demonstrated both abilities early in life. At age 6, Andersson needed money to buy some chocolate. He quietly snatched the neighbor's cat, then sold it for $5.

"It was a good profit and no cost," he says with a laugh.

The cat eventually wandered home. Had it not been for a stomachache from the chocolate, his mother never would have been the wiser.

It was his father, manager of a Swedish department store chain, who gave Andersson his passion for numbers. Every Saturday morning, father and son would analyze that week's sales figures.

"Being accountable and being numbers-driven, I can say we had a much better weekend if the numbers were good," Andersson said. "There must be something special with good numbers."

As a young man, Andersson wanted to make a career in the Swedish army. He graduated from the Armed Forces Military Academy, the Swedish version of West Point. During his 12 years, Andersson rose to the rank of major.

During his military service, he displayed his penchant for out-of-the-box thinking. The Cold War was in full swing, and the Soviet Union was jamming his unit's signals.

Andersson told his staff to solve the problem quickly. They purchased off-the-shelf Texas Instruments calculators, ripped out much of the electronics and performed a few tweaks. The result was a cheap, reliable, jam-proof device to transmit orders to the troops.

The solution demonstrated Andersson's determination to let his staff solve problems - to avoid micromanagement.

"I give people the time and resources to give me what I need and what the company needs," he says.

As the Cold War wound down, Andersson looked for a new career. "Budgets were being cut, and I did not feel challenged anymore," he recalls.

So in 1987, Andersson joined Saab-Scania AB. He moved up the ranks and by 1990 was named Saab's purchasing chief. It was there he devised ways to measure every aspect of supplier performance.

Green, yellow and red

In 1993, Andersson joined GM North America as head of global electrical purchasing. After two years running GM purchasing in Europe, Andersson was put in charge of global purchasing in 1999. He was promoted, with additional responsibilities, to his current post in December 2001, replacing the retiring Harold Kutner.

He quickly learned that purchasing decisions were influenced by a web of "good old boy" relationships between GM and its suppliers. He eventually blew up that network and replaced it with a purchasing system based on data - reams and reams of data.

The walls of Andersson's sprawling suburban Detroit headquarters are covered with color-coded "report cards" detailing each supplier's performance on price, delivery, quality and technology.

Green boxes are good. Yellow means difficulty. Red means a supplier's chief executive will have to explain himself face to face with Andersson. And that's when suppliers squirm.

At those "come to Jesus" sessions with vendors, Andersson is nearly inscrutable. His personal style is sober and objective. He smiles occasionally, rarely laughs.

If you want to know what kind of impression you're making, here are a few clues: When Andersson is open and listening intently, he sits back in his chair, fingers intertwined, hands on his stomach.

If he doesn't like what he hears, he responds with a monotone recitation of the facts. And if he turns quiet and dead calm, says an aide, that's when you're in trouble.

Andersson does not depend solely on data to make decisions. With little warning, he often shows up at suppliers' factories to sniff out problems. "I prefer to ask questions of the (machine) operators," he says. "They tell the truth."

That's when some suppliers find him most unnerving. Early one Saturday morning, Chain Sandhu, CEO of plastic parts maker NYX Corp., found Andersson prowling his loading dock. Sandhu says his mother prepared him for times like these with the warning, "If you don't like the heat, walk away from the kitchen."

'I pay the bill'

While Andersson is tough on his 3,200 suppliers, he can be equally demanding with his global purchasing staff of 4,000 employees.

In January, he ousted four of his most senior executives. Andersson acknowledges that some had used heavy-handed methods with suppliers, and one had undermined negotiations with a critical supplier.

"He gives everyone the opportunity to improve," says the Andersson aide. "After that "

Andersson also prefers to get personally involved in crisis management - sometimes to the dismay of his own staff. Last December, Amcast Industrial Corp. halted shipment of Corvette wheels over a contract dispute. The wheel shortage disrupted production of the popular two-seater.

Andersson planned a Monday flight for a meeting in Indiana with the hedge-fund operators who controlled the supplier. He wanted to understand how hedge-fund operators run the companies they invest in.

Three calls from GM attorneys the preceding Sunday failed to dissuade him. They warned that the issue was so sensitive that the meeting should be attorneys only. "That's fine," Andersson says he told them. "But since I pay the bill, I want to participate. They didn't like that."

Anderson typically keeps a low profile. He occasionally makes public appearances and travels the black-tie circuit but shuns the golf course.

"He's a student of the game, but he's very considerate of the safety of the other players," quips the aide.

He has resumed jogging but carries his Blackberry with him. He says he was a strong high school cross country runner; he clocked the mile in 4 minutes and 20 seconds.

Andersson spends his few leisure hours with his wife and two daughters. They regularly attend the movies.

Asked for his favorite actors and movies, he cites Patrick Swayze of "Roadhouse" fame and Robert De Niro in "The Deer Hunter".

Each year, Andersson takes the family on vacation to the summer home his parents built in Glommen, a village on the west coast of Sweden.

During his army days, Andersson opted for a red Porsche 944 over the more powerful Porsche 928. He liked the smaller car for its better balance and, of course, for its value. Characteristically, he sold it four years later for what he paid for it. Nowadays, Andersson drives a Cadillac Escalade.

On weekends, he haunts grocery stores for fresh ingredients to indulge his passion for cooking. He lavishes his time on pasta and pizza and beef. Sauces are his specialty. His other keen interest is salsa dancing.

Explains Andersson: "Those are the only times when I'm not thinking about suppliers."

You may e-mail Robert Sherefkin at rsherefkin@crain.com

0

Shares

ATTENTION COMMENTERS: Over the last few months, Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

Newsletters