DETROIT -- General Motors is working with about three dozen major suppliers to cut the costs of parts.
The move represents a baby step toward a more collaborative approach with selected parts makers. But suppliers outside that group are still facing strict price-cutting demands, while suppliers within remain skeptical of GM's intentions.
Under the new approach, GM wants suppliers to develop plans to cut the cost of parts by 20 percent over three years.
The effort is an attempt to harvest wide-ranging ideas from suppliers, a GM spokeswoman says. Suppliers will be able to share in savings.
The company says the strategy is developing, and details haven't been announced. But suppliers say the target is mentioned consistently by GM's purchasing staff.
"Every time we get a (request for proposal) package, the buyers ask what we are going to do about 20 percent over three years," says one supplier executive, who asked not to be named.
The initiative shows GM edging toward cost cutting in the collaborative, long-term style associated with Toyota and other Japanese automakers. Last fall, Ford Motor Co., also began pursuing a cooperative approach in North America called Team Value Management. But the doubts of GM suppliers suggest the automaker has a legacy of confrontation to overcome.
The supplier executive says the 20 percent figure would include the percentage cuts that have been agreed to in multiyear GM contracts. But he says the new target still represents a significant increase because most suppliers have agreed to annual cuts in the 2 percent to 3 percent range.
GM spokeswoman Renee Rashid-Merem says GM is keeping the scope of cost-cutting ideas as broad as possible to give suppliers leeway in their proposals. The cuts apply to suppliers' global business with GM.
GM, under global purchasing chief Bo Andersson, wants to go beyond its annual price-reduction pushes of recent years, she says.
In the most recent effort last fall, GM sought price cuts of 4 percent to 6 percent for 2003. It sought similar cuts on 2002 purchases earlier in 2002.
Results of those initiatives varied from supplier to supplier, but GM is satisfied, Rashid-Merem says. GM is happy with supplier performance in other key areas, such as quality, on-time delivery of parts and performance in vehicle launches, she says.