The transparency that purchasing chief Bo Andersson brings to measuring the performance of General Motors' suppliers on price, quality, launches and on-time delivery should make it easier for the automaker to cut costs and improve quality on future products. It's a good start that GM must build on.
GM's purchasing, engineering and manufacturing groups all see the same report cards and know at a glance which suppliers are "green" and are making their targets, which are "yellow" and are having partial success, and which are "red" and are not meeting their goals. The metrics of the tricolor rating system are consistent and predictable. That's the way it should be.
But GM's purchasing practices remind us of the cynic who knows the price of everything and the value of nothing.
That's because the GM system measures how well suppliers can cut costs. GM can rank several suppliers vying to win a contract for a component, but it does not adequately evaluate a supplier offering new technology for which there is no competition.
GM's purchasers frequently claim that the automaker is being overcharged for new technology. Meanwhile, the supplier fears it will be unable to recoup its investment in new technology.
General Motors does little to assuage those fears when it insists on the right to cancel a supplier's contract with 30 days' notice. GM will find that suppliers offer new technology to other automakers first - a competitive disadvantage.
Many suppliers say the tricolor score card is just another tool to beat down their prices. GM says a low-cost supplier that is red on quality is not likely to get new contracts. But suppliers claim that a red vendor's low price may become the benchmark for others - regardless of the red vendor's quality.
That's not right. There must be a stronger correlation between price and quality.
General Motors is pressuring suppliers to cut prices 20 percent over three years. Making that happen has become the suppliers' problem. That's wrong. GM's purchasing officials must do more to make the relationship with suppliers work.
That's the only way to build a strong supply chain. GM must understand that value is more complex than piece price.