Can transparency help GM mend supplier ties?

DETROIT -- General Motors' latest vow to work more collaboratively with its suppliers has plenty of skeptics.

Count Alfred Weber among the believers.

Weber is CEO of Mann+Hummel, a German maker of intake manifolds and other filtration systems with about 15,000 employees and 2.7 billion euros ($3.6 billion) in revenue in 2013. It supplies just about every global automaker and counts GM among its largest customers.

GM recently showed Weber a startling chart. The automaker rated a certain component that Mann+Hummel supplies to GM as middle of the pack on technical innovation relative to the competition. He wouldn't name the component, for competitive reasons.

"It helps to paint the picture of where you are positioned against the competitors," Weber says. "For us, that's a very good indicator that we need to speed up our own competitive analysis in this market to ensure that we're taking the next technological steps that we need to make."

That ranking is one component of GM's Strategic Supplier Engagement process. It was rolled out this spring as global purchasing chief Grace Lieblein's main strategy to smooth the long-contentious supplier relations that have kept GM from accessing the best of suppliers' technical innovations.

The program rates suppliers in two broad areas:

1. Business performance, which includes quality, cost containment and performance on new-vehicle launches.

2. Cultural performance, which assesses tougher-to-measure areas such as transparency and engineering innovation.

It covers 400 of GM's largest suppliers, which represent about 90 percent of GM's global spending.

Highly rated suppliers are rewarded with greater access to GM purchasing executives, joint planning on future product programs and other benefits.

Weber says that all automakers provide feedback on cost and launch performance. But he says GM's assessment of cultural intangibles is unusual. And he says GM's new system offers a level of specificity that allows the supplier to zero in on the reasons behind a rating that the automaker gave it for, say, launch quality.

"They make it much clearer now: 'This rating is coming from Korea,'" Weber says. "It allows you to learn from the concrete example, so you're not just dealing with an aggregate number."

In a recent interview, Lieblein said that a high level of transparency is critical to motivate suppliers to embrace the program.

That's especially true, she said, on the 40 or more cultural factors that GM assesses, which are more subjective than the business benchmarks. The feedback is broken out by region and component type, mostly to help larger suppliers that provide multiple parts in different subsystems.

GM even includes the names of purchasing staffers who provide subjective comments on the cultural ratings.

"We felt that being very transparent and having a consistent way of measuring was important," Lieblein said. "If our suppliers don't feel this is fair, this is all for naught."

Mike Martini, president of the original equipment division of tire maker Bridgestone Americas and a member of GM's supplier council, says the process also provides a formal mechanism for suppliers to raise specific issues with GM, something that was challenging in the past.

"It provides a platform for the supply base to open the dialogue on how GM can improve their approach," he wrote in an e-mail.

Lieblein is counting on the new system to patch GM's relationship with suppliers, which worsened recently to last among the six largest automakers, according to a May survey by Detroit consultancy Planning Perspectives.

GM's standing might have taken a hit because of controversial changes it made in 2013 to its standard purchasing contract, which included new terms that some suppliers believed exposed them to greater warranty liability and put their intellectual property at risk. Lieblein decided in February to roll back those changes.

Lieblein said GM has tried hard to make the Strategic Supplier Engagement program consistent by fixing a long-standing gripe among suppliers: conflicting messages from GM's vast purchasing and engineering departments.

"For each commodity, the engineering team comes forward with a technology that we're looking at for the future, and the purchasing team comes in with the sourcing strategy," Lieblein says. "It's a joint vision."

Weber of Mann+Hummel agrees. He says his employees now waste less time showing up at a meeting with GM purchasing only to learn that a decision previously hashed out with engineering had been changed.

"In the past, we felt we always needed to bridge the message from one area to the other," Weber says. "Now, everybody is around the table. You come to conclusions and decisions much more quickly."