MBA6127 Unit 6 Discussion 2
U05a1 General Motors Case Study
MBA 6127
Effective Global Strategic Sourcing
September 28, 2014
Abstract General Motors observed changes warily in the 1990s as the internet was determined to change the automotive industry. GM was the largest vehicle manufacturer in the world, with revenue of $18.5 billion dollars, production facilities located in 32 countries and a workforce involving 325,000 employees. Despite the companies size and power, GM had witnessed their global market share grind down from 17.7 percent in the early 1990s to 15 percent in 2002 due to the declining levels of customer satisfaction and competition from foreign imports. GM had to accept that the industry had changed (Cohen & Shoshanah, 2005). The need for change was made clear to the GM Company, as customers were more perceptive, powerful and demanding. However, GM’s responsiveness lagged the industry. Furthermore, dealers grew more frustrated by the mix of their inventory. Dealer’s lots were becoming clogged with inventory and in order to clear out the old, GM had to offer sales incentives, squeezing profit margins. Dealers were struggling to get vehicles they wanted as well as vehicles their customers wanted. In addition, special order vehicles had extremely long lead times due to delivery dates were not tracked. The company’s supply chain costs were growing, with high levels of raw materials and work-in-progress inventory, inefficiency, outdated technology, bloated overhead, it was critical for the GM Company to make a change (Cohen & Shoshanah, 2005). To solve the issues GM was struggling with, the company decided to make the necessary changes. GM’s order-to-deliver process encompassed four of the supply chain operations reference models key supply chain processes to plan, source, make, and deliver. The complexity of transforming the order-to-deliver would be like “turning the Titanic
MBA 6127
Effective Global Strategic Sourcing
September 28, 2014
Abstract General Motors observed changes warily in the 1990s as the internet was determined to change the automotive industry. GM was the largest vehicle manufacturer in the world, with revenue of $18.5 billion dollars, production facilities located in 32 countries and a workforce involving 325,000 employees. Despite the companies size and power, GM had witnessed their global market share grind down from 17.7 percent in the early 1990s to 15 percent in 2002 due to the declining levels of customer satisfaction and competition from foreign imports. GM had to accept that the industry had changed (Cohen & Shoshanah, 2005). The need for change was made clear to the GM Company, as customers were more perceptive, powerful and demanding. However, GM’s responsiveness lagged the industry. Furthermore, dealers grew more frustrated by the mix of their inventory. Dealer’s lots were becoming clogged with inventory and in order to clear out the old, GM had to offer sales incentives, squeezing profit margins. Dealers were struggling to get vehicles they wanted as well as vehicles their customers wanted. In addition, special order vehicles had extremely long lead times due to delivery dates were not tracked. The company’s supply chain costs were growing, with high levels of raw materials and work-in-progress inventory, inefficiency, outdated technology, bloated overhead, it was critical for the GM Company to make a change (Cohen & Shoshanah, 2005). To solve the issues GM was struggling with, the company decided to make the necessary changes. GM’s order-to-deliver process encompassed four of the supply chain operations reference models key supply chain processes to plan, source, make, and deliver. The complexity of transforming the order-to-deliver would be like “turning the Titanic
References: Cohen, R., & Shoshanah, J. (2005). Strategic Supply Chain Management: The 5 Disiplines For Top Performance. New York: The McGraw-Hill Companies.