General Motors Supplier Selection For Innovation Case Solution

For practical purposes, the underlying assumption is that General Motors has been successful over the years because of the strategic alignment of company operations and effective logistics, which have together improved corporate ranking on consumer profiles, allowed cost reductions through the establishment of efficient supply operations, and allowed the company to create a competitive advantage over other businesses in the industry (Rosenbaum, Eric, 2019). All suppliers' activities have been given significance via significant use of research and technology, and general motors' performance has also been improved. Even with its well-known success, GM still has a long way to go when it comes to selecting the best supplier to help it fulfill its performance goals and satisfy customers' expectations. To achieve both internal and external supply chain goals and proficiency, it is critical to choose reputable suppliers, according to the case study (Srock, Preslar, Plegue, & Meldrum, 2019). 

1. Problem Statement 

Concerns about intellectual property rights, supplier location, supplier involvement, and prior experience working with GM must be considered whether GM selects a single-source or multi-source supplier pool. Procurement must examine all of these factors and offer a compelling and detailed sourcing choice and strategy to the sourcing committee (Srock, Preslar, Plegue, & Meldrum, 2019). 

2. Supporting Analysis

Industry and Competitor Analysis 

It is an industry that has heavily incorporated robots into its manufacturing operations. It is a production strategy that emphasizes the need for an efficient supply chain and stores goods for just a few hours until it is used and replaced. Toyoda's production philosophy is likewise considered as the best in the industry, for all manufacturing processes. A few automakers are nothing more than a collection of separate brands. Volkswagen, the company's main brand, owns Bentley, which uses conventional Volkswagen components. Yes, a Bentley has VW components! Volkswagen also owns Skoda and Bentley! Only 12 firms own 60 of the world's most prestigious brands (Srock, Preslar, Plegue, & Meldrum, 2019).

3. Stakeholder Analysis 

Internal Stakeholders 

The GM board of directors and executive suite have prioritized autonomous vehicles to safeguard the company's long-term prosperity. Employees have a stake in the company's success, both for their own job security and a productive workplace (Rosenbaum, Eric, 2019).

External Stakeholders

Individuals and businesses alike are interested in Lyft's initial fleet of automobiles. Environmentalists enthusiastically anticipate the growth of the electric and hybrid vehicle industries. Organizations concerned with the safety of autonomous vehicles are closely monitoring the technology's development. Investors and bondholders are eagerly expecting GM's entrance into this key market. Government, both national and local. National and local governments will need to establish macro-level laws and techniques for autonomous vehicles, including hybrid credits. Autonomous vehicles and the innovative components necessary to make them excite suppliers of automotive parts, particularly those who specialize in more conventional components. From classic gas and muscle cars to self-driving and electric vehicles, Ford and Chrysler have been integral to GM's success (Kirby, Jen, 2020). Toyota now has a successful hybrid car that competes with Honda, Mercedes Benz, and other manufacturers. Tesla, a specialist in all-electric and autonomous vehicles, wants to know how a traditional automaker can compete in the electric and hybrid vehicle market. Unions like the United Automobile Employees (UAW) develop the auto industry and protect workers' rights (Srock, Preslar, Plegue, & Meldrum, 2019).

4. External Research

To remain ahead of the curve in autonomous car development, GM must make challenging strategic sourcing decisions. Because safety and reliability are major priorities, the brake systems procurement team will have to make price, intellectual property, and contract sacrifices. Here are some examples of how other companies have dealt with similar strategic sourcing issues. HP's "Social and Environmental Responsibility (SER) Program" is a supplier management system (HP, 2022). The four-phase initiative targets HP's high-risk vendors. GM may create a similar initiative when it establishes itself in the expanding autonomous car market, comparable to HP's SER program. RUD Brake Systems and Rosie Automotive International were two firms that refused to share their intellectual property with GM. Regular on-site assessments by GM to verify the braking systems meet their technical team's requirements may be a compromise. Starbucks' Supplier Guidance Global Requirements outlines its requirements in areas including regulations, procedures, and shipping (HP, 2022). 

The following section summarises Starbucks' subcontracting policy: Starbucks avoids outsourcing or subcontracting by directly negotiating with suppliers "This authorization does not apply if the Supplier is a recognized reseller. To be sure, suppliers should contact their local Starbucks Rep." GM may use a Starbucks-style strategy while negotiating with R.U.D.I. to learn more about its outsourcing practices. To build long-term relationships with R.U.D.I., GM must be transparent about the supply chain. Finally, "Supplied Parts Quality Management" covers BMW Group's supplier quality management process (Rosenbaum, Eric, 2019). The document contains confidentiality, development contracts with warranties, service level agreements, requirements specifications, service scope, and logistics. The document recognizes supplier contracts for secrecy, development, warranty, and supply. "Suppliers have a great responsibility for the whole quality management and with a nominated, often long-term cooperation starts," BMW Group asserts (Starbucks, 2022). 

GM may expressly state in their supplier contract that they want to create long-term cooperation based on the previously defined promises. As a consequence, long-term contracts with prospective brake system suppliers may be less risky. The scale of China's chronic intellectual property threat is also alarming. One in five North American CFOs (Rosenbaum, Eric, 2019) feel their intellectual property has been stolen by a Chinese company in the previous year. Intellectual property rights have recently been a hot topic in recent US-China trade tensions (Srock, Preslar, Plegue, & Meldrum, 2019).