GM Continues To Pursue Cost Cutting Measures, Sweetens Contracts By Deleting Unpopular Terms

After having had some strong pricing from their transformed vehicle lineup, General Motors is seeking help from its 2,700 global suppliers, and asking them to find ways to continually streamline supply chains and distribution networks.

GM Global Purchasing Chief told Automotive News they aren’t doing this alone, however.

“We’re not just saying, ‘This is in your contract, you go figure out how to do it,’” Lieblein said to Automotive News. “Let’s work together to understand the cost drivers in your business.”

Lieblein also noted that the automaker will lax many the agreement terms that were put in place last year. The following revisions,according to the report, are as follows:

• Eliminate a sentence that said suppliers’ parts will “not, at any time (including after expiration or termination of this Contract), post an unreasonable risk to consumer or vehicle safety.” Suppliers interpreted this as crafting an open-ended liability a part from the usual warranty on supplier parts.

• Making clear that GM’s ‘audit rights’ to access a supplier’s books are limited to business between GM and the supplier. The 2013 language gave the impression that GM wanted broader access that included proprietary information.

• Getting rid of a provision forcing suppliers to ensure uninterrupted supply during “any foreseeable or anticipated event.” Suppliers worried that this language would leave them responsible for flagging problems at an upstream supplier.

• Clarifying a bylaw that gives GM license to a supplier’s intellectual property only when the supplier isn’t able to ship products. Suppliers said the 2013 terms posed a greater risk to their intellectual-property rights.

Leiblen went on to note that the previous term demands were a misstep, detracting from the conversation “about technology and quality and driving waste from the system.” She wanted to make sure that no suppliers chose to stop doing business with GM because of it. Now, suppliers are focusing on getting rid of the unnecessary costs.

“It could be a waste in the specs we provide for the part. It could be waste in the supplier’s operations or waste in our operations,” Leiblen continued. “We really have changed the lens that our teams use to look for that waste. And it’s all over the place.”

GM also released a letter, obtained by AN, citing ways to identify waste, predict costs, get rid of raw-material costs, and incorporate other methods.