Car suppliers to get cut of savings at GM

1 September 2009

02 September 2009

General Motors (GM) is to share its savings with vendors in an effort to improve supplier relations.

The scheme will enable suppliers that submit ideas on cutting the cost of car parts to retain half the savings generated from them over the life of a contract.

Previously, GM kept "a significant percentage" of savings realised in the first year and all cost savings for the remainder of the life of the car component.

A GM spokesman said: "We are committed to finding ways to engage suppliers in our business. We think this decision will increase feedback, input and innovation from our supply base, and help generate enthusiasm for doing business with the new GM."

The deal is one of a number of changes implemented by GM's new vice president of global purchasing and supply chain Bob Socia to improve supplier relations. Socia took over from Bo Andersson in June after the organisation filed for Chapter 11 bankruptcy (Web news, 16 June).

Earlier this year GM ranked fifth in a survey that tracks supplier relations of the top three carmakers in the US and the top three in Japan (News 11 June 2009).

John Henke, president of Planning Perspectives, which conducts the annual survey, said: "In most industries, all cost-savings revert back to the customer. With the bankruptcy behind them, I think there is a recognition within GM that they can start afresh."

SMsep2009

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