If you’re a parts supplier to General Motors, you have two choices: bid for business as it comes up or open your books and factories to skip the bidding process.
According to Automotive News, the latter option is part of GM’s One Cost Model launched in 2013, allowing the automaker to analyse a supplier’s internal cost data to identify cost-cutting opportunities. In exchange, suppliers can receive exclusive parts contracts that can last the lifecycle of a model and GM will not put that particular piece of business up for bid.
This all requires a significant amount of trust from suppliers, a commodity which has been lacking at GM since the ’90s.
Purchasing chief Steve Kiefer, formerly an executive at Delphi, told AN that GM won’t use the information to force suppliers to match or beat the company’s “China price”. In some contracts, annual price-downs, resulting in price cuts of 1 to 4 percent, will be skipped. Instead, GM will use the data to “identify waste and continuous improvement opportunities,” Kim Brycz, executive director of global product purchasing, told AN.
Bidding is effectively replaced with annual cost analyses. GM is also including suppliers earlier in vehicle programs with both parties reaping rewards: suppliers can optimize parts earlier on and GM can pay less for the same part.
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