Can General Motors’ Supplier Relations Reputation Ever Recover?

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Automotive, Manufacturing

Looks like General Motors has finally begun to take a step towards getting out of its supplier relations pit that Grace Lieblein helped dig.

A recent story in Automotive News outlines how Lieblein, GM’s head of purchasing, recently reversed several changes to the terms and conditions in the company’s standard purchasing contract that she introduced last summer, six months into her new position.

Lieblein previously worked as president of Brazil and Mexico operations for GM, and several folks have called for her head on a platter for this gaffe, by the sounds of comments such as this one:

“Grace Lieblein really has no business being in the purchasing & supply chain realm. GM must understand that the Chief Procurement Officer seat is not a development position and a true supply chain professional is needed. Get an ISM-certified CPSM and CPSD to hold that position and employ the body of knowledge. It will yield success.”

Ouchies.

The reasons that suppliers were miffed?

Because GM purchasing tried to take much of their leverage away; the changes to the contract were “seen as an effort to exert unprecedented control over vendors.” For example, the contract language looked to make suppliers open-endedly liable for parts later deemed unsafe, and squelched their intellectual property rights, according to the article.

GM Bringin’ Up the Rear

The auto realm is no stranger to the fact that GM’s supplier relations, including collaboration, is not the strongest.

An IHS Global Insight report on the auto OEMs with the best supplier relations found GM nowhere near the Top 12. Based on findings from a May study by Planning Perspectives, Inc., GM showed no meaningful change in supplier relations and, in fact, the survey showed lower scores in 2013 than in the 2004-2007 period.

Indeed, “poor [supplier] relations,” as my colleague Lisa Reisman wrote, “suggest smaller price concessions given to the OEM, less experienced supplier personnel dedicated to the OEM, and an unwillingness on the part of suppliers to provide the OEM with new technologies and “best” ideas.

“Perhaps most importantly,” she continued, “poor buyer-supplier relations harm the automaker’s ability to make money.”

That last point is undoubtedly the major reason Lieblein was compelled to reverse course on the bum language in the contract.

Up Next: Why Lieblein should’ve read Getting to Yes.

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