GM will let suppliers keep more cost savings

ERJ staff report (AN)

Robert Sherefkin, Automotive News

Detroit, Michigan -- The new purchasing chief of General Motors Co., seeking to spark cost-cutting ideas from suppliers, will allow parts makers to pocket a greater share of the savings they generate.

Bob Socia, vice president of GM's global purchasing and supply chain, told his largest suppliers during a regularly scheduled teleconference today that the automaker will split any cost savings 50-50 for the life of the part, a company spokesman said.

"We think this decision will help generate enthusiasm in the supply base for doing business with the new GM," spokesman Dan Flores said. "This is an example of finding ways to engage our suppliers in ways that we have not done before."

Under the previous plan, GM received 65 percent of any cost savings from suppliers for the first year that the savings were realised, and suppliers received 35 percent. After that, GM kept all the savings in the form of reduced prices.

Flores said GM expects to come out ahead despite taking a smaller share of those savings. He said it is too early to put a number on the program's savings.

Socia also added two new members to GM's supplier council. They are Mark Reuss, who replaces Jim Queen as vice president of global vehicle engineering; and Dan Hancock, vice president of global powertrain engineering.

Both the new supplier cost-saving plan and the additions to Socia's supplier council are effective today.

In June, Socia replaced Bo Andersson, who had been GM group vice president for purchasing and supply chain. Socia had been executive vice president of Shanghai General Motors.

From Automotive News (A Crain publication)