Thursday, February 19, 2009

The Grade on Detroit's Bailout Proposals: Incomplete - The Plank

A key area in which to look for operational improvements is in relations with suppliers. More than half of GM's costs--$50 billion per year--come from parts the company purchases from suppliers. But GM relegated its discussion of suppliers to a two page appendix, which is hardly enough for something with so much effect on both cost and value. GM says it wants to work with healthy suppliers, but that's very incomplete. How are the suppliers, themselves on the edge of bankruptcy, supposed to achieve this?

There is no mention of joint efforts to eliminate waste, which is a highly successful method of cost-cutting, or of working together with suppliers so that components interact better in order to produce, say, a smooth, quiet ride, or a pleasing interior. Instead, the report suggests, suppliers are somehow supposed to come up with money to improve technology on their own.
The Grade on Detroit's Bailout Proposals: Incomplete - The Plank
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