Intersecting Ideals: Why GM's Supply Chain is in a State of Ruin

In a recent Procurement Insights post titled “Today’s PI Window on Business Show on Contracting Challenges Drives Home The Lessons That GM Has Learned The Hard Way,” I had made several references to the observations expressed by ADR North America’s CEO Bill Michels. The “wreck” that is now the GM supply network, according to Michels was due in large part to the former industry giant’s “drive on price reduction, low cost country (LCC) sourcing, and extension of terms.” A result Michels contends falls squarely on the shoulders of GM’s former VP of Procurement and Supply Chain, Bo Andersson whose “hard line approach might have been a short term win for GM, but resulted in long term supply chain problems and risk.” At the heart of his position is what Michels’ refers to as “the view that suppliers are a source of incremental profitability rather than an extension of manufacturing capability.” This as he puts it, “is a gross miscalculation.” Joining me today to discuss the GM situation as well as its broader implications in terms of emerging supply chain practices is Bill Michels. Michels, a three time honoree as a Supply and Demand Chain Executive's "Pros To Know," is also co-author of the book "Transform Your Supply Chain."