If you weren’t already convinced of supply management’s role in developing and driving overall corporate strategies in global companies — take a look at what General Motors just did.
The board of directors for General Motors took a bold step this week by naming a woman as the company’s Chief Executive Officer, replacing Dan Akerson when he retires next month. Here’s the GM News release. Mary Barra will be making history as the first woman to ever lead GM — or any global automaker — as Chairman and CEO, and that’s certain to receive plenty of attention.
It’s also very important to look at her experience because she is a 100% GM insider. Barra rose through the ranks at GM as an engineer and engineering manager, starting as a co-op student at General Motors Institute (now Kettering University). She was named the senior VP for product development in 2011, and a few months ago, also assumed responsibility for GM’s global purchasing and supply chain organization (with a promotion to executive VP).
That last step — tying together global product development with global supply chain sent a very strong signal that GM expects to deliver innovative products through its relationships with suppliers. Selecting the executive holding that dual position as the CEO over others who have managed brands or regional operations says a lot about GM’s strategy for the future.
We regularly write about using your supplier base to bring innovation to your company, but here’s a twist on that theme. According to Crain’s Detroit Business, Ford patented a process for welding aluminum, then shared it with a supplier to develop the technology for production. The deal was made under the umbrella of minority supplier development because the supplier is minority-owned. But it also takes advantage of the supplier’s knowledge and experience. Who better to take an idea from the lab to the assembly line than someone who is already fabricating aluminum in production volumes?
There was a time when automakers would develop a new process from beginning to end, then simply dictate to suppliers how it would be implemented. In practice, that approach only gets you to the starting line. Sharing development responsibilities sets a better foundation for improvements even after the process is production-ready.
Automakers have a bad reputation for supplier relationships, so it’s good to see evidence of more collaborative approaches.
Posted in Auto Industry, Supplier Relations
Tagged automotive, Ford Motor Co., global business, manufacturing, minority supplier development, procurement, purchasing, sourcing, supplier innovation, Supplier Relations, supply management
A few years ago when the global economy was in a funk, companies could point to their own cash-flow problems as they extended their payment cycles to 90 or even 120 days. That’s a pretty hard case to make now that the economy has been growing for more than four years straight (according to the ISM Report
Nevertheless, it’s apparently not that uncommon still. In fact, British Prime Minister David Cameron has started talking about legislating limits to late payments. Here’s the coverage a Twitter follower of mine found in The Guardian.
Pushing payments out to four months certainly gives a boost to factoring companies, which will advance funds based on invoices. And it may help a company to winnow out weaker suppliers for components or services that are easy to source. However, for critical parts or strategic suppliers that are bringing your company innovations or unique value — slow payments are a good way to dry up the working capital your suppliers’ need for expansions, replacing equipment or R&D. Or worse, drive them to take their unique value to your competitors.
Time is running out for farmers and others to comment on new FDA rules covering produce farms, food processors and importers of foreign food products. The shock waves from outbreaks of food-borne illnesses led Congress to enact the Food Safety Modernization Act. The FDA was charged with turning the law into regulations, and the comment period for the proposed rules ends November 15.
The rules are creating significant headaches for growers because it is very difficult to anticipate the huge variety of conditions that actually prevail in farms across the country. For buyers the law, and the rules coming from, it demonstrate a significant shift from a system that reacts to an outbreak of an illness to a system intended to prevent the problems in the first place. That idea makes a lot of sense, but as the FDA points out — it is not just relying on more of its own involvement, but active participation from the food industry.
For instance, it requires in some situations that food importers verify that their foreign suppliers have had food safety audits. In other situations, where importers sell to other food processors, they will be responsible for monitoring their customers as well. All this underscores the wider role supply managers are fulfilling as consumers, and therefore, governments are demanding accountability throughout supply chains.
Here’s Food Safety Modernization Actfor the proposed new food safety rules.
U.S. Military procurement often takes a rap for inefficiency — true or not — but here’s evidence the brass are trying to “smarten up” their supply chain. According to Boeing, the U.S. Air Force has signed a master supply contract with Boeing that covers purchases for spare parts at all three Air Force repair facilities. Find the release here.
Negotiating a master agreement reportedly saved months of time and will create efficiencies delivering spare parts to fix or rebuild military aircraft. Of course, if these three operations have all been working on Boeing aircraft since the Air Force started buying from Boeing, one might reasonably ask, “what took so long to figure out one contract for all Boeing supplies was better than three?”
I expect the process was a lot more complicated than it might appear. These are huge operations in three different parts of the country that are responsible for about a dozen different kinds of transports, bombers and fighters deployed around the world. So we should give the Air Force it’s due — especially in this week when we honor our veterans. But it does beg the question for all of us – what obvious inefficiencies do we have in our own supply chains that we have lived with, ignored, perhaps whined about, but never addressed head-on, regardless of how intractable it might seem?
No matter what what it is, perhaps it’s time now to finally tackle that “elephant in the room.” Or perhaps we should say “C-130.”