GM purchasing chief aims to improve supplier relations

Melissa Burden
The Detroit News

Drawing from his work at a supplier for 20 years, General Motors Co. purchasing head Steve Kiefer knows how to relate to their frustrations when dealing with automakers.

So he offered suppliers a chance to email him ideas that could improve quality and their, and GM’s, bottom lines.

“What I said to the audience was, ‘Think about those things when you’re sitting in your boardroom, and you say, ‘If General Motors would just do this, I could save them a ton of money, or give them a better product,’ ” said Kiefer, GM’s vice president of global purchasing and supply chain, who worked for Delphi Automotive before joining the automaker.

“And having been a supplier, I know we used to say it. We’d pull our hair out, saying, ‘Why won’t they let us help them?’ Not just General Motors, all of them.”

Kiefer, who since 2014 has headed the automaker’s $90 billion annual purchasing efforts from 20,000 suppliers, is acting differently.

He’s working to improve relationships with suppliers that haven’t always been the best. An external study released in May indicated GM is making progress. And this year, GM honored 110 companies as a Supplier of the Year, up from 78 in the previous year.

Kiefer called for those game-changing ideas at the 2015 event when he challenged the 78 winners. One came from Ray Scott, president of Southfield-based Lear Corp.’s seating division. GM is one of Lear’s top customers.

Scott said Lear pitched a first: Let’s look at GM’s current full-size Chevrolet Silverado and GMC Sierra truck platform, gather a group of interior suppliers to work collaboratively and see if quality can be improved, and costs saved.

The following participated: Inteva Products LLC, Mold Masters Co., International Automotive Components (IAC), Multimatic, TRW (now part of ZF) and Flex-N-Gate. They produce items as varied as headliners, door panels, carpeting, acoustic material and instrument panels.

“We brought in every one of the competitor vehicles,” Scott said. “We tore them down, we looked at the different innovation technologies, design ideas, we looked at specifications, we looked at proliferation, we looked at ways to optimize not just cost, but mass.”

For six hours one day last summer at Lear, executives from GM and the suppliers were on hand.

“In a manner of an afternoon, we got $20 million (in savings) approved through savings, mass, proliferation, specifications. We went through everything,” Scott added. “I think the lifetime savings is $50 million.”

And those savings were split, with the suppliers and GM benefiting.

Kiefer said some changes earmarked during the Lear and interior supplier review were implemented quickly and helped save money within months. The ideas shied away from major design changes, but instead focused on logistics and delivery changes, quality improvements and inventory ideas. One change included switching to a better-performing heating and cooling system for the trucks.

Lear in 2016 received GM’s Overdrive Award, one of three it gave out. GM recognized Lear for leadership in cultural change and for committing to initiatives that helped drive “exceptional business results” for the automaker.

And Lear wasn’t the only company to respond to Kiefer’s challenge. Other companies offered solutions with new technologies and changes to shipping containers and logistics to move parts.

“We implemented 60-some percent of them and millions of dollars in savings,” Kiefer said.

GM has collected internal and external feedback indicating suppliers are happier with their relationships with the auto giant than in the past.

GM moved up from the bottom into fourth place on the 2016 North America Automotive OEM (Original Equipment Manufacturer) Buyer-Supplier study that ranks the six largest carmakers by their relationships with suppliers. Those with the best supplier relationships receive the newest technologies, designs and prices. The study conducted by Planning Perspectives Inc. in Birmingham found GM has improved as it has revamped the purchasing department leadership, increased training and bettered its communication with suppliers.

John W. Henke Jr., president of Planning Perspectives, said Kiefer was the most trusted chief purchasing officer in this year’s survey of automakers. He said the idea of GM working with a group of suppliers on a product is unusual for a domestic automaker.

“What I think you see here is a maturing, a significant maturing of the way GM is working with suppliers,” Henke said. “This is incredibly important because the only way any OEM is going to be successful in the marketplace, is you have to work closely with suppliers to take cost out.”

Kiefer said other ideas were shared during the truck review that can be put into the next-generation truck. GM increasingly has been teaming up with key suppliers while the design process is still underway.

Lear is one that has been selected as the seat supplier on the next-generation Silverado and Sierra earlier than in the past. Scott said they are working with GM on the product a year before they typically quote a program.

“We’re able to really work with General Motors in a way that’s completely different. And the changes that we have coming in seats is absolutely incredible,” Scott said. “It’s giving the customer a much better value proposition. But it’s also hitting everything else that we talk about: quality, and mass, and cost.”

GM aims to save $5.5 billion in purchasing, manufacturing and administration expenses between 2015 and 2018. In the past, to achieve savings performance, GM would have done it in a “very heavy-handed way,” Kiefer said.

“You can get financial performance at the expense of the relationship,” he said. “What I’m most proud of is: I think we’re doing it in a very different way now where we’re getting it and growing the relationship.”