Supply Chain Metrics: General Motors Company

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Table of Contents

Introduction
The Flaws that Led to the Collapse
Indicators of the Collapse
Solving the Issues in the Company
The Company’s Future
Conclusion
References

Introduction

The success of a business highly depends on its supply chain metrics, which should be in accordance to its organizational goals. The metrics indicate performance, diagnose issues, suggest improvement and define expectations of a firm. If the metrics of a firm are properly formed, implemented, monitored and evaluated, they will lead to success. This case study discusses the effects of existence and lack of supply chain metrics of General Motors Company.

The Flaws that Led to the Collapse

There are various basic flaws in GM’s supply chain system that significantly contributed to the company’s collapse in the early 21^st century. The supply chain system personnel of the company were arrogant and did not care about the customers’ and dealers’ needs (Crumm, 2010). The company produced what they deemed appropriate and took it to the market for sale (they build the vehicles to stock and not for demand). The supply chain system lacked responsiveness at a time when the customers were more aware of their tastes and were more demanding. This was because of internet indulgence of the customers providing them with more market information on the commodities and services available in the market.

The supply chain system of the company also failed to follow up on the special orders that the informed customers placed on the market, causing delay in deliveries. There was the lack of visibility, which left the dealers and customers with no way of checking on the progress of the company on their orders. Increasing supply cost was increased by the lack of upgrades to the system, insufficient processes and the increase in the costs of raw materials and inventory costs (Cohen & Roussel, 2005). The various departments in the company kept pushing the customers’ orders back and forth to avoid responsibilities. All the abovementioned flaws were heightened by competition from rivals, causing the collapse of General Motors Company.

Indicators of the Collapse

Among the various indicators that showed the collapse would happen were the unsold stocks in the dealers’ premises. This was a clear indication of the fall in the demand for commodities and services for the company, and ought to have been looked into for better performance. The company failed to respond to the various constraints that were evidently pointed out by dealers and the customers (Crumm, 2010). The company lacked customer satisfaction drive and concentrated on stock, and this was its undoing since customers should be the main priorities.

Solving the Issues in the Company

However, the company, on noticing the collapse and dedicated its resources to come back to a leading position in the industry through various steps. The supply chain system increased responsiveness to customers by conducting market researches and introduced follow up programs on the customers’ orders. The company’s production aim was changed from being stock oriented to being demand oriented (Crumm, 2010). The company designed an approach to eliminate the various constraints in the supply chain system, which ensured better quality and services hence customer satisfaction.

Communication in the company was enhanced by getting all departments to work together for a common goal of customer satisfaction. Quality of the products and services were improved through reduction in the inventory levels (Cohen & Roussel, 2005). This reduced the costs incurred by the company as well as the time in which the products reached the customers. The metrics that were put in place were monitored and those that were working maintained. Those metrics that did not work as desired were either improved or dismissed.

The Company’s Future

In future, the GM’s OTD system aims to achieve reduced cycles and lead times. There will be production of more customized vehicles and parts as well as services. Through integration with dealers and increase in number of dealers, integration of the technology and advancing with changing times the firm aims to attain global systems and processes (Cohen & Roussel, 2005). The abovementioned changes will work towards the financial and strategic restoration of the company. The financial restoration may be effected through a reduction in inventory costs, quality improvement, and customer outreach. The strategic restoration will result from careful planning and formation of metrics by the involved departments and dealers to work towards the common organization goals through integration.

Conclusion

It is possible for the company to restore its leading position in the industry by adopting proper supply chain metrics that are focused on both the customer and the business. A large company takes time to adapt to changes in the market, and GM showed excellent responsiveness to stay in the market despite the collapse. The metrics they have already adopted presuppose a positive impact on both the customer and the business. The improvements to be made include order response time reduction, increase in material availability, improved inventory management, creation of logistic values, and search for more support from partners and customers.

References

Cohen, S., & Roussel, J. (2005). Strategic Supply Chain Management: The 5 Disciplines forTop Performance. New York, NY: McGraw-Hill.

Crumm, T. A. (2010). What Is Good for General Motors?: Solving America’s Industrial Conundrum. New York, NY: Algora Publishing.

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