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GM'S WORLDWIDE PURCHASING 'TOUGH BUT FAIR'

 TRAVERSE CITY, Mich., Aug. 6 /PRNewswire/ -- In bringing more value to its products and satisfying customers' expectations, General Motors (NYSE: GM) worldwide purchasing process must be "tough but fair if it is to support the success of both GM and our suppliers," Executive Vice President G. Richard Wagoner, Jr., said here today.
 Speaking to the University of Michigan's Automotive Management Briefing, Wagoner called the new process a "sound policy and a major contributor to the company's turnaround." Developed by GM using the best purchasing processes from its operations worldwide, today GM uses one common procedure worldwide.
 "This process is better for suppliers than the former decentralized one where buyers were focused on divisional results rather than GM-team goals for customer satisfaction," he declared. "Suppliers now deal with one organization in the U.S., rather than 27 purchasing organizations; one set of policies, and one approach rather than 27 different approaches."
 "It says to our suppliers, 'we want to work with you to assist you in becoming the most efficient and productive at your business in the world.' We want to assure that you have the highest quality products and can provide the kind of value our customers demand," said Wagoner, who has directed the company's Worldwide Purchasing Group since April 1993, and is also GM's chief financial officer.
 "The goal is long-term relationships for GM and its suppliers, with both on a world-class competitive basis," he said. "We want to be partners, but partners with very high mutual expectations. We can't hide from the marketplace while we absorb inefficiencies into our system. We want to establish long-term commitments through life-time contracts and open worldwide business opportunities for our suppliers."
 Wagoner said that GM's one common process for worldwide source selection and supplier development replaces separate purchasing activities in various GM operations. It incorporates a global sourcing concept for existing products and an advance purchasing concept to involve suppliers in development of new products.
 Noting that GM's purchasing process has received significant media coverage, he addressed three issues of concern to the company's suppliers:
 -- Clearly defining the role of the Automotive Components
 Group Worldwide (ACGW) as a supplier to GM. Worldwide
 Purchasing's objective, he said, is to evaluate the ACGW
 as a supplier using the same selection criteria and
 development tools as outside suppliers. This assures
 GM's customers the best products and also helps ACGW
 divisions to be fully competitive in the marketplace.
 -- Price is not GM's only deciding factor for selecting
 suppliers. Factors of quality, service, and price are
 weighed together, he said, "and we use specific
 quantitative measurement systems to ensure a supplier's
 performance justifies new business. Experience over the
 last 12 months shows that GM purchasing and the
 supplier's emphasis on quality has contributed
 substantially to GM's overall product quality
 improvement and its gains in customer satisfaction."
 -- GM respects its suppliers' legitimate proprietary
 technology. "This is a fundamental principle to the
 overall success of our purchasing strategy," Wagoner
 stressed, "because GM needs the full ability and
 creativity of its suppliers to satisfy our customers
 with the best, most-advanced technology and features on
 our vehicles. We will communicate up front with our
 suppliers on any intellectual or proprietary issues
 which may be involved in our sourcing process."
 "When suppliers have raised specific concerns relating to these criteria, we've investigated them," Wagoner said. "In those select cases where we've found shortcomings, we've addressed them."
 "The few cases that we've found are not representative of the hundreds of sourcing decisions that we handle each week, and the thousands of suppliers we work with every day in a professional manner," he said. But he urged suppliers to contact him or his executive directors with any concerns.
 Wagoner said he recognizes that some suppliers may feel uneasy with the revolutionary changes that GM has made in its purchasing process. The next steps will include seeking supplier's input as he and his staff refine the process.
 "I believe in this process," Wagoner said. "I watched it develop in GM Europe, actively used at GM do Brasil and manage its further development today. In the past 18 months we had to move quickly and decisively to make these changes to ensure that our customers would have the best products for the money they invest. Now, it's time to fine tune the process. While our commitment to the process remains firm, we will strive to do a better job to explain the process and ensure that suppliers have input and better understanding as we move ahead."
 Wagoner described three "improvement tools" GM uses to assist suppliers:
 -- "PICOS workshops" help suppliers identify and eliminate
 waste in their operations. Conducted in suppliers'
 plants, they focus on results achievable by applying
 lean manufacturing approaches, and consistently show
 double-digit efficiency improvements in the areas
 studied. He said this year GM plans to conduct
 approximately 1,500 PICOS workshops with suppliers
 around the world. Additionally, GM's internal
 operations plan to conduct 3,500 such workshops at their
 locations this year. Many of the PICOS workshops will
 be specifically designed to address quality
 improvements.
 -- "Common Enterprise" is a method to systematically
 eliminate inefficiency and waste through the complete
 "value added chain." Using PICOS tools, all operations
 are analyzed and improved starting with the raw material
 supplier, working through third-, second-, and first-
 tier suppliers, and continuing through the vehicle
 manufacturer. The purpose is to eliminate all steps and
 costs that don't contribute to customer satisfaction.
 -- "Creativity Teams" are multi-discipline groups organized
 and empowered to optimize the value of their respective
 commodity. These 325 cross-functional teams make
 improvements that benefit the entire NAO organization.
 "In the past 18 months," Wagoner said, "GM has gone through revolutionary changes that have changed the way we run our business. Today, everything we do is directed at satisfying customers. In the purchasing area our efforts are directed at continuously improving our processes and continuing to build strong relationships with our suppliers that make GM and its suppliers more effective and that also bring more value to our customers."
 -0- 8/6/93
 /CONTACT: Cheryl Kilborn of General Motors, 313-556-2035/
 (GM)


CO: General Motors Corporation ST: Michigan IN: AUT SU:

ML -- DE002 -- 0212 08/06/93 09:33 EDT
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Publication:PR Newswire
Date:Aug 6, 1993
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