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Supply Chain At-A-Glance

Supply Chain

Strengthening environmental stewardship and social responsibility in our supply chain

  • Garnered a record 77 percent participation rate among suppliers in our voluntary CDP Supply Chain disclosure program.
  • Initiated a green supply chain project in China to engage suppliers in a year-long energy reduction program.
  • Joined the U.S. Materials Marketplace pilot program to identify ways to reuse or exchange undervalued materials via an online database and establish new circular supply chains.
  • Reduced CO2 emissions intensity (measured as grams per ton-mile) of outsourced transportation in the U.S. and Canada by 18 percent based on EPA SmartWay data.
  • Find ways to promote transparency and sustainability among suppliers without adding duplicative tasks and complexity.
  • Evaluate monitoring tools and engagement opportunities to strengthen our supplier relationships around sustainability efforts.
  • Expand the scale of our product life cycle analysis to better understand where our greatest environmental impacts occur in the supply chain.
  • Increasing transparency within our multitiered supply chain to better manage various risks and collaborating with others in the industry to improve supplier management techniques.
  • Educating suppliers about the importance of obtaining smelter information with respect to conflict mineral use and encouraging smelters to join the Conflict-Free Smelter Program.

Approach

Supply chains built on strong, transparent and trusted partnerships are critical to ensuring product quality, availability and affordability for our customers.

These partnerships help us to:

  • Accelerate innovation to bring the newest technologies and innovations to our customers.
  • Improve our business competitiveness and lower business risks.
  • Eliminate waste from value streams and deliver defect-free vehicles.
  • Position us as a customer of choice so that we can develop transformative transportation solutions for industry and societal challenges.

In return, we offer suppliers opportunities to realize significant scale and growth potential for their businesses. Given these mutual benefits, GM has renewed its commitment in recent years to work toward exemplary supplier partnerships built on integrity and shared values.

Among the tools helping us to strengthen partnerships is our Strategic Supplier Engagement (SSE) Program. The program is a robust and transparent communication process that improves our information sharing with suppliers who represent more than 80 percent of our annual spend. SSE promotes collaboration, builds strategic relationships and increases alignment between GM and our suppliers through a transparent rating system that assesses business and cultural priorities. Suppliers who rate highly on both have increased opportunities to partner with us in areas such as technology visioning, strategic planning and training. Strategic Sourcing Process (SSP) is a sourcing model tool that helps us “frontload” suppliers early in the vehicle development process to enable input into design and cost elements before design is finalized. We also are enhancing transparency on cost structure and identifying waste elimination opportunities by using a One Cost Modeling tool in order to produce a part.

All-new Chevrolet Volt drive units await final assembly.

Localization

Localization is another important tenet of our supply chain philosophy. We prefer to build where we sell and to buy where we build. This enables our vehicles to be more competitive because they’re built to suit unique local requirements and conditions that drive customer enthusiasm and brand loyalty.

Localization also lowers risks by increasing the flexibility of our supply chain to respond to disruptions caused by nature, politics or other causes. Furthermore, when we work with local suppliers, we also support the local economies of the communities in which we operate and realize environmental benefits by helping to minimize shipping, thus reducing fossil fuel use, carbon emissions and material use. GM works cross functionally through its product development activities, sourcing activities and logistic planning to maximize the benefits of localization.

The degree to which we can localize our supply chain varies around the world, depending on local supplier resources. We estimate that in North America and South America 70 to 80 percent of procurement is sourced locally compared with Europe and our international operations, where 60 to 70 percent is procured locally. In China, we estimate more than 80 percent of procurement is from in-country.

GM assembly parts being inspected, packaged and shipped at the GM Customer Care & Aftersales Plant in Burton, Michigan.

Supply Chain Governance

We expect our suppliers to be fair, humane and lawful employers, as well as solid environmental stewards and responsible managers of dangerous goods or hazardous materials.

These expectations are specifically outlined in purchase contract terms and conditions, which clearly state our prohibition against any use of child labor or any other form of forced or involuntary labor, abusive treatment of employees, or corrupt business practices in the supplying of goods and services to us. Furthermore, our contracts lay out expectations for lawful compliance with data protection and privacy, wages, hours and conditions of employment, subcontractor selection, discrimination, occupational health/safety and motor vehicle safety. In 2015, we requested that all of our direct suppliers certify compliance with Section 31 of our contract, which specifies lawful compliance for suppliers, and we followed up with those suppliers who did not provide certification.

We require our Tier I suppliers on a global basis to source from Tier II suppliers who meet in-country environment and safety standards, as well as quality standards. However, visibility into supplier relationships, especially at lower levels of the supply chain, is a challenge. We are working to better understand how to manage the risks associated with a multitiered supply chain and continue to collaborate with others in the industry to improve these areas.

An ongoing challenge for us is to advocate for a sustainable and socially responsible supply chain without adding more complexity and burdens to our supplier relationships. This is why we continue to believe that collaboration among auto manufacturers makes sense, particularly given the level of common suppliers among the major automakers. This approach also helps ensure that automotive suppliers are not overburdened by duplicative OEM efforts and have a shared understanding of the key issues up and down the supply chain.

To help guide industry collaboration and individual company efforts, GM and the other OEM members endorse the Automotive Industry Action Group (AIAG) Corporate Responsibility Guidance Statements, which provide guidance on business ethics, global working conditions and environmental responsibility.

Supply Chain Responsibility Training is another way in which we collaborate with AIAG. This training highlights fundamental principles of responsible working conditions and expectations of GM and the other AIAG auto company members, all of which contributed to developing the content of the training. Participants review in detail the areas of child labor, forced labor, freedom of association, harassment and discrimination, health and safety, wages and benefits, working hours, business ethics and environmental responsibility. In 2015, we required all of our employees in Supplier Quality that visit supplier facilities to take AIAG training regarding child labor. AIAG, other AIAG members and GM currently have plans in place to expand this outreach to additional countries in 2016.

In 2014, our efforts focused on updating our training outreach plans around a three-pronged approach – self-assessment, web-based training and in-person workshops using case studies for practitioners. Our goal was to leverage this revamped approach to engage suppliers beyond Tier 1, and we piloted the new program with suppliers in several countries in 2015. AIAG, other AIAG members and GM currently have plans in place to expand this outreach to additional countries in 2016.

Vauxhall uses 170 components made of recycled materials in Opel's ADAM, a city car.

Sustainability Initiatives

Transcending the effort to build stronger supplier relationships is the recognition that we can strengthen our supply chain by eliminating waste of every kind – opportunity, spending, talent, materials, time and energy, to name a few.

An efficient supply chain is one that optimizes every type of capital input. By realizing these efficiencies, we build a more sustainable supply chain. Currently, our work is focused in several areas:

Conflict Minerals

Annual SEC disclosure of conflict mineral sourcing is fully integrated into our business processes. A dedicated team conducts due diligence, analyzes findings and reports conflict mineral information from our supply base that encompasses more than 2,500 supplier locations. Governance processes include a compliance committee of multifunctional GM leaders and an executive steering committee to provide leadership and direction for the program.

Beyond our own reporting activities, we continue to collaborate with others in the industry to educate suppliers. We co-chair the AIAG Conflict Minerals Work Group, which works on common automotive industry solutions with other OEMs and suppliers. Through our membership in the Conflict-Free Sourcing Initiative (CFSI), we help fund an audit program to increase the number of smelters and refiners in the Conflict-Free Smelter Program. Through the end of 2015, 78 smelters and refiners have been contacted by GM and encouraged to complete the audit program so that they can join this program. We also work with our own supplier base regularly to increase education and awareness, including conducting periodic webinars and providing a dedicated email contact to answer specific questions.

CDP Supply Chain

Life cycle analysis (LCA) is an ongoing area of focus in order to help us better pinpoint where our greatest environmental impacts occur in the supply chain in order to prioritize our resources. LCA findings are leveraged to target suppliers for participation in our CDP Supply Chain program, a voluntary initiative intended to help increase engagement with suppliers on environmental performance and disclosure, particularly around reducing CO2 emissions and water use. In 2015, we used LCA findings to identify and invite over 200 suppliers to participate in our third annual CDP survey and were pleased to see response rates rise to a 77 percent level – a record level that represents nearly 75 percent of our supply chain spend. Annually, we continue to see that more suppliers not only participate in this program, but also are highly engaged in integrating resource-reduction initiatives into their business strategies.

In 2015, nearly 70 percent of our responding suppliers reported their Scope 1 and Scope 2 emissions and disclosed the type of standard, protocol or methodology by which they collected and calculated this data. We also discovered that nearly half of our respondents have targets to reduce their emissions, and more than 60 percent of respondents have initiatives in place to actually do so. Additionally, some suppliers who responded to the survey also participated in the CDP Action Exchange, which provides a detailed analysis of opportunities to reduce carbon footprints. As seen in the supplier water questionnaire, 35 percent of suppliers have companywide targets related to water, and over 30 percent reported that they have actually integrated water and wastewater management into their business strategies.

While our suppliers are making progress on water and reducing emissions that lead to climate change, there is still room to further improve upon reporting behavior as well as their strategic and tangible environmental initiatives. Together with our suppliers, we continue to seek ways to partner to minimize the environmental impacts of our collective value chain.

Recyclates may even be superior to new plastic products, as they are less prone to warp and expand or contract.

The U.S. Materials Marketplace

During 2015, GM co-championed with Nike to form the U.S. Materials Marketplace, a new joint pilot project led by the Corporate Eco Forum, the U.S. Business Council for Sustainable Development and the World Business Council for Sustainable Development (WBCSD). The project, which brings together 20 companies, is intended to help participating companies identify ways to reuse or exchange undervalued materials via an online database and establish new circular supply chains. Participating companies are expected to benefit from:

  • Lower operational costs due to cheaper feedstock and reduced waste disposal costs.
  • Reduced carbon emissions as a result of the increased reuse and recycling of commodities
  • Reduced environmental footprint by avoiding waste disposal and raw material purchase
  • Enhanced social and economic impact through new business opportunities and jobs
  • A collaborative and dynamic business network allowing for exploration of new pathways for materials with like-minded colleagues

Lessons learned from the pilot will be used to scale up materials reuse projects worldwide, notably through WBCSD’s Global Network of business councils. The U.S. Marketplace received the Digital Disruptor award at the 2016 World Economic Forum in Davos, Switzerland.

China Green Supply Chain Project

During 2015, GM China initiated a green supply chain project in which 10 suppliers are committed to reducing their energy impact while growing their businesses. The year-long program aims to realize a 10 percent improvement in energy use through supplier training, third-party energy audits and implementation of conservation projects recommended by an external consultant. This green supply chain project models a successful program implemented by GM at two of its joint ventures with 400 suppliers between 2008 and 2013.

Vauxhall Recyclates

Vauxhall has been working for more than two decades with recyclable materials – known as “secondary raw materials, or recyclates” – to save primary raw materials and energy. Today, more than 200 recyclates are used across the Vauxhall portfolio as part of Vauxhall’s compliance with the EU End-of-Life Vehicle directive, requiring that 95 percent of every new vehicle be recycled. Current U.K. legislation also requires that all OEMs and vehicle importers of new cars in the U.K. take back vehicles from last owners or keepers at the end of the vehicle’s life to ensure that disposal is done in an environmentally responsible manner. Vauxhall works with Autogreen Ltd, which manages free take-back of Vauxhall vehicles through a Rewarding Recycling program. To date, more than 1.25 million vehicles have been collected for scrap reuse.

Other 2015 Activities

Our operations around the world seek out opportunities to enhance supply chain governance processes and minimize impacts. Some examples from 2015 include:

  • GM Ecuador collaborated with Suzuki to reduce metal scrap waste generated by nonreturnable steel shipping boxes. Working together, we designed new reusable boxes that can make at least 10 trips across the Pacific to avoid approximately 300,000 kg of metal scrap annually.
  • GM Korea started the Cooperation-Coexistence Program for Environment & Safety to evaluate suppliers’ work conditions regarding the environment and human rights. A committee evaluated 23 suppliers and recognized those best protecting against industrial accidents and ensuring basic human rights for their employees.
  • GM India worked with the Logistics Service Providers to organize a training and recognition day for logistics drivers.

Uwe Ruster, Opel Lead Engineer Recycled/Sustainable Materials, presents a water deflector made from recycled plastics.

Partners in Progress

When we set out to create the Chevrolet Bolt EV, we put aside traditional vehicle development and turned to an unprecedented supplier relationship with LG.

2017 Chevrolet Bolt EV (pre-production model shown)

The partnership combined LG’s expertise in infotainment, battery systems and component development with GM’s proven in-house capabilities in electric motor design, battery control, system validation and vehicle body-system integration.

GM and LG engineers considered different vehicle architectures, electric driving ranges and performance options for the Bolt EV before deciding the vehicle must be affordable and deliver 200-plus miles of all-electric driving with spirited performance. LG supplied an array of new components and systems for the Chevrolet Bolt EV, including:

  • Electric drive motor (built from GM design)
  • Power invertor module (converts DC power to AC for the drive unit)
  • On-board charger
  • Electric climate control system compressor
  • Battery cells and pack
  • High power distribution module (manages the flow of high voltage to various components)
  • Battery heater
  • Accessory power module (maintains low-voltage power delivery to accessories)
  • Power line communication module (manages communication between vehicle and a DC charging station)
  • Instrument cluster
  • Infotainment system

LG Electronics has invested more than $250 million in an engineering and manufacturing facility in Incheon, South Korea, to support the component development and manufacturing for Bolt EV components.

GM’s relationship with LG began in 2007 when LG Electronics was tasked with supplying the vehicle communications module for OnStar, GM’s exclusive telematics system. Another LG-owned company, LG Chem, and GM have a long-standing relationship: The company was chosen as the sole supplier of battery cells for the first-generation Chevrolet Volt, which launched in 2010. 

After delivering exceptional quality for the more than 23 million cells with fewer than two problems per million cells produced for the first-generation Chevrolet Volt, GM turned to the LG Corp. to bring forward new expertise from LG Electronics and other LG companies. The agreements encompassed supplying components for the Bolt EV and marked the first time that GM integrated a full EV component supplier so early in vehicle development. 

GM’s component strategy is centered on three options: build, buy and partner. Where it makes economic and strategic sense, GM will build some of its own components. Others will be purchased directly from suppliers with the most expertise in a particular discipline. And, as in the case of LG, GM will partner with a supplier to leverage its own engineering with the supplier to develop unique strategic systems and components.