GM’s supply chain spans over 21,000 businesses around the world. We spend approximately $90 billion – two-thirds of our automotive costs – on about 200,000 items representing a wide variety of raw materials, parts, supplies, freight, transportation and other services. These are delivered or provided to more than 170 manufacturing operations in 30 countries. Despite its great breadth, scope and complexity, we’ve found that working with our suppliers to improve our mutual performance leads to rapid and significant improvements in our overall impacts.
As an example, lifecycle analysis reveals that our greenhouse gas (GHG) impact is 10 times greater in our supply chain than in our own operations. By working with suppliers to reduce their own GHG emissions, we are able to reduce our overall impact.
Our supply chain is built on strong, transparent and trusted relationships, which are critical to ensuring product quality, availability and affordability for our customers. By seeking to be the partner of choice to suppliers, GM is better positioned to:
GM has renewed its commitment in recent years to work toward exemplary supplier partnerships built on integrity and shared values.
Our Senior Vice President of Global Purchasing and Supply Chain (GPSC) is a member of GM’s senior leadership team, which drives the company’s strategy. This officer is responsible for working with suppliers to accelerate innovation, eliminate waste and deliver superior financial performance, while ensuring that supply chain standards are defined and understood.
GPSC is reshaping how the company and its suppliers work together, partner for mutual success and deliver greater value for our customers. Priorities for this group include:
GPSC has two primary forums for formal supplier engagement. The GM Supplier Business Council consists of 12 global suppliers who meet monthly with our GPSC leadership team. The second forum is a global GM Supplier Business Meeting that we webcast to our suppliers 11 months out of the year to gain input and a consensus approach on GM-specific topics. Suppliers who participate in this webcast represent approximately 80 percent of our annual purchases for parts and services. This group also meets in person once a year. In addition, we have a dedicated internet portal for our suppliers to facilitate discussions on important issues, including policies, guidelines, standards and even our Sustainability Report.
We also place high expectations of excellence and ethical conduct on our suppliers, who are expected to act in a way that is consistent with our principles and values. Likewise, GM employees must hold suppliers with whom they work accountable for acting in a manner that is consistent with our Code of Conduct, Winning With Integrity.
Beyond our Code of Conduct, we outline our expectations for supplier conduct 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. We request that all of our direct suppliers certify compliance with these provisions of our contract. We follow up with those suppliers who do not confirm compliance. We also provide for our suppliers access to the GM Aware Line, Speak Up for Safety, Global Response Incident Reporting and other means to raise concerns.
Compliance within our supply chain is mandatory. When suppliers act responsibly, we reward them with greater business opportunities. Conversely, when suppliers act in a noncompliant manner, they may lose current work, future opportunities and/or their contract can be terminated. We monitor and receive feedback on supplier performance through various tools such as Strategic Supplier Engagement and supplier business review meetings. Our Supplier of the Year program recognizes best performers.
Across the globe, we hold various workshops and provide external training to improve supplier operations, primarily in the areas of efficiency, environmental management, workplace conditions, ethics and human rights.
We require our direct or Tier I suppliers on a global basis to also require their direct suppliers to meet in-country environmental 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.
We have a multipronged approach to identify risks in the supply chain and use a variety of tools and outside resources to improve tiered visibility into our supply chain. One of this resources is Resilinc, a leading provider of comprehensive end-to-end supply chain resiliency solutions that include powerful supply chain mapping and analytics capabilities. In conjunction with Resilinc, our model provides real-time, 24/7 alerts to potential global supply chain disruptions caused by such events as labor disputes, human rights abuses or natural events. We have worked with Resilinc to map all Tier I suppliers globally, as well as 20,000 Tier II suppliers. This has significantly enhanced our supply chain resiliency with improved visibility into potential disruptions and faster responses to crisis events.
An ongoing challenge for us is striving for a sustainable and socially responsible supply chain without adding more complexity and burdens to our supplier relationships. 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.
GM works closely with many industry and supply chain-focused organizations, including the Automotive Industry Action Group (AIAG), the National Institute of Standards and Technology (NIST), iPoint and the International Automotive Task Force (IATF). Our GM Europe and Opel operations also have joined the CSR Europe Automotive Working Group.
Industry collaboration groups are a primary forum for developing and sharing responsible supply chain practices across other automotive OEMs, Tier I and sub-tier suppliers. For example in the U.S., we are actively engaged in the AIAG and leverage its sponsored membership program to enable free membership for small sub-tier suppliers. This allows key information and tools such as responsible supply chain training materials, self assessments, best practices and standards, currently available to Tier I suppliers, to cascade to the sub-tier supply base. Each tier is responsible to ensure that their sub-tiers have compliance programs. We also require all of our supplier quality employees who visit supplier facilities to take AIAG training regarding responsible working conditions, including child labor.
GM formally supported the AIAG’s Guiding Principles to Enhance Sustainability Performance in the Supply Chain. These principles are targeted at the entire automotive supply base and were launched in partnership with CSR Europe. GM supported this initiative by having its director of sustainability represent the company on the AIAG Corporate Responsibility Steering Committee and actively contribute to the development of the principles. GM has also communicated these principles on its website dedicated to all suppliers.
Additionally, very specific requirements regarding responsible supply chain practices have been added to the new IATF 16949 Quality Standards.
These requirements include:
This was the result of global industry collaboration between several standard-setting bodies OEMs and Tier I suppliers. Compliance to the IATF 16949 is a requirement for GM suppliers and needs to be met by 2018. Supplier quality audits will enforce highlighting the importance to our company of responsible business practices.
Localization is another important tenet of our value chain. When we build where we sell and buy where we build, our vehicles are more competitive because they enjoy pricing benefits and can be built to suit unique local requirements 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 natural, political or other causes. Furthermore, when we work with local suppliers, we also support the local economies of communities where 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 logistics planning to maximize the benefits of localization.