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 leader 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 our suppliers work together, partner for mutual success and deliver greater value for our customers. Priorities for this group include:
It’s important to GM to gain supplier input on major process improvements and other issues that may affect them. GPSC has several forums for formal supplier engagement. The GM Supplier Business Council now consists of 19 global suppliers who meet monthly with our GPSC leadership team. In late 2018 we combined both the Supplier Business Council and the Diversity Council to enhance the collective voice and improve meeting efficiency. Another forum is a global GM Supplier Business Meeting that we webcast to our suppliers several months out of the year to gain input and a consensus approach on GM-specific topics. GM Chairman and CEO Mary Barra addresses this group during one of its meetings during the year. 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 2018, we launched a third forum for supplier input. The Supplier Safety Council will serve as a clearinghouse for supplier safety policies and best practices from across the supply base. This cross-functional Council meets quarterly to share lessons learned and best practices across the supply base. In addition, we have a dedicated internet portal (thru GM Supply Power) for our suppliers to provide and access best practices. GM encourages suppliers to use this information within their companies to facilitate discussions on important issues, including policies, guidelines, standards and even our Sustainability Report. During 2019, we will be evaluating supplier safety practices/involvement to identify a potential candidate for Supplier of the Year Award in 2020.
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 they work with accountable for acting in a manner that is consistent with our Code of Conduct, Winning with Integrity.
Our Supplier Code of Conduct and supplier contracts set forth expectations for ethical social, business and environmental practices; our major suppliers must certify compliance. Beyond our Supplier 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; anti-discrimination; occupational health/safety and motor vehicle safety.
By choosing to do business with GM, our suppliers accept our terms and conditions
By choosing to do business with GM, our suppliers accept our terms and conditions, and for our largest suppliers we also expect that they certify compliance with laws in the provisions of our contract. Additionally, we provide our suppliers with access to the same communication tools—the AwareLine, Speak Up For Safety, Global Response Incident Reporting and others—that our own employees use 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 webinars and provide external training to improve supplier operations, primarily in the areas of 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. The foundation of this process is our Built in Quality System (BIQS), consisting of IATF 16949 certification and BIQS Metrics requirements. This foundation allows us to cascade quality standards through tiers of our supply base. We aim for all of GM Tier I suppliers to achieve BIQS Level IV, the highest level possible. BIQS compliance also compels these Tier I suppliers to uphold the same quality standards within their own supply bases, since issues here can ultimately affect their quality performance.
Conflict mineral sourcing is another important supply chain area that we manage. Annual disclosure of conflict mineral sourcing is fully integrated into our business processes. Governance processes include a compliance committee of multifunctional GM leaders and an executive steering committee to provide leadership and direction for the program. A dedicated team conducts due diligence, analyzes findings and reports conflict mineral information from our supply base that encompasses more than 3,400 supplier locations. We have recently set an aspirational goal to achieve a 100 percent response rate from affected suppliers for submissions of the Conflict Minerals Reporting Template.
GM’s approach is to drive tiered supplier visibility as the key to moving from a traditional reactive crisis management approach to one of proactive crisis avoidance. Over the past few years, we have developed a robust in-house, customized supply chain visibility tool, which integrates GM plants, Tier I suppliers, known Tier II suppliers and logistics nodes. This tool gives us the capability to map the geographic locations and relationships across the GM supply chain. The tool also incorporates 24x7 monitoring—Global Incident Mapping (GIM)—of potential disruptive events that could impact our supply chain partners worldwide. Our Global Crisis Management approach has significantly improved the response to disruptive events in the supply chain through using innovative tools and real-time data analysis. We monitor for both catastrophic events (earthquakes, hurricanes) and isolated disruptions (factory fires, labor strikes), reporting all potential impacts to our Command Center’s Global Crisis teams for supplier follow-up. This approach supports zero production losses keeping material pipelines full, reduced premium transportation, alternative supply allocation planning and overall protection of supply for foreseen risks. We also provide risk scores to the Purchasing team, which are factored into the sourcing process and support mitigation plan development for high-risk areas.
Supply chain risks are also managed through our broader risk management functions and processes. All identified key risks are assessed, updated and reviewed by senior leaders at least twice a year. Within our Strategic Risk Management team, we utilize and offer a variety of decision-support tools, such as war gaming, game theory, scenario analysis, stress testing, sensitivity analysis and lessons-learned analysis. These techniques are applied across risk, functions and regions.
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 to develop sustainability and social responsibility requirements for our suppliers 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) and the International Automotive Task Force (IATF).
Industry collaboration groups are a primary forum for developing and sharing responsible supply chain practices across other automotive OEMs, Tier I and subtier suppliers. For example, in the U.S., GM employees maintain leadership positions in AIAG, provide direct financial support to the organization and leverage our sponsored membership program to enable free membership for small subtier 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 subtier supply base. We also require all of our supplier quality employees who visit supplier facilities to take AIAG training regarding responsible working conditions, including child/slave labor.
GM also was an active participant in the development of the AIAG’s Guiding Principles to Enhance Sustainability Performance in the Supply Chain. These principles target the entire automotive supply base. In addition, very specific requirements regarding responsible supply chain practices are part of IATF 16949 Quality Standards. These requirements include an employee code of conduct, antibribery policy and an ethics escalation policy ("whistle-blowing policy"). Compliance to the IATF 16949 is a requirement for GM suppliers. Our corporate goal was for 100 percent of our direct suppliers to be compliant by the end of 2018.
GM works closely with many industry and supply chain-focused organizations
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.