DETROIT - General Motors plans to have suppliers bid for parts contracts in live, online auctions over the Internet.
The automaker has hired FreeMarkets OnLine Inc. of Pittsburgh to co-ordinate the auctions.
GM would not discuss the move, and it is not clear how widely it plans to use the auctions. It is likely the auctions would supplement rather than replace GM's current purchasing practices.
The use of auctions is expected to add to the pressure on suppliers to cut prices.
The new program could send an implicit message: A supplier's long-term relationship with GM means little if the vendor cannot offer the lowest prices.
GM is pushing a major international cost-cutting campaign. The automaker hopes to reduce overall manufacturing costs by $4 billion this year, and suppliers are expected to generate a major slice of the savings.
Glen Meakem, CEO of FreeMarkets Online, did not offer details on GM's plans.
'If you scratch the surface, most customers don't know about alternatives to their current suppliers,' Meakem said. These customers 'are probably not dealing with a best-in-class supplier.'
GM has tested the auction system at least once. On 26 August, GM invited two dozen rubber suppliers to bid on contracts for various parts.