GM Europe is in the middle of a hectic launch schedule of eight models in two years. Bo Andersson, right, vice president of purchasing, and board member for purchasing at Adam Opel AG, talked with Automotive News Europe reporter Edmund Chew about the issues facing his department and its relationship with GM suppliers.
What are the major challenges facing GM's purchasing operation?
We are launching many new products. The Astra was launched in 1998. The Zafira, updated Vectra, and Omega are being launched in 1999. The new Corsa, a new mini, the Speedster, a coupe and a convertible come next year.
The major focus is making sure that the new products come to market on time and with the right quality. With a new product, 70-75 percent of the parts come from outside suppliers. I want to create a balance in purchasing between quality and cost requirements and launch [deadlines].
What are you doing on product quality?
Quality has been our major focus during the past few years. The recent launches of Astra and Zafira are encouraging examples of our quality strategy - the consequence of a 16-step quality process during development, launch and production.
One of the major demands is to have all of our suppliers QS9000 certified. To date, we have been very successful and 74 percent of our European suppliers are QS9000 certified.
What are you focusing on during the launch phase?
We have worked very hard to have the same quality standard both short term and long term. For example, when we started up the Zafira we put much more emphasis on the launch performance. You cannot do that if you do not have a reliable supplier base. The successful supplier in the launch phase needs to have a lot of flexibility, because more and more of our cars are sold on a customer order basis. We need to have suppliers that are very flexible on their production volumes and their deliveries.
What level of cost reductions are you looking for from suppliers?
We expect our suppliers to continously improve productivity and to develop and use the newest technology in all their processes. Based on our experience, 3 percent is an appropriate number for an annual reduction of cost that we expect all our suppliers to achieve. Some suppliers have faster technology changes and are able to achieve bigger improvements.
Apart from quality, launches and cost, what other targets do you have in purchasing?
The key focus when we purchase is new technology. It is becoming indispensable that suppliers offer advanced technology and that we work together to bring it quickly to market.
This is helping us and them to offer the best performance to the end customer and prepare the foundation for common future developments.
Management of their own supplier base is one of the biggest challenges facing our major suppliers. This is one of the big differences between the very good and the more average suppliers. We see big differences in how companies run their program management.
Are you outsourcing more on future vehicles?
There is a constant change to modules and systems on future vehicles. We have introduced four or five new module systems on each new car. It depends on the design of the vehicle and the expertise we want to use from suppliers. Some components are too critical for us to source from outside.
You will add a supplier park at Russelsheim for the next-generation cars. How many suppliers do you expect there?
We are looking for about 25-30 modules or systems that will be assembled close to our factory and sequenced into the plant.
Will you establish supplier parks at Bochum and other facilities as well?
We had a successful startup last year at Bochum for the new Astra. We already have a lot of sequencing in Ellesmere Port (UK) where we have a small business park. If Russelsheim goes well, our intention is to continue with the small-scale business parks at our other major facilities.
What kinds of modules are you considering?
We are looking at the instrument panel, door modules, and axles. We already use seat and outside exhaust modules.
What determines whether a module is interesting?
In general, everything that can be brought into the plant in one piece is interesting from a systems and module standpoint. Together with engineering and suppliers, we are constantly working on new concepts.
What do you think of the wave of consolidation in the supplier industry?
I think it is a normal process in this industry. Some of these suppliers are growing a lot and there are very major benefits for us as a customer, but there are also some threats.
What are the benefits?
Volume gives you a major advantage. When we look at technology leadership, we see that some of our suppliers are technology leaders with a two, three or four year advantage over the rest of the supplier base.
Another thing is global platforms. Today, the big players have no problem providing us with global volume for a global platform. If you have a local supply base, you will not get that capability.
What kind of problems will you be looking out for?
There is some risk that the structural cost of the big supplier might become a disadvantage, lose some speed and become more bureaucratic. Communications complexity also usually increases.
Are you going to change the total number of suppliers?
That is not an objective, but with new car platforms we will have more modules and more systems. For instance, we used to use 12 suppliers on fuel tanks. Today we have one system integrator responsible for the complete fuel tank, including the fuel pump, assembly, and validation. This is the the right way to take away complexity and increase speed.
We want to have common suppliers in Europe. That was not traditionally the case. We had a UK supplier base, we had a Continental supplier base and we had a southern European supplier base. Today we increasingly have one supplier in Europe and sometimes that supplier will supply North America and Asia-Pacific.
Is there a shift in the regionality of your sourcing, and are you sourcing much more from eastern Europe?
Indirectly, our supplier base has sourced much more from eastern Europe. We have a lot of local sourcing for our new car in Poland, but from western European suppliers who established plants there.
What is different about the sourcing for the Opel Agila (based on Suzuki Wagon R) in Poland?
The product specifications in many cases are the same as on the Corsa or other Opel cars. We have a much smaller supplier base than we have on any other product. This is because the design is easy to manufacture - Japanese companies are very good at this. They focus very much on simplicity in the design. The good thing for us is that we could still incorporate the Opel brand character and use some of the Japanese design. We could also use our purchasing policies.