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Drawing Data Matrix 2d barcode in Software Copyright 2005 by The McGraw-Hill Companies, Inc. Click here for terms of use.

Copyright 2005 by The McGraw-Hill Companies, Inc. Click here for terms of use.
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of the game whether or not the vehicles being made were the ones customers wanted.
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By the late 1990s the need for change was becoming clear. Consumers were more savvy, powerful, and demanding. Yet GM s responsiveness lagged the industry. Dealers grew increasingly frustrated by the mix of inventory foisted on them. Even in key markets, dealer lots were clogged with over 100 days of supply. To clear out slow-moving products, GM had to offer sales incentives, which squeezed profit margins. Dealers couldn t get the vehicles they wanted the vehicles their customers wanted. Desirable options such as aluminum wheels, leather interiors, and V8 engines often were not available in adequate quantities. Unavailable options, or constraints, were high at GM dealerships relative to the industry as a whole, averaging tens of thousands of orders affected at any given time over the range of GM products. This meant that customers could rarely get their first-choice vehicle. As a result, they often settled for more basic, lower-margin models, which ultimately hurt GM s bottom line. Customers who chose to special-order a vehicle had to wait as long as 70 to 80 days for it to arrive. Furthermore, GM was uncertain of its delivery-date reliability because delivery-date promises were not tracked at the time, and neither dealers nor customers had any way of checking on the status of their orders there was no visibility into GM s order-fulfillment process. At the same time, the company s supply chain costs were growing. High levels of raw materials and work-in-progress inventory, inefficient processes, outdated information-technology systems, and bloated overhead resulted in a costly, sluggish organization at a time when streamlined operations were becoming more and more critical. Now, with market share down and Internet-driven change on the horizon, GM knew that it could no longer operate as it once had if it hoped to remain a market leader. Change at the mammoth company wouldn t be easy. After all, GM makes over 30,000 vehicles every day, using over 160,000 parts from a vast network of global suppliers a staggeringly complex undertaking. Brad Ross, head of GM s global order-to-delivery (OTD) organization, describes the process as a tremendously orchestrated set of events that integrates orders across sales, manufacturing, and logistics, resulting in what we refer to as the daily miracle of production.
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GM s OTD process encompasses four of the Supply-Chain Operations Reference-model s key supply chain processes plan, source, make, and deliver. Given this complexity, transforming OTD would be like turning the Titanic around on the Flint River, notes Kutner. Yet that s what GM set out to do. The goal To ship customer orders in less time, with less inventory, at a lower cost and to satisfy customers better than anyone else in the industry.
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GM s ambitious undertaking meant moving from a make-and-sell to a sense-and-respond organization. First, the company had to start tuning into what customers wanted by sensing the marketplace better. GM had been making the wrong products. Its declining market share and the glut of inventory at the dealer lots were proof of that. Notes Ross, In this business, product is everything. The supporting processes are important, but without the right product in the right place at the right time, you re not even in the game. Second, GM had to put in place an organization that could respond more quickly and effectively to customer demand and provide better service quality. This meant rethinking key processes and replacing the functional mind-set with a more cross-functional, collaborative approach. The Internet became a critical tool for sensing consumer preferences and market trends. In collaboration with dealers, GM developed BuyPower, an online portal that lets potential customers get detailed product and dealer information. By monitoring the click streams of online shoppers doing vehicle research, GM now gains a wealth of information that helps with product development, production planning, and sales forecasting. The company also set up dealer councils, regular forums for getting dealer input on consumer trends and better ways to sell. To align real demand with production schedules and provide visibility into the OTD process GM upgraded its vehicle order management (VOM) system to allow dealers access through the Internet. Previously, customer-specified orders went to the end of the manufacturing queue, which is why lead times were so long. Dealers were unable to specify the mix of inventory they wanted. Instead, GM pushed inventory to the dealers. With the new VOM system, dealers place orders for the vehicles they want on a weekly and daily basis and can see the status of those orders as they move through the order-fulfillment process. Using the new system, dealer orders are automatically compared with the current manufacturing schedule. In the past, GM often built the
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