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been limited to the basics parts ordering or submission of warranty claims and financial reports. GM is also piloting a program that deploys one personal computer (PC) for every two service bays at dealer locations to support integration between service and parts and GM. Early tests at Saturn have shown that GM can centrally manage parts inventory at the store level with this system, increasing inventory turns and first-time fill rates and lowering retail inventory levels. GM s IT strategy is working. The company has taken an additional $1 billion out of IT expenses related to the supply chain since the OTD initiative was launched. The focus on process first and technology second has had a bonus effect. Explains John Whitcomb, GM director of global sales, service, and marketing, Once people have a common understanding of business process, which is manifested by the workflow, the discussion about legacy components becomes much more fact-based. You remove the emotional arguments about keeping those systems which people have grown comfortable with.
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What s next for GM s OTD transformation Reduced cycle times and lead times. More personalized vehicles with special accessories and features. Better integration with dealers, who have already embraced the VOM system and several other Web-based tools that are being built into an integrated workbench. GM is also looking at more build to order through the dealer channel, which is valuable for its high-touch, high-tech capabilities, and a more flexible supply base. It s looking at more commonality among global systems and processes. There really is no end point to an initiative like this, says Ross. We expect to continue on this improvement trajectory for the next several years, providing more competitive advantage for GM and setting new standards for customer satisfaction.
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GM SERVICE AND PARTS OPERATIONS A TRANSFORMATION OF ITS OWN
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The story of GM s supply chain transformation would not be complete without a discussion of another, parallel effort to transform the supply chain of GM Service and Parts Operations (SPO), another key factor in customer satisfaction.
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The SPO supply chain is complex: 400,000 order lines every day, generating requirements for 600,000 part numbers from 4,100 suppliers. In the mid-1990s, GM SPO lagged the service parts operations of OEM competitors in several measures by a wide margin. Costs, inventory levels, and response times were all out of line with the competition. To make matters worse, GM s dealers service parts business was hurting. Faced with new competition from quick service chains, dealers with slow response times were having trouble holding onto customers beyond the warranty period. Today, however, the organization is focused on closing the gap with the competition, and GM SPO is setting its sights for top performance in the industry. By focusing on five common objectives, SPO has been able to align all of its people and energy behind a common strategy. According to Dennis Mishler, GM SPO s director for logistics and supply chain management, We focus everyone on better serving the customer through improvements in order response time, material availability, inventory management, value creation in logistics, and new-launch support. We learned quickly that change cannot come from spreading ourselves too thin. We say, The main thing is to keep the main thing the main thing. FOCUSING ON THE CUSTOMER The main thing for SPO is the customer. The group recognized that its supply chain was defined by the needs of its customers, and therefore, the most important guiding principle for the transformation effort should be to make it easier for SPO s customers to service the end customer. In fact, SPO realized that it was serving multiple supply chains, each with varying requirements. There are three separate brands and multiple product-line businesses covering collision, powertrain, maintenance, and repair, as well as accessories. IMPROVING ORDER RESPONSE TIME To provide dealers and retailers with better service, SPO had to improve order response times and delivery reliability. So it implemented a one-day delivery policy for most customers, shipping overnight or in some cases the same day. Meeting the new delivery
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