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General Motors Supply Chain Case Study

General Motors Company (GM) applies strategies that utilize available technologies to address the 10 strategic decision areas of operations management (OM). In these 10 decision areas, operations managers identify issues linked to productivity and overall business performance. The strategic objective is to maximize operations management support for the achievement of General Motors’ business goals in the automotive industry. This effort should also contribute to the company’s ability to counteract competition with other large automobile manufacturers like Toyota (Read: SWOT Analysis of Toyota Motor Corporation). In addition, such maximization should come along with the minimization of operational problems that hamper General Motors’ productivity enhancement strategies. For example, operational problems in the decision area of process and capacity design could prevent the company from becoming more productive. In this regard, it is essential that General Motors’ operations management remain abreast with the latest solutions, including technologies, to achieve optimal support for the business organization.

The issues and opportunities determined in the 10 strategic decision areas of operations management should guide General Motors’ managers in strengthening competitive advantage. Competitiveness is a significant concern in the business, especially because of the aggressiveness of other firms. The Porters’ Five Forces analysis of General Motors Company emphasizes the need for such competitiveness in the automotive business. For example, competitiveness based on operational efficiencies can help protect the company from threats in its external environment. General Motors’ operations managers are continually searching for better solutions to challenges in the business. Such solutions must suit processes and productivity requirements in automobile manufacturing and distribution. In essence, highly productive operations translate to greater profits for General Motors.

General Motors Company’s Operations Management in the 10 Decision Areas

1. Design of Goods and Services. The decision in this strategic area focuses on how to fulfill the design requirements of products in the context of General Motors’ operations management. For example, the specifications for automobile manufacture are included in human resource planning, as well as cost effectiveness measures that operations managers implement in GM’s plants. Such specifications determine the applicable quality standards, as well as General Motors’ operational sustainability. One of the operations management aims in this decision area is to strategically maximize productivity within the operational limits based on product design. Such design is linked to the product mix element of General Motors’ marketing mix or 4Ps.

2. Quality Management. General Motors’ vision statement and mission statement address quality management by emphasizing value and technological breakthrough in business processes. This strategic decision area of operations management deals with quality standards and quality implementation based on customers’ expectations and automobile market conditions. In this case, General Motors’ operations managers implement a general set of quality standards for all products, with slight variations based on product types, models or variants. For example, universal quality standards are applied in terms of margin of error and quality of raw materials used in producing GM automobiles. High operational productivity is maintained partly by integrating quality standards in HR training to minimize errors in General Motors Company’s production processes.

3. Process and Capacity Design. In this strategic decision area, operations managers are concerned with optimizing resource utilization and standards implementation for effective and efficient production processes. General Motors addresses such concerns through an operations management approach involving cost minimization that does not reduce productivity in the automotive business. Lower costs empower the company to set competitive prices and maximize profit margins. This effort is possible partly because of General Motors’ generic strategy and intensive growth strategies, which involve cost-leadership. The capacity design of a GM plant depends on the product types, models, or variants that it manufactures. For example, the process and capacity design for a Chevrolet plant differs from the process and capacity design for a Cadillac plant. In this regard, General Motors has different sets of operational standards for capacity. Flexibility is also included in this strategic decision area of operations management. Such flexibility allows General Motors’ operations managers to ensure that manufacturing processes are productive in consideration of changes in issues in manufacturing and the automotive industry.

4. Location Strategy. General Motors Company’s objective in this strategic decision area is to optimize the location of operations based on the locations of resources and markets. The company’s operations management approach involves manufacturing hubs in strategic locations, such as GM plants in key areas in the United States and Southeast Asia. Such locations are selected based on a variety of factors. For example, General Motors’ operations managers use talent availability, supply sufficiency, and operational costs, among other factors, in determining the desirability of a location. Moreover, the company evaluates locations based on the costs of transporting and distributing finished products. For instance, a location is more desirable if it entails high productivity and lower costs of transporting automobiles from the manufacturing plant to General Motors’ dealerships. Thus, GM’s operations management is involved in cost-optimization for a limited number of facilities for this strategic decision area.

5. Layout Design and Strategy. High-efficiency flow of resources and information is the objective in this strategic decision area of GM’s operations management. General Motors Company addresses this objective through the integration of automation and carefully planned spaces. For example, operations managers are among the personnel responsible for ensuring that robotics are always available with minimal downtime in GM’s automobile manufacturing plants. In this way, General Motors’ productivity remains high through the automation of manufacturing processes. The company designs the layout of its facilities around automation as a key characteristic for this strategic decision area of operations management. For instance, basic layouts of General Motors’ manufacturing plants require spaces that allow personnel to efficiently move around. The same layouts allocate sufficient space for equipment involved in automated processes. Furthermore, General Motors’ layout design and strategy include operational considerations like assembly lines and corresponding movement of materials, intermediary products, and finished products.

6. Job Design and Human Resources. This strategic decision area focuses on operations management activities involved in maintaining sufficient human resources that effectively address General Motors’ automotive business needs. The objective is to use appropriate job design and HR programs to attract talent and develop the resulting human resources to support the business. For example, General Motors’ Technical Education Program attracts qualified workers who want to pursue their careers in an organization that supports continuing education and skills development. The implementation of job designs and human resource programs determines the interconnections among the company’s employees and helps define the organizational structure (Read: General Motors’ Organizational Structure). In relation, efforts in this strategic decision area of operations management are aligned with strategies for cultural support within the organization. For instance, General Motors’ organizational culture reinforces business goals while boosting employee morale and productivity. In implementing such job designs and HR programs, operations managers ensure that employees are highly productive and effective in contributing to GM’s operational success.

7. Supply Chain Management. In this area of operations management, the strategic decision focuses on maintaining adequate supply to General Motors Company. The objective is to maximize supply chain effectiveness and efficiency by solving operational barriers and bottlenecks. These barriers or bottlenecks limit or reduce productivity and capacity in automobile and parts manufacturing. In this regard, operations managers implement strategies that enhance General Motors’ supply chain. For example, programs for transparency and cooperation align suppliers’ growth and capabilities with GM’s growth and supply needs. Such programs are included in General Motors’ corporate social responsibility strategy, with suppliers considered as a stakeholder group. In addition, the company’s supply chain is highly productive through a proactive approach that addresses issues associated with external factors in the automotive industry. The PESTEL/PESTLE analysis of General Motors Company provides useful information for such proactivity in this strategic decision area of operations management.

8. Inventory Management. Operations managers deal with maintaining sufficient inventory that supports operational goals. In this case, the operations management objective is to ensure that General Motors’ inventories reinforce strategies for customer satisfaction and manufacturing schedules, while considering the limits of the supply chain. For example, the company must have sufficient inventory that anticipates fluctuations in market demand for GM automobiles, to satisfy customers’ purchases and contribute to customer satisfaction. In this strategic decision area, General Motors also determines inventory levels based on productivity requirements. Considering the assembly line processes in the automotive business, the company uses various inventory management methods, such as inventory serialization, the perpetual method, and the “first in, first out” (FIFO) method. These methods facilitate the fulfillment of General Motors’ goals and objectives in this strategic decision area of operations management.

9. Scheduling. Operations management processes must optimize resource utilization to satisfy customers’ demands. Thus, General Motors Company’s objective in this strategic decision area is to develop and implement suitable short-term and intermediate schedules for resource utilization. For example, operations managers implement intermediate schedules for adjusting the capacity and productivity of GM’s automobile manufacturing plants to match actual and forecasted demand. In relation, General Motors develops and implements human resource schedules to ensure that various processes of the automotive business are highly productive. The company’s operations management approach in this strategic decision area emphasizes the importance of flexibly scheduling resource utilization and business processes. Such flexibility enables General Motors to achieve high operational efficiency.

10. Maintenance. In this strategic decision area, General Motors’ operations management objective is to maintain processes for the achievement of business goals. For example, the company’s operations managers are concerned with maintaining automobile production processes and corporate office processes that satisfy productivity requirements. Process maintenance is partly achieved through the use of business strengths, such as economies of scale identified in the SWOT analysis of General Motors. For instance, economies of scale enable GM manufacturing plants to support initiatives for maintaining operational capacity that satisfies market demand. This strategic decision area of operations management presents General Motors with challenges, especially when implementing downsizing strategies that potentially reduce the productive capacity of the automotive business.

Productivity at General Motors Company

General Motors measures its productivity based on the operations of corporate offices, production facilities, the dealership network, and GM Financial. Each of the strategic decision areas of operations management employs a set of measures or criteria for evaluating productivity levels. The following are some of the notable productivity criteria used in the operations management of General Motors’ automotive business:

  1. Units produced per day (GM automobile manufacturing plant productivity)
  2. Units sold per month (Productivity in GM’s dealership network)
  3. Contracts per month (Productivity of GM Financial)
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10 Decision Areas of Operations Management, Automobile Industry, Automotive Industry, Case Study & Case Analysis, General Motors Company (GM), Operations Management

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Wayne State University’s School of Business Administration and General Motors are bringing some of the leading business students from across the country to Detroit for an in-depth look at the supply chain systems that support the automotive industry and its high-tech vehicles.

The third annual General Motors/Wayne State University Supply Chain Case Competition, featuring the 2014 Cadillac ELR will bring 20 university groups to the Detroit Marriott at the Renaissance Center from September 19 through 22, 2013.

The program will introduce students to the issues and challenges involved in producing leading technology vehicles through a case study.

They will examine topics such as component purchasing strategy, global vs. domestic sourcing, risk management, and battery production locations.

“This is an opportunity to showcase Southeast Michigan’s automotive industry and supply chain management careers in this region, as well as an opportunity to provide students an outstanding real world educational experience,” said John Taylor, associate professor and chair of the Department of Marketing and Supply Chain Management at Wayne State University’s School of Business Administration. “Additionally, students will have time to actually interview with automotive companies and participate in several panel sessions on supply chain careers,” said Taylor.

“On behalf of General Motors, we are honored to partner with Wayne State for a third year on the Supply Chain Case Competition”Bill Hurles, General Motors Executive Director of Global Purchasing and Supply Chain

Prior to their visit, the students will analyze sourcing options for the ELR battery and will study a number of supply chain management implications.

The teams will develop recommendations based on their investigation of the supply chain enterprise, data analysis and study of financial implications; and then present their findings to a panel of judges during the competition portion of the program.

The case was developed by title sponsor General Motors and fellow sponsors Delphi, Lear, DENSO and Ryder, in conjunction with WSU’s supply chain faculty. The competition also includes the sponsorship of the Detroit Regional Chamber and the Automotive Industry Action Group.

The ELR’s T-shaped battery pack is located along the centerline of the vehicle, between the front and rear wheels for optimal weight distribution. The 5.5-foot-long (1.6 m), 435-pound (198 kg) pack supplies energy to an advanced electric drive unit capable of 295 lb-ft of instant torque (400 Nm) to propel the vehicle. Using only the energy stored in the battery, the ELR will deliver a GM-estimated range of about 35 miles (56 km) of pure electric driving, depending on terrain, driving techniques and temperature.

“On behalf of General Motors, we are honored to partner with Wayne State for a third year on the Supply Chain Case Competition”, said Bill Hurles, General Motors Executive Director of Global Purchasing and Supply Chain.

“The competition provides students an opportunity to work as a team to solve real challenges faced by Supply Chain leaders today while developing their presentation skills, as they will present their findings to a panel of industry and academic experts. It’s also a great chance to network with other students and industry leaders from GM and our supplier partners.”

The case recommendations are prepared in advance to allow the students plenty of time to explore Detroit and the automotive industry during their visit. They will tour GM’s Hamtramck Assembly plant.

The 20 university teams will be divided into five groups and participate in a preliminary competition on Friday, Sept. 20. The winning semifinalist teams will receive additional information and prepare a second presentation for the competition’s final round the next day. Winning teams will be announced at the awards dinner on Sept. 21.

Participating Schools
Bowling Green State University
Colorado State University
Eastern Michigan University
Florida State University
Howard University
Indiana University-Indianapolis
Lehigh University
Miami University (Ohio)
Michigan State University
North Carolina State University
Northern Iowa University
Ohio State
Pennsylvania State University
Rutgers University
Syracuse University
University of Maryland
University of Memphis
University of Toledo
Wayne State University
Western Michigan University

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