Problems faced by GM in 1970Problems faced by GM in 1970

1- GM’s auto sales have declined from 1- GM’s auto sales have declined from about 60% to 28.3% today .about 60% to 28.3% today .

2- The company has been facing stiff 2- The company has been facing stiff competition from other companies .competition from other companies .

GM ServicesGM Services

1-Selling Cars Online1-Selling Cars Online

Gmbuypower.com 1- visitors can browse for GM cars ,search by 1- visitors can browse for GM cars ,search by

color ,options and availability color ,options and availability

2- find a dealer in their local area which 2- find a dealer in their local area which have the car they want to purchasehave the car they want to purchase

3- the site indicates the cars that dealers 3- the site indicates the cars that dealers currently have in their inventory currently have in their inventory

Selling cars online:Selling cars online:

Dealers must be trained to work with Dealers must be trained to work with customers who done online car research .customers who done online car research .

GMBuyPower has generated thousands of GMBuyPower has generated thousands of leads to dealers per day and more than leads to dealers per day and more than 20% of those leads convert into auto 20% of those leads convert into auto purchase purchase

2- Building vehicles to Order2- Building vehicles to Order

- - Building to order means : making cars that Building to order means : making cars that customers really want to buy customers really want to buy

- Reducing finished vehicle inventory costs , Reducing finished vehicle inventory costs , generate other production cost savings generate other production cost savings saving GM $20 billion per year .saving GM $20 billion per year .

- Heavy reliance on information technology Heavy reliance on information technology and organizational change and organizational change

The company would have The company would have to :to :

Take orders online link its factories Take orders online link its factories and suppliers online change vehicle and suppliers online change vehicle designs so they can be built more easily designs so they can be built more easily using modules cut shipping times.using modules cut shipping times.

This new system requires a reversal of the This new system requires a reversal of the traditional just-in-time trend .traditional just-in-time trend .

Continued:Continued:

Using the internet and systems from Using the internet and systems from vendors such as i2 & oracle and vendors such as i2 & oracle and seebeyond has increased efficiency in seebeyond has increased efficiency in supply chain management and product supply chain management and product delivery .delivery .

Order fulfillment lead time has been cut in Order fulfillment lead time has been cut in half .half .

Inventory costs have dropped 20% Inventory costs have dropped 20% Delivery date reliability has increased by Delivery date reliability has increased by

22% 22%

3- Online Services3- Online Services

OnStar :OnStar :

Subsidiary that provides a telematics system with Subsidiary that provides a telematics system with onboard navigation ,internet , safety and onboard navigation ,internet , safety and communications capabilities accessed through 3 communications capabilities accessed through 3 buttons on vehicle dashboards .buttons on vehicle dashboards .

- GPS keeps the system constantly informed as to GPS keeps the system constantly informed as to the location of the vehicle on the road .the location of the vehicle on the road .

- Onstar provides: emergency roadside Onstar provides: emergency roadside assistance, stolen vehicle tracking ….etcassistance, stolen vehicle tracking ….etc

OnStar SystemOnStar System

--users must pay annual subscription users must pay annual subscription fees ($17:70 per month)fees ($17:70 per month)

- This system is supposed to be very - This system is supposed to be very profitable to GM and generate great profitable to GM and generate great cash flows but this is not the case as cash flows but this is not the case as most users don't renew their most users don't renew their subscription after the first year subscription after the first year

4- Product Development4- Product Development

- GM has now mandated a single process and - GM has now mandated a single process and set of information system tools for product set of information system tools for product development that must be used widely .development that must be used widely .

- Every GM engineer and key GM subsystem - Every GM engineer and key GM subsystem supplier working collaboratively with GM’s supplier working collaboratively with GM’s engineers must use this system through a engineers must use this system through a web-based interface to share so everyone web-based interface to share so everyone can coordinate their work on the same can coordinate their work on the same design .design .

GM’s standardized tools enabled to cut GM’s standardized tools enabled to cut time to develop & produce a car from 48 time to develop & produce a car from 48 months to only 18 months and to slash $ 1 months to only 18 months and to slash $ 1 billion in annual engineering costs and billion in annual engineering costs and reducing assembling time from 32 hours on reducing assembling time from 32 hours on 1998 to 24.4 hours in 2003 . 1998 to 24.4 hours in 2003 .

This system enabled GM to compete in This system enabled GM to compete in both the price and generating new designs.both the price and generating new designs.

Despite of all that GM still have burden with Despite of all that GM still have burden with very high fixed cost for pensions & health very high fixed cost for pensions & health care benefits . care benefits .