Supply Chain Issues for Automakers

GM Case Study

1. How important is the IP to GM? What is the consequence if the supplier owns the IP? Why would a supplier be hesitant to share its IP with GM?

GM’s intellectual property (IP) is crucial to its business model (Srock et al., 2019). If a supplier owns the IP, GM would be at a disadvantageous position and may have to pay royalty fees or license the technology. This would make their products more expensive and less competitive. Additionally, the supplier may be hesitant to share its IP with GM because it could be used by GM to develop competing products.

In fact, a supplier may be hesitant to share its IP with another business for a variety of reasons (Daniels et al., 2007). The supplier may believe that the other business is not capable of properly safeguarding the IP, or that the other business will use the IP to compete with the supplier. Additionally, the supplier may be concerned that sharing the IP could lead to the other business gaining an unfair competitive advantage. Finally, the supplier may simply want to maintain control over the IP and its associated technology. Whatever the reason, it is important to understand a supplier's motivation for keeping its IP close to the vest before entering into any kind of partnership or collaboration.

As a result, it is important for GM to carefully manage its relationship with suppliers in order to protect its IP.

Regarding the buyer–supplier relationship:

1. How does the geographical location of the suppliers (China versus Mexico versus the United States versus Germany) affect GM’s decision?

GM’s decision to source parts from suppliers in China, Mexico, the United States, and Germany is based on a number of factors, including the geographical location of the suppliers. The proximity of the suppliers to GM’s manufacturing facilities is an important consideration, as it can impact the timely delivery of parts and materials. Additionally, the cost of labor and transportation must be taken into account when making sourcing decisions. The cost of labor includes wages, benefits, and training. The cost of transportation includes fuel, maintenance, and insurance. The relative cost of these two factors will vary depending on the location of the supplier and the mode of transportation. For example, if the supplier is located in a developing country, the cost of labor may be lower but the cost of transportation may be higher. If the supplier is located in a remote location, the cost of transportation may be lower but the cost of labor may be higher. Companies must carefully weigh these costs when making sourcing decisions. In general, suppliers in China and Mexico are able to offer lower prices than those in the United States or Germany.

However, GM must also consider the political and economic stability of the countries where its suppliers are located. For example, supplier disruptions due to tsunamis or earthquakes are more likely in China and Japan than in Mexico or the United States. In sum, GM’s decision to source parts from suppliers in different countries is based on a variety of factors, including geography, cost, and political stability.

2. How does the collaboration history between GM and each of the suppliers affect GM’s decision? What types of collaboration history are of most value to GM for this particular brake system innovation outsourcing project?

The brake system innovation project is a crucial one for GM, and the company must carefully consider the collaborative history of each of its potential suppliers before making a decision. Each supplier has different strengths and weaknesses, and GM must evaluate how well they have worked together in the past in order to make the best decision for the future. For example, if one supplier has a history of missed deadlines or poor quality control, that may not be the best choice for this particular project. On the other hand, if another supplier has a track record of success with similar projects, that may be a better fit. Ultimately, GM must weigh all of these factors carefully in order to make the best decision for the company.

2. Regarding single-source versus multi-source supply: Should GM rely solely on one supplier or work with multiple suppliers?

Global automakers have long relied on a single-source supplier for a variety of reasons. The most obvious reason is that it can be cheaper to buy from a single supplier. In addition, supply chains are often already in place, and it can be easier to manage production when working with a single supplier (Burke et al., 2007).

However, there are also some significant risks associated with relying on a single source. If the supplier experiences difficulties, it can have a major impact on production. In any production process, there are a number of key inputs that are required in order for the process to run smoothly. One of these inputs is the raw materials or components that are used in the manufacturing process. If the supplier of these raw materials comes up short or is crunched, production can be halted. This is because the manufacturing process will be disrupted if the necessary raw materials are not available. In addition, if the quality of the raw materials is poor, this can also lead to problems further down the line, as finished products may be faulty or sub-standard. As a result, it is essential for businesses to have reliable suppliers who can provide high-quality raw materials on a consistent basis. Otherwise, the business may find itself experiencing significant difficulties. A single-supplier can help to streamline operations and ensure consistency, but there are also big risks in entrusting a whole operation to a single supplier.

In addition, if the relationship between the automaker and the supplier breaks down, it can be difficult and expensive to find a replacement. This is because the automotive supply chain is highly complex, with each supplier playing a vital role in the production process. The automotive industry is built on relationships between automakers and suppliers. These relationships are essential for ensuring that vehicles are delivered on time and within budget. Yet, if disagreements arise due to new leadership or a change in strategy, it can lead to serious problems in the production line or factories down the road.