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GM purchasing gets a re-engineering Under product boss Stephens, purchasing, engineering expected to act as a team

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GM purchasing gets a re-engineering

Under product boss Stephens, purchasing, engineering expected to act as a team

CHRISSIE THOMPSON

AUTOMOTIVE NEWS

DECEMBER 14, 2009 - 12:01 AM ET

DETROIT -- In its new home under product development chief Tom Stephens, the purchasing division of General Motors Co. has new marching orders: Cooperate.

That means engineers and purchasing decision-makers will work together to weigh quality and cost, sometimes choosing a more expensive part if it gives more to the customer, Vice Chairman Stephens said last week in an interview.

Putting purchasing under Stephens culminates a process that started in August, when GM reorganized purchasing so its units mirrored the divisions within engineering.

For example, purchasing has a new interiors/safety unit that aligns with engineering's setup. Previously, interiors were included in a purchasing division with structures and closures.

"Now they can act as a team so they can have the same objectives," Stephens said. "Cost isn't just purchasing's job. It's all of our job. But quality isn't engineering's job. It's all of our job."

Because the divisions are aligned, corresponding representatives from purchasing and product development can meet with suppliers to discuss product and pricing, he said. Within the next six months, some U.S. purchasing staffers also will move from their offices at the Renaissance Center in downtown Detroit to join engineering at GM's Technical Center in suburban Warren, Mich., Stephens said.

"Supplier relationships are the responsibility of the people in product development," he said.

Supplier executives said they haven't had much of a chance to see whether the new emphasis has made a difference. But GM has promised changes in the past and often hasn't delivered, they said.

"There's not much they can say that's going to convince us," said one CEO, who declined to be identified because his company has business with GM. Evidence of a change could take a long time to surface because GM is so big, the CEO said.

Stephens said the integration already is paying off. GM executives point to their recent selection of a more expensive power-steering supplier over a cheaper offer because the winning supplier offered a more desirable technology. That decision -- for a future rear-wheel-drive Cadillac sedan that GM employees call the "BMW fighter" -- was made jointly by purchasing and engineering, Stephens said.

One supplier CEO -- Daniel Coker of Amerigon Inc., which makes components used in heated seats -- said he has seen another example in the past six weeks that the new strategy may be working.

The GM engineer who works with Amerigon asked the supplier about exploring other applications in vehicles for Amerigon's thermoelectric technology. The engineer then put Amerigon employees in touch with other GM technical departments, Coker said, and future meetings will include people from both GM purchasing and engineering.

Said Coker: "This is the type of thing that they're looking for."

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