@Risk

Think you have a tough work week ahead? No matter how taxing your calendar appears to you this Monday, I’d wager that you still wouldn’t want to trade places with Bob Socia, the new vice president of global purchasing and supply chain for General Motors. 

Sure, GM took a big step forward when it emerged from bankruptcy last Friday, but the company still faces a tangle of thorny problems. For starters, GM’s supply chain is in tatters. In fact, Bill Michels, CEO of ADR North America LLC in Ann Arbor, Michigan, a consulting firm specializing in global supply chain management, says Socia has inherited a supply chain that is “crippled by bankruptcies, unprofitable, unstable and undeveloped.” Without question, Socia has his work cut out for him, and he’ll need plenty of focus and determination to piece things back together.

So, where would you advise him to begin? For starters, I would venture these two suggestions:

First, begin by implementing a new, restructured risk management program. Right now, GM needs to engage in classic supply chain redesign, identifying its most critical suppliers and its most immediate threats, such as suppliers that are incapable of surviving a temporary shutdown this summer or worse, consolidation. (As I pointed out in an earlier post, Laura Marcero, a restructuring expert at Grant Thornton, estimates that the auto industry now needs 30% to 40% fewer suppliers.) After that, I’d work to overhaul and update GM’s long-term supply chain risk management strategies, as well.

Next, create strategic relationships with your healthiest suppliers. Look for those that can deliver innovation, stable prices, and low risk. Then, develop formal support programs that will help you strengthen these collaborations as the process of rebuilding the “new GM” unfolds. Now more than ever the company needs a robust, working relationship with all stages of your supply chain.

The housecleaning challenges at GM are multi-faceted and involve not just the supply chain, but manufacturing processes and now even the formerly sacrosanct management team, as well.  I wish Bob Socia well as he navigates these choppy waters, realigns supplier relationships, and works to strengthen GM’s position in the competitive auto manufacturing marketplace.