GM pushes its suppliers to tap China

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Detroit News – 04/07/05

Well this is predictable. GM is in the news with profit problems and management shakeups. So what comes next? Let's beat up on the suppliers and pressure them into China. When GM wants “aggressive cost cutting” are they asking suppliers to make short-term cuts that might hurt their business in the long term? Or, are they asking them to become more lean and really get better? Now building parts in China for China is one thing — that makes sense from a Value Stream standpoint, but does cheap labor really offset the total supply chain cost for parts that are used in the U.S.?

From the article: “GM imports only one-tenth of 1 percent of the parts used in its U.S. assembly plants from China (Michigan factories supply 14 percent). But the company expects to increase its auto part purchases from China 20-fold in six years — from $200 million in 2003 to $4 billion in 2009.”

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Mark Graban is an internationally-recognized consultant, author, and professional speaker who has worked in healthcare, manufacturing, and startups. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent book is the anthology Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also a Senior Advisor to the technology company KaiNexus. His latest book has been released as an "in-progress" book, titled Measures of Success.

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