by David P. Carlisle
At the beginning of the summer, I asked Charlie what’s new, and he enthusiastically started talking about crummy market share for fascias and grills and about sheet metal market share. If he could get the fascias and grills closer to the market, in time and distance, GM likely could increase its market share.
“How are you going to do that Charlie?” I asked. He replied by telling me that 95% of the volume in fascias and grills was in very few part numbers. If he moved them to the PDCs he’d have to add inventory and take a transportation and variable labor cost hit.
Charlie next talked about the customer requirements of a world-class RIM system, and that he really needed over 100,000 part numbers in “facing fill.” GM historically had around 50K part numbers in their PDCs. To get enough part numbers to “look” like the facing fill GM really needed, GM had bring back some ship-direct parts, buy some more inventory and load it into the PDCs. They also needed to be clever and utilize “finesse” by upgrading a batch of referred parts to free “critical” order status in order to achieve next-day service. He also might have to re-slot his PDCs and move into the mezzanines.
Lots of moving parts in a world-class solution to the necessities of the market. He didn’t mind this at all.
He didn’t mind because GM could leverage his increased PDC productivity to cover these extra costs, plus a whole lot more.
I saw blurry lines. Was Charlie a marketing guy, a sales guy, or, a supply chain guy? Who was this man?
Charlie talks a lot about “team.” Here, in Boston, we understand when a team’s a team versus when the team is an extension of a man. Bobby Valentine managed the Red Sox to worst-in-class because it was all about him. John Farrell took the Sox to the World Series because he understood that the guys pitching and hitting were on the field while he was in the dugout. It’s easy. You want to suck at what you do? Become a Bobby Valentine. You want to win? Model yourself after Farrell. Charlie’s a Tigers fan who we welcome to Red Sox Nation. He led his team, his pitchers and hitters, to world-class results. But, they made it happen.
Taking a look at the data for a minute, we can see that GM has made great strides in several supply chain areas over the last 15 years. The following charts compare GM to the best-in-class peer for each of the years, using a subset of the North America Parts Benchmark (NAPB) participants that are most comparable as this peer group.
Network line productivity, which measures how many lines are shipped per hour across all warehouses, is up 254% since 1997 for GM. Warehouse worker productivity at the facing warehouses is also up 246% since 1997 for GM. GM has had best-in-class performance since 2007 in both productivity metrics, as compared to this peer group.
At the same time, warehouse errors, which occur when the dealer either receives the wrong part or is short a part, are down 83% since 1997 for GM. GM is quickly closing the gap to best-in-class quality, and at these levels we’re talking about a gap of only about 100 errors per million lines shipped.
After a dip during the recession years, GM has caught up to its best-in-class peer group in system fill.
This increase in system fill has enabled back orders at GM to be reduced by 87% since the recession-driven peak of 2009, giving GM best-in-class results compared to the peer group in 2012.
Now you’re thinking, “Sure, we could get faster and better too, but it’s going to cost an arm and a leg to do it!” GM found that wasn’t the case. Since 2002, GM has reduced variable costs, which mostly consist of labor costs, like employee wages and benefits, by 57%. By comparison, the peer group has reduced costs as well, but not as quickly or by as much.
GM is best-in-class in all these areas and still reducing costs? Sounds like a plan I’d want to sign up for!
Months flash by and I am sitting down at a break in the NAPB Steering Committee meeting. I start reading my email and find a notice that Charlie was now Vice President, GM Global Aftersales Supply Chain, Warehousing and Logistics, … “leading an all-new organization to improve safety, quality, cost and customer service. The organization will bring together GM’s regional aftersales warehousing with warehouses aligned with manufacturing operations around the world. Working as an integrated team, the group will apply lean common processes to deliver benchmark levels of service to customers in every region while reducing complexity and cost. “
Must be cataracts. Because, the lines got ever blurrier. Charlie’s team is now global and encompasses everything that even looks like a warehouse or non-production operation. The conundrum here is that, if I was a lot younger, and saw true, I’d not see any blurry lines at all here. Because it makes sense.
The North America Parts Benchmark has spawned global benchmark groups, all using the same metrics and data dictionary. It has expanded to include Heavy Truck, Agriculture, Construction, and other like industries. When companies come into the benchmark group, they tend to cling to their differences. Parts warehouses come in all sizes and shapes; all sorts of different functionality, encompassing widely different missions, spanning light production (packaging) to incredibly simple transportation-related functions (break-bulk centers). When companies stay in the group (pretty much all do), they better understand comparability at a sub-function level. Receiving, scanning, put-away, picking, re-warehousing, slotting, sorting, … the list is endless. These sub-processes can be measured, benchmarked, and sorted from best to worst practices. Carlisle’s roles are to manage the measurements, ensure quality and comparability, and document best practices in such a manner that they are transplantable. There are no blurry lines in all this.
GM’s reorganization of responsibilities, now shepherded by Charlie, makes complete sense, and is consistent with the evolution that most of the 50 or so companies have seen in their decades-long benchmarking journey.
Yes, we can dissect diverse operations into common elemental parts, and deliver benchmark levels of service and cost. Or, in GM’s words: “working as an integrated team, the group will apply lean common processes to deliver benchmark levels of service to customers in every region while reducing complexity and cost. “
Bottom line: As we get older we, each of us, might once again see blurry lines. And, we might have cataracts, but they’re not the culprit. We now have ample “context” – the blurry lines now single out the unexpected. The interesting stuff. Innovation. Things that are important. GM’s reorganization is important. Think about it.