General Motors E Procurement

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Case on General Motors

• What business is the organization in?

General Motors, as a representative U.S.–based automobile manufacturer, has several characteristics that make it a perfect fit for e-procurement and a great example of how e-procurement is reshaping U.S. Manufacturing.

First, GM is the major part of a large supply chain. The scope of this supply chain and the role of GM in it is reflected in its annual $63 billion procurement expense. The cost savings associated with e-procurement will be immense.

Second, GM’s ability to push adoption of e-procurement by every link of its supply chain raises the volume of sales through its e-procurement system up to $300 billion–$500 billion per year. This will undoubtedly generate further cost savings associated with purchasing across the whole supply chain.

Finally, GM, perhaps because of its familiarity with the benefits of electronic data interchange with its suppliers and its dominant position in the supply chain, was one of the early adopters of e-procurement.

• What products are bought via e-procurement?

General Motors started seriously pursuing the idea of e-procurement in 1999, when its technology partners, i2 Technologies and Commerce One, started creating a B2B trading community dubbed TradeXchange. I2 Technologies of Irving, Texas, an advance planning software vendor, signed a memorandum of understanding with GM specifying that it would provide supply chain management services and business process expertise. I2 also agreed to provide the components of its Rhythm suite to GM and GM’s suppliers. Commerce One of Walnut Creek, California, an ecommerce software vendor, was supposed to lead the TradeXchange project. Through the realization of this project, GM together with its Japanese affiliates Isuzu and Suzuki was in a position to gain significant benefits associated with e-procurement. However, soon the opportunity arose to push the...
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