In the past few years, the motor vehicle industry has ensured measures are put in places that assist in responding to customer demands. For instance, measures have been put in place which assist in achieving business-to-order process apart from implementation of built-to-stock model (Chandrasekar 2010). This has enabled automobile manufacturers to respond to customer demands promptly as well as meeting customer demands.
General Motors, one of the leading automakers in the US has ensured current technology, customer demands and supply chain is enhanced by creating strategies that ensure these goals are achieved. Initiatives have been developed which ensure new levels of value are delivered in areas of customer needs, supply chain demands to meet shareholder expectations (Rushton Croucher & Baker 2006). The main areas that have been considered significant in marketing logistics at GM are the use of digital technology, enhancement of focus on customer demands and increasing loyalty and value of GM network (Shimokawa 1994). There has been the need to leverage all supply and distribution chains to ensure all customers are served. The company is making strides in collaborating supply chain management and design of products and developing initiatives that improve marketing and distribution of its products.
However, GM like any other automotive industry is considered a company that has destroyed instead of creating value. This is caused by a number of issues that are faced by the company in terms of slow time to market, high costs of stocks, and lack of utilization of existing capacity and reduced customer satisfaction or loyalty (Norcliffe, 2006). On the supply chain side, initiatives have been put by GM Supply Power in areas such as online procurement portal that assist in reducing inventory and ensure customer satisfaction is accomplished and loyalty is achieved by providing quick delivery of vehicles. There have also been challenges in collaboration for supply chain management and design of products as well as improvements in CMR and logistics (Rushton & Croucher & Baker 2006). There has been the need for GM to integrate such initiatives to take advantage of benefits of a DLN.
GM has strived to transform its supply chain in an effort to improve its overall performance of the automotive industry (Okochi 1981). This paper explains some of the customer challenges, supply change challenges and customer relations management challenges that are faced by the company and provides solutions to these problems.
2. Marketing and Logistics Challenges Faced by GM
The greatest challenges faced by General Motors are related to the demand and supply sides of operations of General Motors. It has been considered necessary to ensure these sides of supply and demand are addressed to ensure the company is capable of dealing with customers’ demands and supplying chain partners (Fitzen 2009). Initially, the company mainly focused on maximizing sales in order to make optimum use of their capital-intensive plant assets and crate workforce that is unionized. The effort to increase plant productivity has only contributed to exacerbation of the problems for the industry in general. This has resulted in excessive stock inventories and a mix of inventories that are not focused on customer preferences, those results in the need to improve sales incentives that assist in satisfying customer preferences.
2.1. Customer Challenges at GM
In the current technologically-driven manufacturing environment, the approach of one-size-fits all cannot be used to satisfy all customers (Rushton & Croucher & Baker 2006). Automakers have been forced by changing customer expectations to look for ways of improving the design of vehicles, their manufacture and sales (Liu 2012). The leading automobile manufacturers face difficulties in the areas of different customer demands, changing preferences and requirements of target dealers. They have also been forced to respond to these demands by making and delivering vehicles according to the order of customers and within the time period of the demand. Furthermore, the company has faced difficulties in aligning itself closer to customers and building a closer relationship which ensures the needs of customers are met (Gattorna 1998). There has also been the need to ensure that the customer requests are translated to the shop floor by manufacturing products according to customer demands, since traditional automotive processes are still not efficient in meeting customer-driven requirements.
On the supply sides, products produced by GM are still considered complex. The company has also faced the difficulty of having a direct relationship with its customers (Graves, 1993). The company still uses the traditional method of customer relationship management, where operations are slow in comparison to new methods such as the use of direct link to customers. Furthermore, automakers at GM have been faced by the challenge of inventory levels and the need to ensure they work with dealers to develop new channels of distribution. It has been assumed by the company that holding inventory will result in enabling customers to get maximum choice available immediately and enable buyers to feel a vehicle, thus making it unlikely to be bought (Parry & Graves 2008). It has also been difficult to implement new sales and channels of distribution like the use of the internet and auto supermarkets and little efforts have been made to offer products that are attractive to customers.
2.2. Supply Chain Challenges at GM
One of the issues related to supply facing GM is long order-to-delivery lead time in addition to unreliable production schedules, that result in high amounts of inventory in the supply chain (Enarsson 2006). It has been observed that there are long demand planning cycles in addition to low visibility to the supplier and constraints of supply of materials, and production that result in delays in production and changes in short terms objectives. These difficulties have driven GM automakers and suppliers to construct buffer inventories and restrict their capacity to ensure they react to changes in customer demands. This condition has resulted in inability of suppliers to sense customer orders, and manufacture has solely been restricted to 12-16 weeks of lead time. In addition, it has also been seen that there are constrained, inflexible production and assembly capabilities in addition to long delivery times that have resulted in high amounts of inventory in the form of safety stocks.
Another supply chain challenge that is faced by automakers at GM is the content of the cars they make (Chandrasekar 2010). Over periods of operations of this company, this company has been surpassed by automakers from Asia that have managed to produce high content vehicles; that is, vehicles that can serve a number of purposes included as standard components. This has assisted in overcoming customization constraints caused by lead time of exporting products to other regions of the world. GM has responded to this challenge by increasing vehicle content and features. This has not solved the problem since customers prefer to select the vehicle content that they need in place of standard options that are produced and it has been identified as an area where improvements need to be effected (Shimokawa 1994).
Moreover, another supply chain issue that is being addressed by GM is the need to work to address collaboration in development of products that are considered to likely result in a product development time of 48 months. Manual communications have usually been used in between the OEM’s and other partners of supply chain due to inability to afford an investment in electronic data interchange technology that can be useful in communication between OEM’s and their larger suppliers.
There is also complexity in logistics operations at GM supply chain and major expenses are involved in creating opportunity for improvement (Norcliffe 2006). There is also lack of communication in inbound and outbound logistics operations that result in inability of automakers to optimize their supply chains, resulting in reduced inventories and inability to respond to customer needs.
2.3. Customer Relationship Management Challenges
It has been difficult to deal with customer requirements such as the need to get the vehicle they need to buy in the exact time and at the right price. In many situations, customers who want to buy a car usually do not want their cars to be made in a manner that is not preferable to them. This becomes difficult, and the manufacturing process becomes slow. It has resulted in a situation where each customer is responded to in a different way resulting in failures which consequently result in reduced loyalty to the company.
Furthermore, customer views have not been considered since customers are not usually allowed to have complete control of the nature of the manufacturing process. This is because most of them are not allowed to reach the manufacturing floor where they can contribute their ideas on the nature of cars they would like to have (Okochi 1981). Consequently, most of the cars produced by the company are not usually according to customer specifications.
In addition, customer information has not been consolidated or leveraged to improve interaction. Since customer information is not consolidated in customer management databases, it has not been possible to capture customer information and interact with customers. Customer acquisition has not been possible, and it has not been possible to feed customer requirements to products improvement, sales and marketing practices and provision of personalized efforts to customers. As a result, GM has not been able to track customers over time as they move across various brands, locations or other GM businesses such as finance or mortgage.
3. Solutions to Marketing and Logistics Challenges Faced by GM
General Motors is making efforts to ensure high performance of its marketing activities which results in satisfaction of customers’, suppliers’ and shareholders’ needs (Fitzen 2009). More focus has been put on the areas of application of digital technology by focusing on IT for customers by increasing their loyalty and a lifetime to GM and improving the entire supply network for suppliers to partners of chain distribution, dealers and customers.
One of the approaches adopted by GM to tackle the above challenges is the use of Information Technology in every unit of production (Liu 2012). Process information officers (PIOs) have been assigned in the organization to assist in the design, development as well as implementation of business processes that assist in development of products, production, sales, and services in addition to business services that ensure solutions are driven across the unit.
3.1. Solutions to Customer Challenges
Customer challenges can be addressed in a number of ways. One of the ways in which customer complaint can be addressed is by allowing vehicles to be produced according to customer requirements (Gattorna 1998). In addition, communication with the customer can be improved by using direct links to customers, and manufacture of vehicles with limitless wireless communication and telecommunication networks. Interaction with customers who are currently dealing with the company can also be done on a daily basis.
The company can also implement measures that enable consumers to receive a number of safeties, security and convenience features. For instance, the use of OnStar allows customers to make free calls via Personal calling. They can also be enabled to listen to the current news or information related to traffic through Virtual advisor. These subscribers will also be able to get cars that enable them to open their car doors if they leave their keys inside their cars.
Other methods that can be used to address customer challenges include recording of customer information such as contacts and place of residence so that communication with the customer is enhanced. It also ensures that delivery of product is done based on customer requests (Graves 1993). The company can also deal with customer interests by providing customers with after sales services in case vehicles bought from the company are broken down.
3.2. Solutions to Supply Challenges
GM understands that in order to obtain real benefits of customer side, there is a need to improve supply side by making back end of supply side strong, flexible and able to respond. GM has been involved in plenty of work on the supply side, specifically in supporting and enabling initiatives that enable vehicles to be manufactured according to order and ensuring communication is improved and supported, and collaboration activities are supported across GM’s vast network of suppliers, distributors and dealers.
In response to high customer demands and improved profitability of the company, GM is intending to abandon a build-to-stock model to a more integrated build-to-stock and build-to-order models (Parry & Graves 2008). The role of order-to-delivery model is to assist in transforming the supply chain to meet the increasing customer demands in the evolving digital environment.
Supply chain issues have also been addressed by implementation of order-to-delivery approach of manufacturing. This is an approach of manufacturing that is divided into three-functional groups-order to fulfillment, supply operations. The role of order fulfillment team is to work on customer planning activities. The role of order to delivery is to ensure dealers provided customers with the right vehicle at the appropriate price and at the right time (Enarsson, 2006). This activity is aimed at reducing inventory and increasing satisfaction of customers and loyalty by ensuring their goals are met globally. Efforts have also been made to ensure delivery time is reduced to between 50 per cent and 40 per cent in two years time. At the same time, reliability of delivery is intended to be between 70 and 90 per cent. Links are also strengthened between engineering, manufacturing and dealers as well as customs have been developed to allow GM work in collaboration with suppliers.
Supply chain can also be improved by including internet communication in the supply process by allowing companies to collaborate with suppliers, and it is estimated that about 70 percent of materials procurement will be done through the internet (Chandrasekar 2010). Communication across the supply chain will be enhanced through the use of Web-based portal links that connect the company with its suppliers, enabling them to conduct transactions and share information such as purchasing, sourcing materials, control of quality, logistics and engineering functions. The use of GM Supply Power is also intended to reduce costs of operations, speeding up vehicle development process and results in improvement of supplier communication with respect to product schedules and capacity plans.
3.3. Solutions to Customer Relationship Management
Efforts have been made by GM which ensures one-to-one relationship with customers is made. There have been attempts to ensure interactions with customers are personalized, and vehicle construction has been based on customer instructions, according to GM’s centric approach that ensures support is provided and selling and distribution costs are reduced (Shimokawa 1994).
Initiatives have also been put by GM to strengthen customer relationships by gathering, managing and leveraging customer data to ensure customer interaction is enhanced. Efforts have also been made to consolidate customer database such as web sites and call centers. There have also been attempts to capture various types of information by interacting with each customer (Norcliffe 2006). This information is then fed back to improvement of products, sales and marketing campaigns and personalization of efforts. It is believed that implementation of such customer-centric capabilities are likely to create a cycle of increased improvements. Customer knowledge is also considered being likely to result in profitable customer acquisition and improved loyalty of customers that results in customer information.
This approach will also assist GM in tracking customer movement across brands, various locations and other areas of business related to GM such as finances and mortgages. Integration of customer information will be implemented to assist leveraging broad shelf brand offerings. Integration of customer data among different business units and subsidiary businesses such as financing of cars and insurance will be applied to assist GM in matching customer requirements across products offerings of a number of divisions, thus making GM a multi-divisional organization.
In order to ensure the company is centered towards the needs of customers, the company is focused on addressing customer demands regarding delivery of vehicles (Okochi 1981). Assuming that a customer requires a product within a specific time, arrangements are being made to ensure that two-to-three days of delivery are enabled. This will also involve consideration of customer expectations such as delivery reliability, lead time and the significance of getting the exact desired vehicle configuration.
4. Conclusion
This paper reveals that there are numerous demand and supply chain management challenges that need to be addressed. These include customer relationship management as well as supply chain management. In case of customer relationship management, this paper mainly focuses on the need to ensure communication with customers and consideration of customer requests during design and manufacture of vehicles. In case of supply chain management, the main areas of focus are the reduction of time between manufacture of a car and delivery to the customer. It also focuses on the use of modern communication methods to assist in communication between the customer and the company.
However, GM has seen the capability on the demand side and its efforts will be targeted towards capturing and sharing customer demand information in the network that results in efficiencies in the supply chain (Fitzen 2009). Combined initiatives are also underway in other sections of the company like product development or manufacture. Efforts are also being made in demand and supply areas where quantifiable results are expected specifically in the areas of customer loyalty, reduced lead times for delivery, and high efficiencies in delivery while ensuring market share is maintained in the increasingly competitive automotive industry.
As there are continued efforts by GM to launch and introduce new trucks and cars, their business model will be focused on ensuring their design and manufacture is focused on including customer requests and improvement of existing conditions according to customer requirements. The manufacturing process will be focused on the overall move to strengthen customer satisfaction and experience as well as building customer loyalty through better and integrated customer relationship management capabilities and improving line-up of products that result in a complete overhaul of the production processes (Liu 2012).
This paper shows that marketing and logistics challenges at GM are all about ensuring satisfaction of different customer needs with differentiated supply capabilities that result in increased values for all members of the network. This paper also gives automakers the capability to move from transaction mindset of focusing on sales of cars to a relationship mentality where production is driven by the desire to produce customized products, which meet customer needs. By understanding the requirements of customers, it is possible to identify the most prospective customers and develop the right production portfolio then collaborating with suppliers can result in making the model functional. This can result in increased benefits for GM and increased loyalty and overall profitability of GM loyalty network.
