General Motors (GM) is an international motor vehicle company founded and currently based in the United States. Apart from designing and distributing vehicles, the company also owns a number of manufacturing facilities all over the world (GM, 2016). Due to the high competition in the automotive industry and the 2014 risk management failure that resulted in major fines and losses, the company is facing several operations management concerns. Applying a good selection of operations management tools and concepts could help the management to reduce the risks and improve productivity. The present essay seeks to analyze the present situation at GM and provide some recommendations for effective operations management.
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GM is an automotive company that designs, manufactures, and sells motor vehicles, such as cars and trucks (GM, 2016). Thus, the company employs a full chain of business processes from design to sale and marketing. The company is based in Detroit, MI; however, it has a chain of over 170 manufacturing facilities and distributes products through a network of over 20 000 dealers (GM, 2016). Therefore, the company has a rather complex structure, which affects internal communications and operations management.
There are several factors that contribute to the organization’s operational challenges. First of all, the 2014 incident when GM had to recall over 3 million of its cars worldwide due to faulty ignition highlighted the need for rigorous quality control. Secondly, the company has a complex organizational structure and is present in over 140 countries all over the globe, which ultimately leads to communication problems. Besides, the competition in the automotive sector is high, which creates the need to continuously enhance business processes to develop new technologies and manage costs. Finally, increased environmental concerns are affecting manufacturing companies worldwide, which is why sustainability is also a major issue requiring attention.
The 2014 incident resulted in significant financial losses and a large fine imposed by the U.S. government following a criminal investigation into the incident (Slezak, 2014). Faulty ignition is a critical technical issue that can result in the death of the driver or passengers by forcing the engine to shut off at random. Thus, the recalls also damaged the company’s reputation. In order to ensure future compliance with quality standards and develop a solid reputation in the aftermath of the problem, it is essential for GM to build and support a system of rigorous quality control.
CM has a significant chain of manufacturing facilities and distributors globally, as well as a tall and complex organizational structure, which makes communications one of the critical concerns of the corporation. GM needs to ensure that it has robust and efficient communication channels in place so that it can manage all of its regional facilities, distributors, and suppliers effectively. Besides, it is essential to promote managerial oversight over any risks, as well as key business processes.
The 2014 crisis indicated that the company had significant issues with operational transparency, leading to the CEO being unaware of the faulty ignition problem for weeks (Balsoni, 2014). Transparency issues, as well as delays in communication, became essential problems that prevented the management from taking action to minimize the impact; similar issues threaten the company today if the communications are not addressed in a consistent and well-planned effort.
The automotive sector is a highly competitive market, where it is hard for brands to earn customer loyalty. Thus, GM has to offer technical advantages to its customers by developing innovative products and features. At the same time, it is critical for the company to manage its costs effectively in order to remain productive. It is crucial for operations managers to address this issue for the company to increase its profits and maintain a stable market share.
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Sustainability has become one of the critical concerns for manufacturing companies all over the globe, both due to government regulations and due to the development of new, green technology. GM aims to achieve its sustainability goals by popularising renewable energy, waste management, and developing electric vehicles. For example, in 2016, the company announced that it intends for all of its manufacturing facilities to use 100% renewable energy by 2050 (GM, 2016). Operations management is a significant part of the company’s sustainability efforts that can ensure success.
Tools and Concepts
Total Quality Management
Total quality management (TQM) is used by businesses that seek to promote business excellence by improving the products and services they provide to customers. Although TQM also refers to corporate culture and the need for developing a customer focus, Oakland (2014) states that it can also aid in operations management by reducing the risk of product defects and creating control tools necessary to ensure a consistently high quality of parts and final products. TQM would be more useful for GM than the more traditional quality control activities as it offers a comprehensive strategy for quality improvement.
Lean Six Sigma
Lean Six Sigma (LSS) is another operations management tool that can help the company to address some of its key challenges, such as quality control, cost management, and sustainability. LSS focuses on operational excellence rather than business excellence in general, which makes this approach more targeted than TQM. LSS targets specifically target production, helping to decrease costs by eliminating waste and improving the quality of items (Habidin & Yusof, 2014). LSS was chosen as opposed to the regular Six Sigma approach as it is more suitable for the automotive industry and can help GM to target costly and risky processes first before implementing the tool throughout the company.
Digital Communication Tools
The TQM and LSS would help the corporation to improve its operations and to avoid risks of product defects in the future. However, it is also critical for the company to tackle its communications and make them more efficient. The management should consider tools that would benefit internal communication within units, communication between branches (both national and international), and communication with external units, such as suppliers or distributors. For example, digital communication technologies, such as intranet social networks and project software, could be useful for sharing information across the GM facilities worldwide, thus improving organizational transparency and reducing the risk of communication delays.
Multinational car corporations have a complex structure, which causes difficulties in communication. Moreover, they have an elaborate network of production and distribution facilities, which reduces possibilities for proper oversight and quality control and can thus result in major losses due to product defects. In addition, the corporation also faces the need to evolve its technologies and processes to continue to reduce costs and sustainability.
Therefore, TQM and LSS were chosen as the tools that can help operations managers to control processes and decrease the risks of product defects. The use of communication tools is also strongly advised to promote communication across the facilities and regional branches. Two further recommendations for the company would be to increase the oversight of processes, especially in manufacturing, and to perform regular internal audits to identify problems that could impact quality. Overall, a practical operations management strategy would assist GM in recovering from its 2014 incident and create a reputation for quality while also improving profitability and managing costs.
Baldoni, J. (2014). General Motors: The problem is greater than a faulty ignition switch. Forbes. Web.
General Motors (GM). (2016). General Motors strategic and operational overview. Web.
Habidin, N. F., & Yusof, S. R. M. (2013). Critical success factors of Lean Six Sigma for the Malaysian automotive industry. International Journal of Lean Six Sigma, 4(1), 60-82.
Oakland, J. S. (2014). Total quality management and operational excellence: Text with cases. Abingdon-on-Thames, UK: Routledge.
Slezak, S. (2014). GM’s risk management failures provide lessons for other firms. Web.