Introduction
General Motors (GM) specializing in manufacturing automobiles has always been a symbol of American culture and a representation of the high level of competitiveness of the United States in the global economy. It was founded in 1908. Its plants located in more than 30 countries all over the globe use the newest and environmentally friendly technologies to make the most reliable cars that would win the customers for life.
Including a wide range of models and brands, General Motors, the company employing more that 250,000 workers, can satisfy the variety of needs and tastes from budgetary to the most exquisite, from mass production to individual designs. As the quantity of the vehicle manufacturers increased and the quality of their products, as well as the competitors’ performance, improved, GM decided not to miss the leading positions in the market and focused on boosting the productivity and competitiveness. The conglomerate decided to fall upon the operations management as the primary tool for achieving this strategic objective.
The paper will be divided into subsections each covering the major steps taken by General Motors with the aim of improving its operational performance such as planning and design of transformational processes, monitoring and controlling of the operations, process improvement with Six Sigma and lean principles, project and supply chain management, capacity, location, and scheduling planning. Furthermore, it will provide the SWOT analysis of General Motors and the overall conclusion regarding the effectiveness of the GM operational performance.
Finally, special attention will be paid to the recommendations for the company’s further development. The motivation for shaping such list is the fact that there are still some areas of operations management that are underdeveloped or ignored and require changes and improvement.
Overview of GM Operations Management
Operations are central to both the company and its employees no matter what is their position (Meredith & Shafer, 2013). That said, it is effective and well-planned operations management that defines whether the organization would be productive and successful.
General Motors as the company that strives for winning customers for life and sees the maximum possible satisfaction of their need and desires as its strategic objective, acknowledges the significance of operations in achieving this aim. The company’s operations management can be characterized by several specificities such as:
- introduction of the newest technologies that help both reduce the defects in the process of manufacturing and improve the operational performance;
- focus on the use of environmentally friendly technologies and making sure that the suppliers do the same;
- priority on the safety of the employees reached by the maximum automation of the production process and safe raw materials;
- thorough planning of capacities and location as the foundation for boosting productivity and improving performance;
- strict systems of controlling and monitoring the operations aimed at providing the best quality products.
Planning and Design of Transformation Processes
General Motors acknowledged that transformation processes are the key to improving performance. That is why the special focus is made on planning and designing them. Because GM uses assembly lines in manufacturing automobiles, the most significant bettering refers to modifying them. The company introduced the newest technologies, the so-called smart bolts, to its factory in Tonawanda, New York.
The step was taken in response to defects in the whole batch of engines that resulted in severe losses to the company because it was forced to call back the vehicles of that batch. The technology operates under the “track-and-trace” (Paula, 2013, par. 1) principle that means that the system gathers all the necessary data and minimizes the risk of defects or, at least, records the time and the number of the defective batch. GM plans to introduce smart bolts to all plants within the next five years.
Monitoring and Controlling Operations
Nowadays, GM exploits traditional balance sheets as the tool for controlling and monitoring operations with the primary focus on the financial performance and statistical data (General Motors Company, 2015). The decision is motivated by the fact that the company sees financial success and increase of revenues as the major indicator of well-being.
In addition to it, GM pays significant attention to meeting the demands and standards of green management. In particular, it requires its suppliers to be certified with ISO14000 (Bosso, 2010), a set of environmental standards, making sure that the materials used for its vehicles are safe for both workers and customers.
Process Improvement With Six Sigma Approach
Six Sigma approach is an effective tool for improving the overall operational performance. Comprising of five stages (define, measure, analyze, improve, control), it is only beneficial in case of strict control over the activities taken at every step. GM has used this approach to enhance safety concerns deriving from ignition switch issue that caused the customers’ vehicles crashes and even led to deaths. What GM has done is developed the safety improvement project based on the Six Sigma approach.
On the define phase, the specialists detected the problem that had to be solved and found that it was the lack of quality control of the ignitions. On the measure stage, GM collected the data to find out the primary reason for the problem, and saw it in the fact that the assembly lines work 24/7, but employees failed to control their performance constantly. The analyze phase helped realize that the primary way of solving the problem is launching the initiative that will let the workers contact the senior management as soon as they detect the problem with the automobile parts quality or potential dangers. The company called it Speak Up for Safety Program.
The improve was a step at which GM decided to build up a new quality assurance process that will control the performance of every stage of the final part assemblage. Finally, control phase implies developing ignition recall update website (GM safety initiative listed, 2014). The primary purpose is to make sure that the customers know how to act in the similar situation and have an opportunity to provide the company with the feedback.
The company announced that it would take further steps in improving the skills of its workers in using this approach to enhance the operational performance from engineering to covering all types of processes.
Process Improvement With Lean
There is a wide range or principles generally referred to as lean. The philosophy was designed by Toyota when the automobile manufacturer faced the acute lack of resources. The decision was to use the available resources to the maximum extent and eliminate any kind of waste, so that it will boost productivity and improve performance. The practice has proved to be effective. Nevertheless, General Motors positions itself as a non-lean company claiming that this method is only for needy organizations that do not possess resources similar to those GM (Carraciolo, 2014).
The only experience of the comprehensive use of lean and all its principles including kaizen, 5S, theory of constraints, JIT, and kanban was in the case of New United Motor Manufacturing Inc. (NUMMI), a joint venture of Toyota and GM. The plant was operational in the period between 1986 and 2010, and it has proved that lean philosophy has many benefits and indeed leads to process improvement (Hozak, 2012) but with its closing, the company decided to forget about this experience.
As for today, the only lean principles applied to the GM operation are the Six Sigma approach and value stream mapping. As of the latter, it is used for analyzing process flows and as a visual tool for detecting and eliminating waste in every department. GM’s value stream map consists of six primary elements: the customer and the customer’s requirements, major process steps, process metrics (basically, process time), supplier with material flows, information and physical flows, and overall performance (Thorsen, n.d.).
The whole process is a set of four steps: pre-study defining the scope of the value stream, drawing the current situation, defining the desirable future situation, and implementing the plan. So, value stream mapping in GM is drawing the difference between the state of the process as it is and how it should be (Thorsen, n.d.). The practice has proved to be effective because the company actively uses it.
Project Management
Project management in the case of GM has several dimensions – the projects themselves, planning them, and the control over their effectiveness. As of the projects, the organization strives for improving the operational performance by involving the newest technologies in the production process. That is why the primary type of projects used are R&D and IT projects financed throughout the life cycle as GM has enough resources for doing so.
What can be said about planning and control is that GM focuses on the productive system of project management. The company makes sure that its project managers are trained according to its global standards and are highly skilled. Moreover, special attention is paid the leadership features of the managers, so that they are able to coordinate the process and teach the employees if needed (Iamratanakul, 2013). However, the company has faced a challenge of quantity over quality because it focuses on the speed of finishing tasks, not on the essence of the progress (McKie, 2014). It means that planning and scheduling are successful, but the control tools are not always effective.
Supply Chain Management
General Motors is the company that focuses primarily on satisfying the customers and delivering the final good to them as soon as possible. That is why it made significant efforts to develop the supply chain that would simplify and speed up the whole process. The specificity of the firm’s supply chain is that the primary focus is made on compliance with the laws especially certifications and standards regarding the production of automobile parts it buys from suppliers. Moreover, it is seen as the contractual guarantee of providing the consumer with the best quality and safe product. In addition to that, GM is concerned about the human dignity, that is why special attention is paid to fair working conditions granted to all employees (General Motors, 2016).
GM’s current supply chain is monitored by the global material and logistics controlling organizations that has managing and distributing the companies resources according to the company’s needs all over the globe. There are several major elements of the firm’s supply chain. First, there are suppliers of raw materials and vehicle details that the company does not assemble by itself. Second, there are contributors to the company – the companies that together with GM work on supplying the goods to the consumer but are not suppliers (in fact, investors). Third, there is also logistics system comprising of thousands of dealers all over the globe. Finally, the web-enabled element that helps to reduce order wait times (Yu & Bauer, 2014).
Capacity, Scheduling, and Location Planning
Capacity planning, location planning, and scheduling are of extreme importance to General Motors because the company felt significant influence of every economic crisis and lost its positions in the automobile market for numerous times. That said, it pays a lot of attention to estimating potential demand and output as well as market fluctuations using the wide range of formal methods of forecasting. The company may not be successful in predicting economic collapses but, at least, it does its best to succeed.
Moreover, planning and scheduling are a part of the company’s educational program (Song & Yao, 2002). The primary reason for teaching them is that GM wants to make sure that its employees have skills necessary to develop plans for the further development. As of the practical use of planning, the latest news from General Motors is that it plans to increase capacity in China by adding four new plants (Ramsey, 2013).
First of all, this step proves that capacity and location are interconnected. Second, it demonstrates that GM realizes that it is more beneficial to invest in building manufacturing close to the customer than transport the finished products. Speaking of scheduling, GM has positioned itself as the company that focuses on continuous improvement of operational performance, that is why it pays significant attention to developing and optimizing schedules of assembling and manufacturing its vehicles according to economic and even weather conditions. Moreover, General Motors launched the online schedule system, so that it is available to all its employees and management.
General Motors SWOT analysis
Critical assessment of the company’s primary strengths, weaknesses, opportunities, and threads, also known as SWOT analysis, can become another effective tool for estimating and improving its operational performance. In the case of General Motors, it should be noted that they all derive from the GM’s position in the automobile manufacture market and what is seen as the strength, on the other hand, is the source of weakness or threat.
The analysis begins with the strength (S). What is first and foremost is GM’s rich experience and location of plants all over the globe. The company has manufactories close to the location of raw materials and in the countries with the most developed infrastructures or the cheapest workforce. These factors guarantee that it will remain afloat because there will always be found an opportunity to keep on manufacturing.
Moreover, it means that the company involves specialists with diverse backgrounds that increases the potential effectiveness of it decision-making and problem-solving mechanisms. Except for the fact that there are plants in most than 30 states, the official dealers of the company are represented in more than 120 countries from the poorest to the richest. It means that the next strength of GM is its global presence. The fourth strength is branding.
The fact the GM is the representation of the American quality cannot be ignored when defining the reasons for its popularity and consumer faithfulness. The next strength is the desire to win a customer for life that is a vision statement of the GM. It is about doing everything possible to satisfy the needs and desires of the customer to the maximum extent so that once an individual bought a care of wide range of models, he/she does not want to switch to another manufacturer. Finally, the company strives for the involvement of the newest technologies in the production and is quite successful in taking this step.
The next part of the analysis is weaknesses (W). The first one emerges from the last strength. Nowadays, the company uses old and out-of-date that often results in defects of the products and decrease in the level of customer satisfaction. The next weakness is failing to use the environmentally friendly technologies to the maximum extent that is unforgivable in the era of overall green consciousness. Next, nevertheless the company’s operational performance is, for the most part, successful and effective, the financial performance is low. That is why what suffers is the quality of the final product, especially if compared to other leaders in the automobile manufacturing market.
The third constituent of the analysis is opportunities (O). What should be mentioned first of all is the growing presence in China and India. As the company announced the plan of increasing capacities in this region, it might help it win the billion market that would have more than positive impact on the overall performance. Next opportunity is the growing demand for hybrid vehicles. Because GM has hybrid cars in its model range, it can benefit the company. Finally, the light truck segment of the vehicle market is continually expanding. It is another area in which General Motors has the advantage because it produces light trucks.
The last part of the analysis is threats (T). The primary threat to GM is intense competition in the global market of vehicle manufacturers. Bearing in mind the number of weaknesses it has, this threat can significantly affect the performance of GM. Another threat is the growing environmental concern and the transition towards green production and green management. Finally, there is a threat of increases in the prices for fuel that will have the impact on both manufacturing and sales.
Bearing in mind what was mentioned about GM in the SWOT analysis, it can be said that the company has some significant weaknesses that can become opportunities for the further growth if critically estimated and correctly dealt with. Moreover, it has numerous strengths. That is why I believe it has good chances to become a leader in the automobile industry again.
Conclusion
This report has provided the overlook of steps taken by General Motors to improve its operational performance such as planning and design of transformational processes, monitoring and controlling of the operations, process improvement with Six Sigma and lean principles, project and supply chain management, capacity, location, and scheduling planning. In addition to it, it has presented SWOT analysis of the company for the evaluation of its role and perspective in the global automobile market.
The general conclusion about the GM operations management is that it is, for the most part, effective. The company pays significant attention to the operational performance and has proved that those approaches that were applied in a well-planned and thorough manner were productive and benefited the organization. Of course, there are some gaps, but they can easily be filled in case of following at least some of the recommendations listed below. The same steps can, by the way, improve SWOT analysis of the company eliminating its primary weaknesses or turning them into opportunities and making it more competitive and, as the end results, bringing restoring the leadership positions in the world automobile market.
Recommendations
The analysis of GM operational performance has shown that there are still gaps that should be filled. For example, the company might be interested in:
- Implementing innovations using Thin Film Pretreatment System instead of zinc phosphate to prepare automobiles for paint and apply paint without baking in an oven after every layer that will decrease the usage of natural gas. These steps will not only reduce the costs, energy, and water usage but also make the manufacturing process more environmentally friendly (Bradburn & Randall, n.d.).
- Designing a balanced scorecard considering such aspect of performance as customer, learning and growth, internal business processes, and financial. It should start with drawing up the strategy maps that will focus on the same aspects of performance as the balanced scoreboard. This step will help estimate the effectiveness of the company’s operational performance.
- Obtaining the ISO 14000 certification because green management and environmental issues have become one of the company’s challenges and it works hard to meet the ecological standards.
- Further improving feedback from customers. For example, one of the steps taken while using the Six Sigma approach was launching the Spanish version of the recall website (GM safety initiative listed, 2014). My recommendation is to translate it in some other languages because even though English and Spanish speaking people are the primary users of GM automobiles, the company should also think about the minorities who do not know these languages but still may face the similar problem. With the resources the conglomerate has, it is possible to bring this improvement to life.
- Recollecting its successful experience of using the whole set of lean principles and return to it. Even though the company positions itself as such having enough resource to ignore these approaches, the practice has demonstrated that there are still some problems the can be solved using this approach and the areas in which they are applied shows higher levels of operational performance.
- Improving its project management exploiting the Goldratt’s critical chain. Bearing in mind that it often forms teams of people coming from different countries and with different backgrounds, the possible safety buffer for the company is considering the option of having people with the same backgrounds or drawing up maximum deadlines because these people might be involved in different projects at different places. These steps could lead to minimizing the probability of activity time variability with path interdependencies and inflated activity time estimates.
- Including some newest technologies, e.g. the web-based system for sharing knowledge and experiences in the GM supply chain, as the company operates on the multinational scale.
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