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General Motors Supply Chain Risk Management

In the spring of 2020, the world was hit with the new virus, COVID-19. This resulted in a world pandemic, putting everyone and everything at a standstill. People were losing their jobs, becoming ill, having to switch their daily lives around which ultimately affected the world of supply chain. Although the world had stopped moving, supply chain although facing struggles, kept moving. For General Motors, they faced a range of challenged when the pandemic hit. The number of workers decreased, and due to that the number of parts being built and shipped were decreased, causing a shortage of cars and car parts everywhere.

When it comes to the finished automobile, it requires 30,000 parts to make it finished. Due to the virus, volumes dropped, and they then hurried to make contingency plans. This is due to most of the parts being managed on a lean “just-in-time” basis, meaning General Motors only had these parts from 2 to 12 weeks before being sent out. Due to the pandemic, the holding times for these parts where a lot longer and things where not being made. In hopes to reverse the damage that has been done, the company is looking to “restart’ and based on not only material capabilities but also the logistics and health of their employees. General Motors can do very much when it comes to their supply chain right now because places all over the world are dealing with these same issues that may take an amount of time to resolve. Although they cannot do much about that right now, they are known for their supply chain risk management capabilities that may help them for the current time and preparing for any future occurrences that are related to the virus.

General Motors sells more cars in China than they do in the United States, and since there is really no travel going to or from China right now, the company is getting hit hard. Due to this, General Motors for alternative suppliers across Europe, Japan, and a number of different locations, trying to soften the impact of diminished supplies from China. In order to do this, successfully, the company understands that they are going to have to this quickly, as they are already behind. They first assess how much of their supplies and which ones are being impacted from China, this will help them narrow down where they need to find different suppliers, to quickly fill in the missing products. This will help them to figure out which finished products are these going to affect and what are some alternatives that could have. From there, they can figure out how much of the revue and total profit will be moving forward so they can figure out where they are financially.

Due to the volume of issues, they are facing they are able to come with sophisticated supply chain resiliency capabilities to help prepare themselves better for future occurrences. The main factor that needs to be emplaced for every major problem is quickness. Being able to respond as quick as possible helps to avoid bigger issues as you can act upon the problem. General Motors does this is by providing “Blind Spot Workshops”. In these workshops they come with several risks for a number of scenarios and how they could help resolve each one. This allows them to think fast on their feet and with a number of different minds thinking of the scenarios, it allows for a broad range of solutions. Also, they have come with a set of analytical tools that help assist them in analyzing risk associated with specific suppliers and catastrophic events. Tools such as “Resilinc”, allows them to pinpoint supplier plants that might have be affected if say a earthquake, a tsunami, etc. where to happen so they are aloe to assess the situation and adjust to issue that might to start the company. When the issues are understood, the company can then use their supply chain planning tools to figure out how profitable alternative suppliers are going to be and what will the ongoing service level impact will be.

Overall, I believe that due to the pandemic, General Motors has had unsurprisingly faces hardships and where required to shift their supply chain to adjust to the world pandemic, but they have done so very well. They can get in contact with new suppliers that could be used to them if future pandemics happen, or something happens with China due to them being most of their revenue. They conduct workshops in order to prepare for risk management to have the least harmful impact on the company. I think the key objective to take away from this post, is that risk management is very important, especially to larger companies. No one ever know when something big is going to happen or how it may affect your revenue and profits, to ensure the safety of your company, being prepared is key. I think that although struggling as everyone else is, General Motors stays profitable with their ability to adjust to such instances.

Authored by: Brianna Coeling

Reference:

https://www.forbes.com/sites/stevebanker/2020/02/12/how-will-the-coronavirus-impact-general-motors/?sh=1077468352bc

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