General Motors Case Study

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Northeastern University *

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3335

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Information Systems

Date

Apr 3, 2024

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pdf

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4

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General Motors: Supplier Selection for Innovation General Motors (GM), an automotive manufacturing business, has launched a new project to transition to autonomous vehicles. The Chevrolet Bolt EV was General Motors’s first autonomous vehicle, with significant technological advancements created to enhance the customer experience. In February 2017, GM announced that the 2020 Chevrolet Bolt would become the platform for their first autonomous vehicle, which would require a new braking system integrated with artificial intelligence. Angela Hanna, a commodity buyer at GM has been tasked to select the most appropriate supplier for the e-boost brake module, a component crucial to the safe operation of the autonomous vehicle. This case will navigate the complexities of the GM supplier selection process, evaluating factors that encompass cost, innovative capabilities, intellectual property, and supplier relationships. The suppliers in contention – Rosie Automotive International, Elroy International, R.U.D.I. Braking Systems, and Orbitty International Manufacturing & Technology Co. – each present unique propositions with their own set of advantages and trade-offs. Rosie Automotive International offers proprietary technology with a competitive edge but demands a larger share of GM's business. Elroy International brings a willingness to share intellectual property but lacks a long-standing relationship with GM. R.U.D.I. Braking Systems, while an established prototype supplier for GM, exhibits reticence in sharing IP information. Orbitty International showcases industry-leading expertise but at a premium cost and with a history of strained customer relations. Based on costs alone, R.U.D.I. Braking Systems offers the most competitive bid for the e-boost system, quoting $43 for the electric vehicle (EV) version and $53 for the autonomous vehicle (AV) version. Rosie Automotive International indicated a price increase due to rising
costs. It required a larger percentage of GM business along with a long-term contract, suggesting a higher overall cost of engagement. Elroy International is a recent addition to GM’s supplier list and, while open to sharing IP, might have additional costs associated with establishing a new supply chain relationship. Orbitty International Manufacturing & Technology Co. offers a premium cost service, especially as they are recognized as a global powerhouse in automotive design and engineering. Given these considerations, R.U.D.I. Braking Systems emerges as the least expensive option based on the direct costs quoted. However, cost considerations should also account for the value of IP rights, the potential for collaborative innovation, long-term strategic relationships, and the total cost of ownership which includes integration, operation, maintenance, and potential risks associated with each supplier. Hence, while R.U.D.I. has the lowest immediate cost, a thorough cost analysis should include these additional factors to ensure the most cost-effective decision over the vehicle’s lifecycle. On a non-qualitative analysis of the pros and cons of the 4 suppliers, Rosie Automotive International (RAI), already has an established history with GM, being their regular supplier. They also can provide the necessary e-boost modules with the added confidence of their IP, suggesting competitive cutting-edge technology. However, RAI’s IP is proprietary and they are unwilling to share, which would limit GM’s control over the technology. RAI requires a larger GM business share along with a long-term contract, reducing GM’s ability to negotiate and increase costs. For Elroy International, they are willing to share their IP, mitigating GM’s risk of dependency and their acquisition of U.K. supplier Cogswell Braking Systems can be advantageous to technological advancement. However, they would need to establish new supply chain logistics, as they have not been a previous supplier to GM. R.U.D.I. Braking Systems offers GM a long-standing relationship with experience in prototype supply, technical alignment
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