After the slump in domestic car sales in the past decade, General Motors, like other has worked to identify methods to return to the top of the car manufacturing sector. Examining the manufacturing process to decrease maximize General Motor’s return on investment and using outsourcing to decrease labor costs are two ways that the car manufacturer is focusing on to increase flexible resources for further development. In order to accomplish this, the leaders of the company are focusing on Process Strategy and Location Strategy.
Where previously, GM followed the industry in regards to process strategy which tolerated imperfection in the manufacturing process, which was corrected after the fact by recalls, they altered their process strategy to create cars with “flawless quality.” This meant increasing inspections at home plants and abroad, and the willingness to throw out any part of the process that allowed for possible imperfections in both the function and appearance of the cars they produced. This resulted in a new process strategy that set higher quality achievement bars for employees to meet, increased reviews and training for staff to address quality improvement issues and alter the process as necessary to constantly increase quality until every car coming off the line was perfect. This new process ramped up quickly and employees were expected to meet this zero imperfection process policy within months of its inception. This new process strategy allowed GM to shed its reputation for producing the reliable work horse of cars to making reliable cars that could still compete with the higher end luxury vehicles (Fine, & Hax, 1985).
In an effort to cut costs and maximize earning potential, General Motors decided to alter their location process by focusing on emerging markets. In addition to other countries, the car manufacturer de-emphasized their Detroit presence, in favor of strong presence in China. The diversified location process used a strategy where the manufacturing process was de-centralized and instead of a few small plants producing limited parts or serving a redundant function. Previously, this had served to ensure that there would be no interruption in car production in case of a market collapse in the U.S. However, the head management at GM decided that it was time to use a location strategy that focused on potential instead of safety in the town where car manufacturing was born and had thrived (Belis-Bergouignan, Bordenave, & Lung, 2000).
References
Belis-Bergouignan, M. C., Bordenave, G., & Lung, Y. (2000). Global strategies in the
automobile industry. Regional studies, 34(1), 41-53.
Fine, C. H., & Hax, A. C. (1985). Manufacturing strategy: a methodology and an illustration.
Interfaces, 15(6), 28-46.
