Thursday, March 23, 2006

Is IT a remedy for GM's poor results?

General Motors Corp. is turning to automation to improve its auto parts distribution system to dealers, ending practices that had made for a bumpy ride for its auto parts supply chain. By the end of 2007, GM expects to have its approximately 8,000 U.S. and Canadian dealers using its Retail Inventory Management (RIM) system, which relies on intelligence gleaned from nationwide parts sales to recommend parts-restocking policies at dealerships, Computer World reported.

Today, GM parts distribution relies heavily on the judgment and practices of individual dealer parts managers, who typically wait until the end of the week to submit a batch of parts orders. This has meant that a large percentage of parts orders have arrived at GM distribution centers at the same time, driving up labor costs because workers earn overtime pay as they rush to fill orders.

One main question is Is IT a remedy for GM's poor results? The answer is maybe. It's for sure that the giant auto maker must reduce its cost of development and also supply chain cost heavily in the next three years to survive and this plan is in line with cost reduction objective, but this should be combined by a set of other restructuring efforts acting in a coordinated way to be helpful.