Assignment cover sheet

Student name: Wang Jin Biao

Course: PGD in Strategic Business IT

Lecturer Name: Graham Glanville

Assignment Title: Strategic Report of GM

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 Table of Contents

Title

EXECUTIVE SUMMARY

INTRODUCTION OF GM

MAIN DODY
Introduction of enterprise system
ERP system
CRM system
SCM system

How could an Enterprise System support the GM

ERP system smooth firm’s collaboration for GM
MRP2 solved the problem of cost control for GM
EDI system improve customer satisfaction
CRM system closer the distance between GM and customers

Barriers and Suggestion to successful implementation in GM

Unclear focus on the implementation
Disunity command and deployment
Huge among cost
Staffs qualification and skills

CONCLUSION

REFERENCE

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Executive summary:

The General Motors Company, also known as GM, is an U.S-based automaker with
its headquarters in Detroit, Michigan. The company manufactures cars and truck in 34
countries, recently employed 244,500 people around the world, and sells and services
vehicles in some 140 countries. By sales, GM ranked as the largest U.S. automaker
and the worlds second-largest for 2008, having the third-highest 2008 global revenues
among automakers on the Fortune Global 500

This report is based on the research on GM Company. It will be discuss the current
situations of these enterprise system supports the business strategy of GM and identify
the barriers to successful implementation in GM. The report concludes with
recommendations to increase market share, build up consumer confidence and to
achieve its long-term goals.

Introduction of GM:

In 2008, GM sold 8.35 million cars and trucks globally. GM is the majority
shareholder in GM Daewoo Auto & Technology Co. of South Korea and has
collaborations with Shanghai Automotive Industry Corporation of China, AvtoVAZ of
Russia, GM retains various stakes in different automakers. GM's biggest success
internationally has been its performance in China, where GM's sales rose 66.9 percent
in 2009, selling 1,830,000 vehicles and accounting for 13.4 percent of the market

Introduction of Enterprise System

Enterprise Systems are large-scale, integrated application-software packages that use

the computational, data storage, and data transmission power of modern information
technology to support processes, information flows, reporting, and data analysis
within and between complex organizations.

Enterprise System has three main elements, there are:

Enterprise resource planning (ERP),

Customer Relationship Management (CRM),

Supply Chain Management (SCM).

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Enterprise Resource Planning (ERP) systems

ERP systems are normally purchased as an off-the-shelf package; these systems are an
integrated computer based applications to provide a single solution from a single
supplier with integrated functions for major business areas such as production,
distribution, sales, materials, financial resources and human resources management.
Its helps to facilitate the flow of information between all business function within the
organization.

http://www.erpsoftwarebusiness.com/images/ERP_Circle.jpg

Materials Requirements Planning (MRP);

Material Requirements Planning (MRP) is an information system used to calculate the

requirements for component materials needed to mange manufacturing processes. An
MRP system is intended to ensure materials are available for production and products
are available for delivery to customers, plan manufacturing activities, delivery
schedules and purchasing activities, maintain the lowest possible level of inventory.

These are components of an MRP system;

Master Production Schedule (MPS)

Bill of Materials (BOM)

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Inventory Status File (ISF)

Master Production Schedule (MPS)

The MPS provides a plan for the quantity and timing of when order is required. The
system will use this information and taking into account delivery, production and
supply lead times and will indicate when materials are needed to achieve the Master
schedule.

Bill of Materials (BOM)

The BOM identifies all the components required to produce a schedule quantity of an
assembly and structure of how these components fit together to make that assembly.
The BOM can also be viewed as a product structure tree which is a list of the raw
materials, sub-assemblies, intermediate assemblies, sub-components, components,
parts and the quantities of each needed to manufacture an end product.

Inventory Status File (ISF)

The ISF provides information on the identification and quantity of items in stock. It
helps MRP system determine a sufficient quantity of an item is in stock or an order
must be placed. The ISF will also contain the lead time, or time between order and
availability for each component.

Manufacturing Resource Planning (MRP 2)

MRP2 extends the idea of MRP to other areas in the firm such as marketing and
finance. Thus central databases hold information on product structure (BOM) which
can be updated due to design changes by engineering. By incorporation financial
elements into item details, inventory cost information can be utilized by finance
departments.

Customer Relationship Management (CRM)

Customer relationship management (CRM) provides integrated functionality for

marketing, sales, customer support and call centre requirements. Which
understands customer needs allows the organization to design customer specific
levels of service and track profitability at the customer level this increases
value per customer and customer retention.

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http://www.amigolog.com/Amigolog-CRM-Overview-En.jpg

Customer Experience Management (CEM)

CEM can collect customer information through web-based and e-mail based tools to
understand customers requires like timely and precise information about order , quick
and reliable responses to all inquires then interrogate information using data queries
and provides continuous automated customer feedback.

Supply Chain management (SCM)

SCM is the integration and management of key business functions that promote
the flow of materials through the entire supply chain. Supply chain consists of
the series of activates that moves materials from suppliers, through operations
to customers. SCM can be divided to upstream and down stream have these
most common terms are in bound logistics, outbound logistics, Materials
Management.

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(http://organizations.weber.edu/sascm/supply_chain.bmp)

Informational side of SCM

SCM is more than just physical flows, but informational, coordination of the 2 flows
that give the organization competitive advantage.

Procurement Information Systems

The role of procurement is to acquire all the materials needed by an organization in

the form of purchases, rentals, contracts and other acquisition methods. And also
make a decision for choosing suppliers. Procurement information systems like
Electronic data interchange (EDI) can exchange, using digital media of structured
business information.

Vendor Managed Inventory (VMI)

VMI often used EDI as data transfer to involves vendor having visibility into the
customer’s inventory utilization and determines replenishment policy needed to
maintain the inventory at the agreed upon levels.

How could an Enterprise System support the GM

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As we know Enterprise System is integrated application software use the power of
modern information technology to support business processes, information flows,
reporting, and data analysis for organizations.

GM has been the global automotive sales leader since 1931, during the GM’s
development; Enterprise system can support the GM’s business strategy from ERP,
CRM and SCM three main system

ERP system smooth firms collaboration for GM

Enterprise Resource Planning (ERP) system provides enterprises with a unified

business management information platform. Integrate internal and external enterprise
resources which eliminate information barriers and information silos between the
separate departments within the enterprise.

“A car for every purse and purpose.”. (Sloan, 1963, p. 438). By using the famous
multiple-brand business strategy, GM’s brand image and automotive products has
become self-worth and reflect the identity of the representative.

After successively acquisition of Chevrolet, Opel and Vauxhall, GM has more car
brands and models than any other car manufacturers. In less than a decade, GM has
opened the new assembly plant over a dozen countries, including China, Japan and
India.

Over time, multi-brand strategy is revealing its drawbacks. Order different

components form different countries across worldwide for each brand. Resulting in
communication difficulties between brands, R&D, manufacturing, marketing and
finance which increased the cost.

By using the ERP system-Materials Requirements Planning (MRP) can help GM to

calculate the requirements for component materials needed to produce at assembly
plant is essential in supporting enterprise development,

How to smooth the collaboration between the firms from different geographical is
facing a major challenge. By using the ERP system, GM can provides a single
solution with integrated function for major business areas in the different bases.
Although these bases are thousands of miles away from each other across the
worldwide, the production schedule, orders, procurement and business process of
each bases are achieve real-time feed back and information sharing that helps
provides a plan for the quantity and timing of when orders are required. Also taking
that into account delivery, production and supply lead times and will indicate when
components are needed to achieve the master production schedule (MPS).

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When those components required for produce scheduled is assembled, Bill of
Materials (BOM) can help to structure of how there components fit together to make
that assembly, like GM’s each engine has more than 300 parts, more than 2,000 parts
for vehicle, compare with other company, GM has more car models. GM can facilitate
the (BOM) integration as product structure tree for the workshops monitoring all the
data and generating the correct schedule of parts at the right time. With use of BOM
system GM can decomposition product structure into the single unit level, not only
limited to the workshop levels. If GM’s engineering using central databases hold
information on product structure it also can shorten the time from design to
production.

As GM has many different models of car, consequently it has thousands of auto parts.
Inventory management is also very useful for GM. By using inventory statutes file
system (ISF) GM can benefits from identification and quantity of auto parts in the
stock from each stock, reduce inventory and reduce occupation of funds while
avoiding overstock or shortages of materials,

After all, ERP system-Materials Requirements Planning (MRP) can also help GM to
calculations all the information at above with Gross Requirements, Scheduled
Receipts, Planned Order Release, Projected On Hand, Net Requirements then outputs
a MRP Report that helps GM to make strategic decisions.

MRP2 solved the problem of cost control for GM

Manufacturing Resource Planning (MRP2) system incorporating financial

elements into item detail consist the information of product demand, product
manufacturing, product sales and consumer feedback. So enterprise can quickly
adjust of product structure to adapt market changes to save the cost.

In 2005, Sloan’s work at GM had come under criticism for creating a

complicated accounting system that prevents the implementation of lean
manufacturing methods. Essentially, the criticism is that by using Sloan’s
methods a company will value inventory just the same as cash, and thus there is
no penalty for building up inventory. This system seems to have been widely
adopted because of its significant advancement over previous methods. (Sloan,
Alfred P, 1965, My Years With General Motor.) However, carrying excessive
inventory is detrimental to a company’s operation and induces significant
hidden costs. (William Waddell & Norman Bodek, 2005, Rebirth of America
industry.)

GM motor can facilitate ERP system extends the idea of MRP2 to other areas in the
firm to achieved integrate and optimize marketing, purchasing, manufacturing,

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financing, engineering, logistics and other business process within its overall value
chain. Further enhance the GM’s competencies of flexible production, agile
manufacturing and lean management. For example, MRP2 system can
incorporating financial elements into component details, so GM’s finance
departments can benefits from use the inventory cost information to ensure
synchronize and data consistency of cash flow and logistics. That achieved the
status of cash flow can be traced back the origin of funds and further trace to
the place related business process. Change the statue of financial information
always fall behind the material information. MRP2 system also separately
account the paper cost and actual cost of variety finished products and semi-
finished products to identify the key element of cost rises in GM. For GM’s
managers provide cost control and cost management decision support.

Use of SCM system for GM

Supply chain management (SCM) is built for the core businesses, through the
information system, utilize various segments of materials, capital, information
and other resources for planning, scheduling and control. Integrate of all the
procurement function through users, retailers, distributors, manufacturers and
suppliers for the organization to achieve the best marketing cost production at
right quality in the right place and right time.

As the world’s largest car company, GM annually expend on the supply chain
of more than 50 billion dollars. For such great amount of logistics, suppliers
and physical distribution, there is many complicated situation and problems
that SCM system can help with it.

EDI system improve customer satisfaction

The electronic data interchange (EDI) system is integrate of supply chain to

achieve of creating net value, building a competitive infrastructure, leveraging
worldwide logistics, synchronizing supply with demand and measuring
performance globally. And also established a visible global logistics operation
system and a real electronics supply chain. The EDI system realizes the real
time management function during the implementation of the supply chain
process and also allows changing the detail during the supply chain process.
For example you can find out which vehicles in transition, find a vehicles for a
customer specific requirements, to change its original destination and transit to
customer directly.

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Although the second quarter of 2007, GM in addition to the overseas market
outside North America sold more than expected, but Toyota took the top spot in
the position has become an irreversible fact. The main reason is the decline in
customer satisfaction. At the same time, imported cars increased competition.
The automotive industry pattern is changing.

The U.S. is “the country on wheels”; cars penetration is the largest in the
world. Auto industry entirely controlled by the three automotives; GM, Ford
and Chrysler. Dealer and customer’s views were ignored. GM’s global souring
and production control and logistics group vice president Harold Kutner
explains; “We were an ‘arrogance’ company, we arrogantly self-righteous that
customer accept whatever we product.”

Nowadays, the market demand is more complicated and volatile. As

information technology becomes more sophisticated, consumers have become
more power and requiring higher standard. However, GM’s ability to respond
the market needs has lagged behind. Dealers also overwhelmed by more than
100 days of inventory supply. For clearing unmarketable products, GM has had
to offer a variety of measures to stimulate sales that results in a decrease in
profit margins.

Dealers can not get the required cars which what customer needs in time.
Consumer’s preference is particularly serious shortage of equipment, GM’s tens
of thousands of order for the products are affected, in other words, Gm’s
customer is difficult to timely access to their preferred models and equipment
that relate to GM’s competitiveness and profitability.

Market Relationship can use electronic data interchange (EDI) to share

information, combining orders in a single delivery to shorten customer delivery
times, reduce inventory and lower the costs.

By using EDI system, GM can coordinate relationship between the production

schedule and actual needs. EDI system can support GM an integrated order
management system, allowing dealer to enter the system through the network to
ensure the required inventory portfolio. With the EDI, dealers can order weekly
or even daily for required cars and view the order status during the processing.

Through the EDI system, GM can automatically compare current production

schedule with dealers order to ensure that the dealer received the right car. In
order to speed up delivery time, the EDI system will try and find a way to
fulfill orders more quickly.

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CRM system closer the distance between GM and customers

Customer Relationship Management (CRM) system support enterprise use of

information technology (IT) and internet technology to achieves integrated
marketing for customers. CRM system can continuously communicate with
customers to understanding of customer needs and continuously improve the
products and services to increase and satisfy customers demand

GM with its multiple-brand strategy was very successful, when the economy
crisis blows up the bubbles. GM facing the decline of market shares, because it
was invested too much in SUV and trucks while customers are seeking low fuel
consumption economic cars.

CRM system not only can help GM improve customer service, and also help
GM find customer demand. With a wealth of customer information, GM can dig
it deep to analysis and found many significant customer behavior patterns

CRM system can help GM collect customer information through web-based

tools to understand customers required. Then quickly response to the required
like rush hybrid technology into a vehicle, create a large centralized and well
funded R&D program to catch up and surpass competitors (Toyota)
immediately

From the customer service point of view, because there is different firms
involve sales, delivery and repair. CRM system can help GM’s customer get a
unified, consistent and convenient service. It also can track each car’s entire
life period to closer the distance between GM and customers.

CRM system’s call center can help GM to collect and disseminate customer
information for coordinate car sales and car services through entire sales
system. Let potential customers and actual customers can direct and easily
dealing with the company. Customer can request information in a timely
manner to convey the local retail agents and maintenance units.

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Barriers and suggestion to successful implementation in GM

The implementation of an enterprise system provides the opportunity to integrate

disparate systems, provide real time information, adopt proven system, enforce
standards, reengineer business processes and restructure the organization.

Although Enterprise System is very useful for GM combines information technology

and advanced management ideas to rational allocating resources, maximizing the
profitability. However there are barriers to successful implement as follow;

1. Unclear focus on the implementation

2. Disunity command and deployment

3. huge among cost,

4. Staffs qualification and skills training

1. Unclear focus on the implementation of ES

GM have to think from their own practical needs and realities conditions to determine
the short term and long term task of enterprise system and requirements. So that
implementation is on the right direction. Without clear objectives, the implementation
process is not protected. Too much focus pressure to achieve short term goals is also
the barrier for GM’s ES implementation. Because the implementation is the process of
long gradual and continuous optimization.

2. Disunity command and deployment

ES implementation is a long term, comprehensive systematic project, involving a
wide firm and difficulty of process that needs GM’s leaders support and promote. It
will be necessary for GM establish the coordination of enterprise information
management department in order to unify command and deploy the overall
development of ES. Without specific coordination and management is very difficult to
achieve the desired result.

3. huge among cost

ES system implementation requires a certain amount of investment funds and other
resources. This should be fully taken into account when planning and to make
scientific and reasonable arrangement. So when GM is arranging the budget for ES
implementation, it is necessary to determine the different stages of implementation
investment budget not only to avoid blindness investment resulting in the unnecessary

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waste of fund. But also avoid cuts in the necessary budget funds because company‘s
financial strain or other reasons, resulting the ES system “unfinished”.

4. Staffs qualification and skills

For GM, the employee’s lack of understanding of Enterprise system and low skills
behind the development of ES system is an important task. Therefore, GM must take
various forms, various levels of training methods to enhance all staff qualification and
skills of information technology to promote the development of ES as a fundamental
task of getting employees involved in the construction of ES to improve the passion,
enthusiasm, and also increased benefit in the information process.

Conclusion

In summary, an integrated enterprise system for GM includes three main systems

there are; Enterprise resource planning (ERP), Customer Relationship Management
(CRM) and Supply Chain Management (SCM). These systems can assistant GM by
smooth collaboration between different firms, provide cost control and cost
management decision support, improve customer satisfaction and closer the
distance between GM and customers. However, that does not means Enterprise
system has no weaknesses. During the implementation of Enterprise system,
there are barriers for the GM such as; Unclear focus on the implementation of
enterprise system and development goals, disunity command and deployment of the
overall development of enterprise system, huge among cost and staffs qualification
and skills training. Although there are barriers, but with right strategy like determine
the short term and long term task of enterprise system, by GM’s leaders support and
promote to establish enterprise information management department, determine the
different stages of implementation investment budget and getting employees involved
in the construction of ES. I am sure GM can avoid those barriers and successful
implementation the Enterprise system.

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REFERENCE
http://www.erpsoftwarebusiness.com/images/ERP_Circle.jpg

http://www.amigolog.com/Amigolog-CRM-Overview-En.jpg

http://organizations.weber.edu/sascm/supply_chain.bmp (diagram)

(Sloan 1963, p. 438)

(Sloan, Alfred P, 1965, My Years With General Motor)

(William Waddell & Norman Bodek, 2005, Rebirth of America industry)

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