ENGLISH - GM España seeks optimal supplier location

In this article, managers from General Motors España’s Purchasing and Logistics departments explain the importance of aligning an efficient supply chain with competitive logistics costs. In recent years, the combination of the Figueruelas plant’s magnificent performance and the contribution made by its suppliers has produced outstanding results.

General Motors’ Spanish factory is one of its most competitive anywhere in the world. The Figueruelas plant (Zaragoza) has demonstrated a clear capacity to come up with absolutely reliable industrial solutions to highly complex challenges within extremely tight timescales. What is more, its supply base in Spain has played a major role in achieving that. GM España Purchasing Director Félix Canales says, “Practically every type of component used in an automobile is available from the Spanish supply base, as well as all the services needed to make cars.”

Referring to the supply industry’s influence, Mr Canales points out, “The supply base on the Iberian Peninsula accounts for a high percentage of our purchases. Last year, domestic purchases made up over 70% of our plant’s annual procurement volume by value, well above the 15% recorded by the other European plants. These figures fluctuate as new vehicle programmes come online at our factory, and they also depend on the components used in platforms shared with other vehicles built in Europe.”

“The significance of logistics costs increasingly highlights the strategic role played by supply chain management in any industrial organisation,” Mr Canales

The head of Purchasing believes that Spanish suppliers “are valued very highly within the automotive industry for their quality, service, development capacity and competitiveness.” Referring to the way other geographic regions likely to become increasingly important to the sector are evolving, Mr Canales says about Morocco, “The country is consolidating its position for some components, which is allowing it to compete with Eastern European nations in terms of delivery to OEMs based in southern Europe because of its proximity and the associated logistics advantages.”

General Motors bases its supply chain strategy on “our suppliers” excellence at achieving the right balance of quality, service, development and innovation capacity and competitiveness.” Among these factors, one of them is particularly important. “The significance of logistics costs increasingly highlights the strategic role played by supply chain management in any industrial organisation,” underlines GM España Supply Chain and Logistics Director Guillermo Mancholas.

Mr Mancholas adds, “Supply chain management means taking responsibility for integrating materials and information flows and directly influencing decisions that range from supplier and production centre location through to production management to meet demand or adjusting supply flows to optimise inventory levels, space and transport costs, or managing finished product distribution flows to dealerships.”

Less offshore relocation

Mr Mancholas offers a similar view of the short-to-medium-term outlook, stating, “Firms will seek to balance logistics, supply and manufacturing costs in overseas countries, which will slow down the offshoring process seen in recent years. In the medium-to-long term, we will see labour specialising increasingly in technology in developed countries and gradual incorporation of less skilled and more competitively priced labour in developing economies. That could reawaken some companies’ interest in relocating to North Africa or developing nations in southern Asia.”

Both executives emphasise, “Our factories’ supply chain excellence is vital to achieving the competitiveness so essential in this sector. For us, logistics costs play a hugely important role when it comes to selecting the supply base in the countries in which we have our production plants, though of course supplier quality, service, innovation, development capacity and competitiveness are always taken into account.”