General Motors intends to reduce the size of the logistics behemoth by 2016, trying to trim costs and eliminate waste in North America.
This was the global focus last year and now it’s the $8 billion American side of the operation’s turn to face scrutiny, all the while retaining unaltered its duties of moving parts and materials worldwide to 168 manufacturing plants, handle customs and duties, in order to ship spare parts, cars and trucks to dealerships.
This is an area watched carefully by GM Chairman and CEO Dan Akerson, who set the goal of cutting $1 billion from material and logistics costs in North America by 2016. Trimming that amount will help boost its US profit margin by 1%, GM North America Chief Financial Officer Chuck Stevens said in March during an investor’s conference.
This will be achieved in several ways: by working with suppliers to bring parts plants closer to GM’s assembly plants, by extending rail lines directly to plants, and by adding stamping plants to assembly facilities that don’t have them and also by cutting down the waste (the real one, yes).
“The challenge is how do you do logistics efficiently and frankly minimize cost, because that cost you save there can be, you can put into reinvesting in the product, you can put into strengthening our fortress balance sheet,” said Grace Lieblein, vice president of GM global purchasing and supply chain, in an interview last week.