Boston, MA 10/13/2014 (wallstreetpr) – General Motors Company (NYSE:GM) has been able to cut big on costs as its major suppliers relocate closer. The company’s representative stated that they have been able to convince some of the key and major suppliers to move closer to the company’s assembly plants. This will help the company to effectively reduce its transportation costs as well as keep a watch on quality.
Mutually Beneficial
The automaker’s Vice President of global purchasing and supply chain, Grace Lieblein, said that it pushed suppliers to move to close proximity of its assembly plants. The move is made by the company as it is in the process of transitioning into making next generation vehicles. The Fairfax Assemble Plant located in Kansas City will be one such plant to assemble next generation vehicles. Lieblein said that the company’s efforts has proved to be mutual beneficial for both itself and suppliers.
It is reported that suppliers such as Magna International Inc. and Comprehensive Logistics Co. are preparing to build factories in Spring Hill, Tennessee, which is just a mile away from General Motors Company (NYSE:GM)’s plant there. Such initiatives by suppliers could translate into big savings for the automaker, which is making efforts to boost its North American profit margin. General Motors Company (NYSE:GM)’s call to reduce costs is reflected in its forecasts made earlier this month. The company plans to save $700 million in North America this year under the material and transportation costs. Also, it expects to save $900 milllion each in 2014 and 2015.
Not Company Specific
The strategy to put suppliers near is not just adopted by General Motors Company (NYSE:GM). Other players like Ford Motor Co. (F) also has its suppliers located near its assembly facilities. The automakers even promise suppliers to give contracts for two generations of their vehicles, if they agree to locate nearby. Thus, it is quite understood that suppliers too have an underlying interest in shifting to the closer vicinity of their customer.
