What Does Bo Andersson's Departure From GM Signal?

Earlier this morning, GM announced that its head of procurement and supply chain, Bo Andersson, was leaving the automaker to pursue "other career opportunities." I read this as code for being shown the door (after all, if Andersson told GM that he had a different offer and the automaker wanted to keep him, GM most certainly would have countered -- something that we all know happens in the procurement executive realm). But that's a subject for another column. What's more important today is discussing the merits of this decision for GM and why this might have transpired in the first place.

Based on many discussions and interviews that I've had with industry insiders in recent years, Andersson has largely been part of the solution to GM's supplier woes versus an extension of the automaker's negative relationships in the past. Granted, turning any tanker takes time, but Andersson started the process. Since taking the helm of GM's supply chain in 2001, my sources suggest that Andersson has worked to improve supplier relationships from levels that were just about as bad as they could be, despite having one arm tied behind his back.

Our research and interviews suggest Andersson had an impossible job, given GM's past treatment of suppliers combined with numerous other factors -- work rules that mandated union assembly of parts (versus the flexibility of suppliers to source integrated components from suppliers), continued pressure from the highest levels of GM to stick it to suppliers whenever possible for additional cost savings and limited budgets to invest in supplier development for all but the most strategic suppliers (unlike Honda and Toyota). Following his departure, it's unlikely any of this will change unless the fundamental culture of GM senior management and union leadership change.

I've heard second hand recently how John Campi, Chrysler's former CPO (and before that CPO of Home Depot), thought Detroit's procurement mentality and supplier relationships were the worst of any industry (he also had many choice words for the Big 3 and his former employer from what I hear). GM, unfortunately, is not much different from Chrysler when it comes to an inability to rid itself of its supplier management -- or mismanagement -- legacy.

But what are the real reasons that Andersson exited stage right this morning? Clearly, he had worked to do as much as possible since taking over as CPO, but perhaps some people probably thought he could have done more. That or -- and this is my speculation -- the UAW did not like the strategies that he was taking in regards to GM's procurement and supply chain direction. Unfortunately, I suspect that whomever comes into the new role will have an impossible job given the fact the UAW now has a seat at the most senior procurement and supply chain table at GM. Imagine being a CPO and being forced to answer to the union before sourcing decisions are made. Get the picture?

After all, when you've got a labor gun to your head to prioritize keeping union workers on the job over the right sourcing and supply chain decisions (e.g. make vs. buy, manufacturing outsourcing, global sourcing of assemblies/components/platforms, etc.) to maximize earnings and competitiveness, it's pretty clear how impossible a task the new CPO will have. Too bad as a citizen of this country that I can't sell my share of my Federal stock in GM. Because after decisions like this -- and the input that went into making them -- it's pretty clear what my investment will end up being worth.

- Jason Busch