IT Takes Production to a Worldwide Market
In supply chain innovation, you're talking about 9 million vehicles that can be distributed to any part of the world. We can build in Korea and distribute in the Middle East by handling the complexity of global logistics. To build vehicles, you're taking $90 billion in materials and services, and you're bringing them in just in time throughout the world. You can do it from the most efficient location. So the shipping cost is not more than the cost of the vehicle-that would be dumb. We have systems that figure that out. We didn't have that three or four years ago. If you run out of production in one part of the world, you can shift it to another country with capacity. It's very important in emerging markets such as India, China and Russia. In Latin America last year, every vehicle we could get in, we could sell. Outside of the United States, we're doing unbelievably well. We're up to 250,000 vehicles sold in Russia. It will probably go up, just like China.We're not worried any more about the globalization of information technology. We're not worried about IBM's systems in China and we're not worried about AT&T, which is managing telecommunications throughout the world using the same architectures. If you do that, you have a total digital real-time enterprise, and, after that, it's only innovation. Does it hurt every day when they screw something up? Yeah, but that's a minor issue. Every year [for 12 years], operational metrics have gone up. So right now, innovation is all we do. Most of our suppliers have had to change their work force to focus on innovation. For example, AT&T has 30 basic R&D people working at GM. Capgemini has 400 architects to integrate all these areas globally. IBM, Capgemini, Hewlett-Packard and Microsoft are all working together building the most futuristic IT environment. The real question is, will it pay off? Will GM be a better automotive company? Does Bob Lutz, [GM's] head of all product development, have an IT problem? No-none throughout the world. Zero. He can build vehicles as fast as anybody else. It's a fashion business-all he has to worry about is building the right vehicles. He has the opportunity to do it. Go look at emerging markets: Where there's a clean sheet of paper, in almost every case, GM's the leader. It's still iffy. You're still talking about a battle to win. In every area, we're putting in futuristic technology, from all our suppliers. And they've got their futuristic people linked in here because it's an unbelievable testbed. You've got to be careful you don't get carried away because you don't want to blow up the place [laughter].
If you're running common financial systems where the only differences are local regulations, the efficiencies of cost are quite amazing. We're putting money we are saving into innovation projects such as hybrid and alternative fuel vehicles. It takes tons of money to put into those areas.