GM’s Dave Leich says the last 18 months in automotive have been unlike anything he’s seen in over three decades in the industry. As executive director, global supply chain, at General Motors Corporation, Leich leads the assembly, propulsion, and stamping operations, as well as the material launch execution and the demand/supply planning and scheduling organizations. His responsibilities also include GM’s global supply chain operations for North America, South America, and Asia-Pacific.
Leich represents GM’s global purchasing and supply chain on the company’s North American staff. He also represents GM on the AIAG board of directors. In this exclusive interview, Leich provides a sneak peek into what he will discuss as a featured speaker at the AIAG Supply Chain + International Trade Summit coming up on September 9, 2021.
AIAG: Your presentation at the upcoming AIAG Supply Chain + International Trade Summit focuses on supply chain challenges, and the past 18 months have surely seen its share of those. Have you ever seen the global supply chain face so many challenges before? Can you put what we’re experiencing into context?
Leich: I have been in the automotive industry for 32 years, and nothing has come close to the last 18 months in terms of the level of difficulty and complexity. The pandemic last year, the semi-conductors this year, steel and aluminum, resin shortages, shipping delays…I’ve never seen so much uncertainty and volatility in the supply chain.
In Q1 of 2020, as the pandemic spread from region to region around the world, it created chaos not just at GM but other companies as well. From last year to this year, with the global nature of everyone’s supply chain, there were already automotive supply chain issues in some areas. The pandemic made some of these issues worse.
On the positive side, we saw a great deal of industry collaboration. We needed safety protocols and playbooks. There was a great deal of collaboration across the supply base.
And now, we are facing drastic swings in automotive demand. Early in COVID-19, we were heading toward a recession, and then suddenly, auto demand was super strong all around the world. It has been an incredibly unique and challenging situation.
The semi-conductor challenge is even more complex than managing through COVID. It’s amazing how far-reaching the restraints are down to Tier 3 and Tier 4. Trying to map out the semi-conductor pipeline and connecting all those dots to our product line has been an incredible challenge. People are working around the clock on this, both automakers and suppliers.
We thought the semi-conductor situation was going to improve in Q3, and we were cautiously optimistic that it could return to normal in Q4 — but now the polar freeze in Texas destroyed semi-conductor equipment, there was a fire at a major supplier in Japan, and over the past 4 to 5 weeks, we’ve seen a COVID surge in Malaysia and Taiwan.
AIAG: What should be the top supply chain concern for automotive companies, and what can they do to address it?
Leich: The most difficult challenge is replenishing vehicle inventories. This is the top priority for OEMs, and it will put stress on an already fragile supply chain. The finish vehicle market is in the 4 million range, but the U.S. OEMs are down to about 1.5 million. It’s not going to fix itself overnight. It’s going to take a few years to get our regular inventory restored.
Suppliers have to be predictive, ensuring their labor supply and raw materials. Labor is a big problem for some of the smaller suppliers.
AIAG: What weaknesses in the automotive supply chain have been exposed by the challenges of the 18 months?
Leich: The supply chain needs to be more resilient. There’s a lack of robust risk management and tools. We need better visibility across the supply chain and sub-tiers. These things have to be a top priority because the vehicle supply chain is more complex. The visibility is very important.
We need to do more work on key risk indicators across the supply chain. We usually focus on KPIs, but KRIs are critically important in identifying risk and potential issues much sooner, giving us time to mitigate risks.
AIAG: What can attendees expect to take away from your upcoming talk at the AIAG Supply Chain + International Summit on September 9th?
Leich: We’re going to discuss the compounding challenges this industry has faced over the last 18 months. We’ve been in crisis management mode, and in crisis mode, relationships definitely matter. We will talk about the importance of the relationship between OEMs and suppliers, and how building and leveraging these relationships is critical in times like these. Our way out is through collaboration and creativity — the “one team” approach.
Don’t miss Dave Leich’s presentation on “2021 Supply Chain Challenges and Resiliency” at the AIAG Supply Chain + International Summit, scheduled for September 9, 2021. Register here.
