GM build-to-order plan would cut inventories by half

DETROIT (Jan. 22, 2001) — General Motors Corp. said it wants to cut inventories by half — about $12 billion US — in the next three to four years by building most of its vehicles to customer orders rather than trying to forecast demand.

Speaking at the Automotive News World Congress in Detroit, GM group vice-president for worldwide purchasing and North American production Harold Kutner set a target of building 85% of its vehicles to order.

“We’ve seen the growth of the Internet shopper who knows what’s available,” Kutner said. “They’re not going to compromise based on inventory.”

The Big Three automakers have been stung by lower-than-expected sales recently. Deep discounts and sales incentives have been unable to stir up demand.

Kutner said the arrival of the Internet and improved supply-chain-management technologies could take the guesswork out of forecasting.

In limited tests of build-to-order programs, Kutner said GM has reduced the time it takes to turn an order from a dealer into a built vehicle by 40%. He said the next challenge was in shipping the vehicle, which can take 15 to 70 days.