General Motors: Building A Digital Loyalty Network Through Demand And Supply Chain Integration

Rick Wagoner, CEO of General Motors knew that something was “broken” in the automobile industry long before a USA Today article made the announcement in December 2001. Wagoner, along with top lieutenants Mark Hogan, group vice president, on the customer side; Harold Kutner, group vice president for worldwide purchasing, on the supply chain side; and Ralph Szygenda, group vice president for information systems & services, and chief information officer on efforts to “digitize” GM, had launched several initiatives to realize their shared vision of value creation within GM. Several of these initiatives were aimed at integrating GM’s demand and supply chains, supported by the latest technologies. Their goal was to strengthen and integrate GM’s demand and supply chain systems to build what is known as a digital loyalty network (DLN). As its name implies, a DLN includes the three components GM was addressing: “digital” for technology-enabled; “loyalty” for a focus on customers and on increasing their loyalty and lifetime value to GM; and “network” for coordinating and leveraging all supply and distribution chain partners to serve those customers. Wagoner and his team believed their efforts would be fundamental to a sustainable, value-creating auto industry business model that would lead to increased efficiency and profitability. The group had made excellent progress, and Wagoner decided to get together with his team to take stock of where they stood in realizing their overall vision. But the words “industry business model is broken” stayed with him. He wondered whether the investments in these myriad initiatives would actually pay off—and whether they would help fix the problem of low value creation. As he pushed the e-mail send button to alert the team of their meeting, he wondered whether their efforts were really sufficient to render GM a value-creating business.