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1998-05-23 17:21:10


GM's Problems Updated: 100,000 Suppliers, Embedded Chips



General Motors has 2 billion lines of code. It has 100,000 suppliers. It has budgeted less than $600 million to fix this.

The company found out it was vulnerable only recently.

Its manufacturing system is dependent on embedded chips.

This is from FORTUNE (April 27).

* * * * * * * * *

Unfounded gloom and doom? Not if you listen to Ralph J. Szygenda, chief information officer at General Motors, whose staff is now feverishly correcting what he calls "catastrophic problems" in every GM plant. In March the automaker disclosed that it expects to spend $400 million to $550 million to fix year 2000 problems in factories as well as engineering labs and offices. . . .

So for a long time manufacturing companies snoozed, including GM. When he arrived at the automotive giant a year and a half ago to take over the CIO job, recalls Ralph Szygenda, he was amazed "that most people assumed that the factory floor didn't have year 2000 problems." Szygenda, with experience in manufacturing at Texas Instruments, didn't settle for assumptions. He shook GM out of its slumber by turning to outside companies such as Deloitte & Touche and Raytheon Engineers & Constructors, specialists in solving the problem, which sent in 91 experts to assess the automaker's situation. Supplemented by squads of GM technicians and programmers, these experts fanned out through GM's 117 facilities in 35 countries. What they found shocked even the factory-wise Szygenda.

"At each one of our factories there are catastrophic problems," says the blunt-talking executive. "Amazingly enough, machines on the factory floor are far more sensitive to incorrect dates than we ever anticipated. When we tested robotic devices for transition into the year 2000, for example, they just froze and stopped operating."

Szygenda quickly placed manufacturing facilities at the top of the list of the three "most dangerous" year 2000 areas at GM, followed by the company's supply base and the portion of businesswide software systems that supports production controls and logistic processes. Now, says Szygenda, "we're working feverishly and fast" to get the problem under control. All by itself, GM has two billion lines of software to check. The company is also retiring 1,700 obsolete computer systems.

Attacking the year 2000 problem has exposed another major area of vulnerability for GM: its 100,000 suppliers worldwide. Will all be compliant? Modern manufacturing's mastery of just-in-time parts delivery and business-to-business electronic commerce has created a beast that can bite it. Szygenda knows all too well how, on occasion, labor strife or a problem at a key supplier has shut down GM plants. "Just-in-time delivery has streamlined our supply chain to make it highly sensitive to any interruption," he says. "Production could literally stop at our plants if suppliers' computer systems are not year 2000 compliant.

He sketches the grim possibilities: "Let's say that a key sole-source supplier of brake valves shuts down as a result of a year 2000 problem. As a result, on day two, two plants that produce master brake cylinders and clutch master cylinders have to stop production because they don't have those valves. On day three, as motor vehicle assembly plants begin to run out of parts, production falls to about one-third of usual volume. By day four, all assembly plants shut down. And with no orders coming in because of the shutdown, hundreds of plants supplying parts to the assembly lines also shut down, from major engine plants to mom-and-pop subcontractors. That's the worst-case scenario--and yet it's a very real threat."

Surveying its suppliers last year, GM found plenty of cause for concern. The survey showed that awareness of the year 2000 threat was low among U.S. suppliers and even lower among those in Europe. One key global supplier didn't even know a problem existed.


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