Objective: Make a supplier selection based on the recommendations and provide supporting arguments for your decision

GENERAL MOTORS: SUPPLIER SELECTION FOR INNOVATION

Mary Barra, GMs CEO, made it clear that GM was going to be a disrupter in the world of personal mobility. Part of this effort was to position the company as a leader in AV development. GM planned to bring this promising new technology to market quickly and with razor-sharp precision. Public safety and defect-free quality were GMs top priorities. As part of its quest to bring a fully autonomous vehicle to the market, GM acquired Cruise Automation, a three-year-old company best known for having created the first aftermarket AV conversion kit. The product allowed buyers to convert their cars into AVs for highway driving with the touch of a button.

GENERAL MOTORS AUTONOMOUS VEHICLE PROJECT LAUNCH TEAM

two autonomous test fleets of the Chevy Bolt EV had been introduced on the GM Tech Center and on the streets of SFO. These vehicles were undergoing testing, validation, and evaluation schedules, and they were performing to expectations. The next phase in the AV project was to introduce a highly controlled fleet of vehicles to be operated by Lyft. They were scheduled to begin deployment in the second quarter of 2018 and would be known as Chevy Bolt AVs.

The AV project team was charged by GM senior leadership to develop an autonomous driver system (ADS) that was safe for occupants, other vehicles, and could respond to the myriad of unexpected potential hazards on the road. In addition, GM wanted to maintain control of the intellectual property (IP) involved in the project. This included software, data streams, and data storage. GMs strategy was to own the IP so that it could independently and swiftly react to changes in the technological landscape. Hanna was excited to be part of this team. Her responsibility was to source the brake control modules for both the Chevrolet Bolt AV and the Chevrolet Bolt EV.

INTRODUCING THE CHEVROLET BOLT ELECTRIC AND AUTONOMOUS VEHICLE

The Bolt delivered more than 200 miles (320 kilometres) of electric range. Using a 240-volt wall box, the battery could be recharged after a 50-mile commute in less than two hours. An optional fast charging system, allowing the battery to be charged up to 90 miles in 30 minutes, was also available. The use of lightweight materials contributed to the Chevrolet Bolt EVs impressive acceleration rate of 0 to 60 mph in seven seconds and driving range of 200 miles For the model year 2018, regular production was expected to begin in mid-Oct 2017 with an estimated annual volume of 30,000 units. The price of the Chevy Bolt EV was US$30,000 after tax credits. The lifecycle was expected to be two years. In February 2017, GM announced that the 2020 Chevrolet Bolt would become the platform for GMs first autonomous vehicle, the Chevrolet Bolt AV (Level 4). The 2020 Chevrolet Bolt EV braking system would be upgraded to level 2 automation. The EV model change and AV start of regular production would occur in October 2019. The AV was expected to have an annual volume of 10,000 units, and the 2020 Chevrolet Bolt EV/AV would have a five-year life cycle.

BRAKE TECHNOLOGY

The key piece of the brake system, which needed to be fully integrated with the AI, was the brake booster. Hanna was confident that the supply base was capable of providing parts that would meet the needs of these programs.

Two major braking systems had been in use for many years: the anti-lock braking system and electronic stability control technology. EV propulsion systems opened the door for electronic brake booster (eboost) technology, which eliminated the need for a vacuum booster. The braking system for an AV (levels 3 and 4) required two e-boost modules: a primary brake booster and a secondary module. The secondary module was redundant and triggered by different inputs to react in an emergency. For a semi-autonomous vehicle (level 2) such as the Chevy Bolt EV, beginning with the 2020 model year, the primary brake consisted of the human driver pressing the brake pedal; the secondary system was an e-boost module, similar to the AV version, that would stop the vehicle when the human driver failed to stop. IP was an important part of the e-boost module.

CHEVROLET BOLT AV SOURCING OBJECTIVES

Hannas task was to source e-boost modules required to support the enhanced 2020 Chevrolet Bolt EV and the new 2020 Chevrolet Bolt AV. She would negotiate and award production contracts for these programs. The production supplier would need to deliver parts to the Orion assembly plant for the following scheduled production plans:

2020 Chevrolet Bolt EV

100 vehicles: March 2018 to December 2018

300 vehicles: January 2019 to March 2019

600 vehicles: March 2019 to October 2019 (regular production)

2020 Chevrolet Bolt AV

500 vehicles (non-saleable Lyft fleet): March 2018 to December 2018

1,000 vehicles (extended Lyft fleet): January 2019 to March 2019

2,000 vehicles (ext Lyft fleet): March 2019 to October 2019 (regular production)

The production of these vehicles would allow GM and Cruise, in collaboration with the ride-sharing service Lyft, to test the Chevrolet Bolt AV on the road in selected cities. The ride-sharing vehicles would be fully autonomous but would have a trained back-up operator in the drivers seat for the continued learning and improvement of the systems as well as for any emergencies.

A statement of requirements (SOR) needed to be distributed with a request for quote for the 2020 Chevrolet Bolt EV and AV braking system. The SOR would include a significant amount of data and detail, including GMs IP requirements. Because the technology was advancing so rapidly, the SOR would likely require changes before the procurement process was complete. Various regulatory and statutory issues could also affect the braking system and thereby the SOR.

This practice was common for all new AV technology commodities, including radar systems, high-definition cameras, and lidar systems (a combination of light and radar detection). GMs marketing division was still in the process of determining a feasible sale price for the Chevrolet Bolt AV.

BRAKE ELECTRONIC BOOSTER SOURCING

R.U.D.I. Braking Systems (R.U.D.I.) had a contract for the manufacture of Chevrolet Bolt AV prototypes in minimal order quantities. Its contract with GM was to develop a prototype electric brake system that integrated into the ADS on the Chevrolet Bolt AV. These vehicles were built in a GM pre-production facility and used a process known as soft tooling, which was only appropriate for manufacturing low volumes for small projects. The prototypes were tested and worked well with the GM and Cruise version of the ADS. However, R.U.D.I. was unwilling to share its IP with GM, so it could not be tested.

Rosie Automotive International

RAI was a regular supplier to GM located in Shanghai, China. RAI was the contracted supplier for the 2018 Chevrolet Bolt EV and had the capability to quote on all of the necessary e-boost modules. However, RAI informed GM that its IP was proprietary information, so GM would not have access to, or control of, the software and data associated with the braking system. RAIs tech experts claimed that a single point of control of IP provided greater control over its functionality. Being experts in e-boost technology, and considering IP a competitive advantage, RAIs tech team claimed that RAI needed to retain control of the software. RAI was very confident that it would be the successful candidate for the brake system quotation. The electric brake AV hardware, which would be manufactured in-house, consisted of two unique subcomponents that comprised the complete assembly. Shortly after GM made the last engineering change on its EV braking system to accommodate the RAI technology, RAI approached GM for a price increase. RAI required a larger percentage of GM business and a longterm contract guarantee to offset additional capital investment.

Elroy International

Elroy International (Elroy) was a manufacturer of electric brake systems located in Silao, Mexico. Although Elroy was not one of GMs regular providers of brake systems, the company did supply other commodities such as bumpers and side mirrors to GM. Because Elroy had recently acquired the U.K. supplier Cogswell Braking Systems, the company had been added to GMs bid list by the braking systems creativity team. Elroys capabilities as a supplier in this commodity were unknown to GM. However, the company was willing to share its IP with GM. Elroys electric brake system AV components consisted of three unique subcomponents that comprised the AV assembly. Elroys quote included a significant amount of purchased brake hardware components that were supplied by Orbitty International Manufacturing & Technology Co. (Orbitty), according to Elroys sales engineer Gord Butler. Elroy did manufacture some of its own AV components, however, and owned the software for its e-boost system.

R.U.D.I.

Braking Systems Headquartered in San Jose, California, R.U.D.I. had been a long-standing prototype supplier to GM, and had recently signed a high-volume production contract for the Chevrolet Equinox program. With a new state-of-the-art manufacturing site, R.U.D.I. was excited to add GM to its portfolio of production customers. The company was actively hiring new employees who exhibited enthusiasm for the business, which was reflective of the companys excellent reputation for customer service. R.U.D.I. had not been a seasoned regular production supplier for GM. However, having signed the prototype contract for the first two fleets of the Chevrolet Bolt AV, the company became the preferred supplier by GMs product engineering team. Therefore, R.U.D.I. was asked to help develop technical portions of the SOR for the competitive bid.

Steven Messick, the R.U.D.I. engineer who provided the quote to GM, was confident that R.U.D.I. would win the bid because the language in the SOR was very familiar to R.U.D.I.s engineer team. The company was also capable of producing the sensors, software, cameras, and electronic modules in the autonomous arena. R.U.D.I.s e-boost system AV components consisted of three unique subcomponents that comprised the AV assembly. R.U.D.I.s quote included one purchased component, although the company was unwilling to share information about the source of that component. For this bid, R.U.D.I. insisted on retaining IP rights. The company was committed to working closely with GM and was open to sharing IP information in the future, once GM developed enough internal subject matter expertise.

Orbitty International Manufacturing & Technology Co.

Headquartered in Munich, Germany, Orbitty was a global powerhouse with manufacturing facilities in Europe, Asia, North America, and South America. Orbitty had partnered with GM on smaller special projects in the past. The company was recognized as an industry leader in automotive design and engineering. Orbitty had co-developed the winning vehicle of the Defense Advanced Research Projects Agency (DARPA) 2007 Autonomous Challenge, in partnership with GM and other suppliers. That collaboration had made Orbitty a preferred supplier among GM engineers. Orbitty had no ongoing contracts on GM programs, but the companys iconic reputation for innovation excellence seemed to generate some arrogance in its dealings. Although the company clearly was lacking in terms of customer service, various automotive companies were still eager to work with Orbitty as a strategic partner.

Orbittys e-boost system for the Chevrolet Bolt AV was quoted as being manufactured out of its Germany facility, to take advantage of available capacity. The company was willing to share its IP information with GM, but at a premium cost. Having invested significantly in the technology, the company was eager to recuperate some of the costs of software development. Although Orbittys previous bid packages had been very high, GM expected few engineering changes during the development of the product, which would result in few unanticipated costs. Because the direction to move towards full automation was fast approaching, GM chose to include Orbitty in the bid, feeling that the companys offer had merit. Orbittys AV e-boost system comprised three unique subcomponents that were all manufactured in-house.

SUPPLIER SELECTION DECISION

Hanna now needed to review all proposals with her engineering teams. She needed to choose a supplier for both e-boost modules and then present her recommendations and reasoning to the sourcing table in about one week. The business would be awarded in about three weeks. With a competitive bidding process, the buyer needed to account for all tangible and intangible factors. She needed to make the best decision for GM. The target piece price was $43 for the EV e-boost module and $53 for the AV version. Hanna needed to create a complete sourcing proposal to present to the sourcing table for approval.