One of GM biggest problem is high cost. Manufacturing its own parts has turned against the GM, because the competitors are buying them through the third parties enabling them to bargain on prices and save on the cost of production. Another highly costly problem is the vehicle inventory. Industry requires a large inventory for auto manufacturers, with different options and features. That itself is extremely costly and inefficient. GM needs to link all of its departments in one IT system. All of GM’s operations should be able to communicate and be compatible to each other. The new economy runs with information technology and it changes rapidly. GM needs to stay up to date in product design, engineering and manufacturing a new vehicle. Keeping the models fresh will help future sales. In order for GM to be able to compete successfully and achieve a leading role in the new economy, it needs to reduce the cost of production substantially, focus on innovative products and services and the development of its e-business; selling vehicles on-line, build-to-order and locate to order.
In GM’s drive to sell cars on-line and to build-to-order, there are some problems that technology cannot address. The biggest one is the channel conflict. GM is working on pilot programs to enable customers to purchase vehicles on-line through local dealership. The dealers are concerned about GM trying to bypass them by selling vehicles on-line. GM is experimenting modular assembly plant in Latin America. However union problems are likely to be a big issue, because modular building will almost certainly lower the income of autoworkers. Delivery remains a problem, delivering a vehicle takes time, you can’t FedEx them.