We’ve received this heads-up letter to GM dealers from one our sources on the front line. [Thanks to you-know-who-you-are.]
IMPORTANT BULLETIN: Parts Order Management Update
Paul Copses, Executive Director — GM SPO Sales and Marketing, and Charlie Hyndman, Executive Director– GM SPO Global Warehousing and Operations
05/06/2009
To: All ACDelco Customers, GM Dealers and Saturn Retailers (US, Canada, Mexico, Middle East, Other)
Please be advised that GM Service and Parts Operations have been working on supply plans for all of our suppliers over the past few months to ensure adequate inventories of service parts for our customers. However, in order to carefully manage inventories for our key supplier, Delphi, it is necessary to take some near-term actions.
GM has been in negotiations with Delphi and its lenders to arrive at solutions that would ensure a source of supply under fair and reasonable terms. To date, this issue has not been resolved. Given this, we will effectively manage supply and demand for Delphi sourced parts based on a number of criteria which include:
1. Parts that are still in vehicle warranty, inclusive of recalls and campaigns
2. Parts in current production
3. First year/last year of parts application and relative volume in the car parc, and
4. Number of days supply
This process will be effective immediately.
For ACDelco customers, and GM dealers and retailers, this means that some order control provisions will be applied immediately to better manage our Delphi-sourced inventories. In some cases, the controls will be more restrictive, especially when inventories are at critical levels on GM vehicle warranty parts.
These parts will also be taken off of RIM controls for markets serving dealers who use the RIM system. In other cases where we have adequate or plentiful supply, we expect limited or no restrictions. In all cases, we will closely monitor supply and demand on a daily basis, taking necessary actions as required.
Our intent is to balance the needs of our customers with our ability to maintain a steady flow of products which Delphi supplies.
Although Delphi is our largest supplier, more than 90 percent of GM part numbers are in a good short term inventory position. These controls will be managed on a daily basis to ensure that we are protecting the interests of GM vehicle owners and our GMSPO customers. At this critical time, we must collectively protect against any hoarding that sometimes occurs in these situations. Therefore, we ask for your support when it comes to managing supply and demand.
In addition to order writing controls, we will take the following measures to enhance supply of Delphi-sourced parts:
• Scrapping parts under warranty will cease and we will begin to evaluate re-working parts for reuse
• All Delphi parts will be made returnable (e.g. eliminating any in-field scrapping)
• Additional cores for reman products will be identified and a modified core return strategy will be implemented, where applicable
• Finally, when necessary, we will actively re-source products and identify acceptable substitutes as quickly and efficiently as possible
As you can imagine, this is a challenging situation that we are actively managing with our highest priority and with the best interests of our customers.
Paul Copses
Executive Director, Sales and Marketing
GM Service and Parts Operations
Charlie Hyndman
Executive Director, Global Warehousing and Operations
GM Service and Parts Operations
So a broken part under warranty may very well be “southern engineered” back together for reuse on my GM vehicle? Just awesome, GM, that’s a good way to keep customers from abandoning ship.
Are they reusing and rebuilding parts replaced under warranty? Yet another reason to avoid buying a GM vehicle.
It’s less that ideal, but understandable given the whole Delphi mess.
As for rebuilding parts, I know Honda did that extensively during the early 5-speed self-destructing auto transmission fiasco in Gen 2 and early Gen 3 Acura TLs. Honda designed a retrofit to the tranmissions to fix the problem (not enough fluid one of the gears), took back bad tranmission, reworked them and added the retrofit, and sent them back out for warranty claims.
So in other words the dealers KNOW Delphi is going down and probably GM also (duh) and are stocking up on “commonly replaced” parts in anticipation, which is draining GM’s existing supply, so GM is going to limit orders on those parts.
Could GM be trying to avoid buying parts from Delphi somewhat to force it go 11/7, then scream for more help from Uncle Sam? It would seem that Delphi would LOVE to get a bunch more orders for parts right about now…
Rebuilding parts well is economically efficient and environmentally responsible. It should have been an established practice industry-wide for a long time by now, with candid communication that’s the deal.
Phil
Washington — Delphi Corp. will get another two-week extension to try to complete a plan to emerge from bankruptcy, after a key hearing on its restructuring plan was delayed today.
The auto supplier had faced a hearing this morning in U.S. Bankruptcy Court after it again failed to reach agreement with the U.S. Treasury and General Motors Corp. — its former parent — on a plan that would allow it to leave bankruptcy after 43 months under court protection. The hearing is now set for May 21.
Phil Ressler
You beat me to it. i don’t see the problem here in fact I’m amazed that this hasn’t been policy all along. As long as everybody knows you’re using remanufactured parts I don’t have an issue with it.
I’ve bought plenty of Delco reman. parts and have had very few problems. At least up until a few years ago if you wanted an automatic transmission from GM, it was going to be remanufactured.
I think the bigger news is what GM evidently has or had planned for Delphi and their execution of that plan (and Delphi).
I would like to think that Post Mortems on failed parts is what every manufacturer is doing anyway. How else can they know to eliminate frequent failure mechanisms from the nextgen of parts ?
Oh but this could be fun. It could provide oversight on those mechanics out there who needlessly replace good parts to boost profits.
What controls will GM have ? Billing a dealership later on for misdiagnosing ? Stuff like putting a hacksaw to a muffler pipe after its removal – which I’ve personally seen done – could nullify the re-imbursement for that part under a ‘parts abuse’ policy. Interesting how that will be handled. The customer will be long gone when the dealership gets the bill.
There is nothing wrong with GM taking back parts, either for failure analysis or for refurbishing. The problem occurs when they resell that part and fail to disclose that it is returned or refurbished.
I’d like to think that there are consumer protection laws in place to prevent such abuse. But really, even if there were, I don’t think GM gives a damn.
Yeah, aside from the mental image it creates of rats fleeing a sinking ship, I’m not sure there’s any real news here. When Chrysler revolutionised auto backing in 1963 with their 5/50 warranty, right from the start in all the ads and informational literature it said “Factory-approved remanufactured parts may be used for repairs under warranty”. So this is really not new.
Reman parts can be perfectly okeh (most of the ones supplied thru manufacturer channels for warranty work), and they can be pathetic trash (most of what’s sold to consumers at parts stores). It’s all down to who’s doing the remanufacturing, by what process, and to what budget.
Most service contracts contain language that refurbished or “equivalent to new” parts can be used.
In a previous job I worked in a factory for a large computer manufacturer (think mainframes, not PCs). When a customer’s computer would fail, the field engineer would often replace several parts to try to quickly bring the computer back into operation. Many of those parts would be returned to our manufacturing facility to later be returned to the service parts stream.
All parts were tested – if we didn’t have a process in place to test and verify the part we wouldn’t return it. About half the parts returned were found to have nothing wrong with them. About 35% we could diagnose and repair. We ended up having about a 15% scrap rate.
Ok, so cars aren’t the same as computers. I don’t want a refurbished head gasket. But keep in mind that Delphi is a big maker of automotive electronics (entertainment, communications, navigation, control systems, sensors, etc.) – so in this regard the products are quite similar.
I would be comfortable with refurbished parts so long as the refurbisher had their act together.
Re montgomery burns & Phil Ressler :
I agree, if done properly reworking and ‘zero’ timing parts can be an efficient and sensible way to maximize the life of certain components.
We do it all the time on aircraft parts. Really.
My concern is that even in the best of times this must be carefully done, with tried and tested rework procedures, and a quality feedback loop that ensures the effectiveness of the repairs/rework. These processes must be developed and refined long before customer parts start piling up down in the Receiving Dept.
Blanket directives such as this, do not inspire much confidence.
Also forcing return of all parts cuts theft from false warranty claims down in the shops big time.
Daniel J. Stern :
May 7th, 2009 at 12:13 pm
Allot depends on who’s doing the rework. I have bought a lot of reman and aftermarket parts in stores most consumers would go to for a couple of reasons, one they are cheaper by far than factory and in the case of aftermarket parts are usually the same thing produced for the OEM’s just without the brand name and most of the cost in the case of reman parts such as starters, alternators, or EGR valves the company doing the rework usually warranties the part for as long as you own the vehicle. As an added incentive most stores will test the part for you before you buy to make sure that’s what you need.
I know from personal experience Acura warranty repairs are made with salvaged, rebuilt parts. In my case it was the air conditioner compressor. The first rebuilt failed within a month and was replaced with a second rebuilt. So far the second one is holding up. I was told Acura will not authorize new parts.
Also, Acura replaced the OEM battery with a no-name under warranty. Worse, it appeared to be a cleaned up used one.
Contradictorily, Acura urges owners to use only new OEM parts for customer pay repairs.
I am innocent.
So few of my numerous new-vehicle defects were admitted to then repaired by Chevy/GMC that my 2004 Silverado did not diminish the part supply in the least.
Of course, if the dealers I visited had actually bothered to diagnose the problem they would have not been able to babble “Unable to replicate the problem.”
I am saddened that the higher-ups of GMC corporate will be able to continue their compared-to-the-commoners lavish life-styles.
If only those scum had to forgo even basic medical care and wonder where next months’ rent was coming from as so many decent hard-working Americans regularly face.
But, what is to be expected in a country in the throes of class warfare.
Obama is performing divinely as a figurehead for his various masters… the elite class, corporate America and special-interest groups.
Maybe a few of the baffled brainwashed bleating sheep-like citizens may be aroused from their slumber and begin to understand that class war is alive and thriving within the USA.
In supplier section Delphi Dead
“puts Delphi, GM, The Treasury and creditors on a shorter timeline to resolve Delphi’s three-year-long bankruptcy; a deal must now be reached by May 9. If a deal isn’t reached by then, Delphi will be liquidated, GM will have to buy back mission-critical plants, and new suppliers will be contracted”.
Today is the 8th. Who wants to bet on when the new date will be set and what that will be?
I pay for a new part, I expect a NEW part.
Guess all future service (on my last and final GM) will be specced “3rd-party parts only”.
I expect a price break on “re-worked” and I have very little faith in GM’s quality and ability to “re-work” it correctly.