General Motors: “Electrification” Capacity Constraints
(5 pages of text)
In mid-2017, a supply constraint analyst at General Motors (GM) was working on two electric vehicles: the Chevrolet Bolt EV for the US market and a similar Buick model to be marketed in China. GM had chosen to work with only one supplier for the vehicles’ lithium-ion battery: Morningside Power Storage of South Korea. However, since making that decision, consolidation in the freight shipping industry had led to higher shipping costs, and China had introduced regulations to restrict and discourage the importation of batteries. The supply constraint analyst needed to decide where the battery cell manufacturing and battery pack assembly should be located and the production levels necessary to meet, at the lowest cost possible, the needs of both the Chevrolet Bolt EV in the United States and the Buick version in China.
This case is suitable for undergraduate- and graduate-level courses on strategy and operations management, particularly in sessions on supply chain management, innovation, and offshore outsourcing. After completion of the case, students will be able to
- calculate logistics costs, customs duties, import fees, costs of applicable government regulations, supplier capacity, program volume and schedules, and the global supplier footprint;
- create a supply plan that satisfies timely demand in more than one region; and
- identify and understand risk factors in each capacity expansion scenario.
United States, Large, 2017
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