Case Study: General Motors’s New Top Buyer

In the spring of 1992, Ignacio Lopez de Arriortua hit Detroit like a storm. General Motors was in trouble and needed help, so the company’s president appointed Lopez as the vice president of global purchasing. He had saved the company millions of dollars in its European operation and set out to do the same for the entire corporation. His goal was to save the company $5 billion in purchasing costs in 1993 alone.

Lopez approached his mission like a military commander. He dubbed his employees “warriors” and moved a group of young managers into key positions. He convened a series of intense meetings steeped in the rhetoric of war. At these meetings, he insisted that the Western world is under attack, adding that saving GM was tantamount to saving Western civilization. Attendees reported being overwhelmed by scores of PowerPoint slides that Lopez projected to support his points. “It’s a message that’s as crafty as it is captivating,” suppliers say. “He knows how to pounce on the emotional needs of an audience,” said Donald C. Trausch, president of Borg-Warner Corporation.

Lopez created upheaval. He immediately sent a directive to all GM suppliers that costs had to be cut by as much as 10 percent. Contracts were canceled and suppliers had to resubmit proposals. He said he would work with suppliers only if they guaranteed to cut prices every year. Some suppliers were extremely angry, while others were happy about the chance to do business with the huge auto company.

Lopez received considerable attention because he was responsible for purchasing billions of dollars’ worth of parts. However, some of the attention he received and maybe even enemies made were because of his communication style. For example, when he arrived in Detroit, he issued a 44-page health manifesto titled “Feeding the Warrior Spirit.” He told his employees they would have to follow his diet to remain competitive in his purchasing organization. In addition, he told everyone, including the company president, to wear their watches on their right hands to remind them of the trouble faced by GM. And his Basque accent could be perplexing, as he frequently caught people off guard. At one interview, he replied, “I laugh at your question,” as he unnerved the journalist. He tore into people as he demanded performance. He responded to allegations that he might be too tough by saying, “It is tough, but it is fair.”

Although some were extremely critical of Lopez, others were complimentary. “Lopez comes through and hits you over the head with a 2-by-4 and starts you bleeding. Then he puts on a bandage and helps you heal,” said one manager. A vice president of GM in Europe said, “Lopez has been tremendously misunderstood. The bottom line is that his teams get in and do it.” When accused of possibly causing too much stress in the organization, Lopez simply shrugged, “We do not have the time. If we had three years, we could make everything comfortable and no one would be fearful.”2 pg paper
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