In today’s world, where globalization is afact of business life, where competition isfiercely intense and where concerns such asenergy security and climate change are glob-al in scope, a science-based approach to deci-sion-making and problem-solving is essential.

At General Motors, operations researchprovides that framework, particularly forcomplex issues and systems that involve mul-tiple objectives, many alternatives, trade-offsbetween competing effects, large amounts ofdata and situations involving uncertainty orrisk. In truth, for an entity the size of GeneralMotors, these are the only kind of challengesthe company faces because GM is huge andno issue is simple!

With products that range from electricand mini-cars to heavy-duty full-size trucks,monocabs and convertibles, GM offers acomprehensive range of vehicles in morethan 120 countries around the world. Alongwith its strategic partners, GM sells and ser-vices vehicles under the Chevrolet, Buick,GMC, Cadillac, Opel, Vauxhall, Holden,Baojun, Wuling and Jiefang brand names.GM also has significant equity stakes inmajor joint ventures in Asia, includingSAIC-GM, SAIC-GM-Wuling, FAW-GMand GM Korea.

GM has 212,000 employees located innearly 400 facilities across six continents. Itsemployees speak more than 50 languagesand touch 23 time zones. The work they dodemonstrates the depth and breadth of theauto business – from developing new vehi-

cles and product technologies to designingand engineering state-of-the-art plants,organizing and managing the company’svast global supply chain and logistics sys-tems, building new markets and creatingnew business opportunities.

The work is multifaceted, but whetherin Detroit, Frankfurt, Sao Paulo or Shang-hai, the goal is straightforward: offer productsand services that establish and maintain adeep connection with customers aroundthe world while simultaneously generatingrevenue and profit for the company.

Considering the complexity of thechallenges in the auto business and thespeed at which change is occurring inevery arena – technology, business, mate-rials and resources, governmental policiesand regulations – it is critical to employa scientific approach in thinking aboutand attempting to understand problemsand implement viable solutions. Today,no area of GM is untouched by analyti-cal methods.

The Early YearsEven before the industry entered the

current period of globalization and pro-found technological change, operationsresearch was valued within GM. As early asthe 1960s and 1970s, GM employed analyt-ical techniques for transportation studies andtraffic flow analyses. In the 1980s, GM

22 | OR/MS Today | December 2013 ormstoday.informs.org

General MotorsUsing O.R. to meet auto industry challenges and provide value to customers andthe company.

Editor’s note: This is another in a series of articles profiling members of theINFORMS Roundtable.

GM Chairman and CEO Dan Akerson (fourth row, third from left), GM CTO and Global R&D VicePresident Jon Lauckner (fourth row, fourth from left) and Global R&D Executive Director GarySmyth (top) with the GM R&D Operations Research team.

Figure 1: GM vehicle brands.

By Jonathan H. Owen, David J. VanderVeen and Lerinda L. Frost

Roundtable Profile

developed analytical principles and usedmathematical optimization methods toimprove assembly line job sequencing. Inthe 1990s, it patterned warranty cost reduc-tion analyses after Centers for Disease Con-trol epidemiology studies.

In 2005, GM won the Franz EdelmanAward from INFORMS for its work onproduction throughput analysis and opti-mization. Even when overall industry pro-duction capacity is above demand, it is usual-ly the case that demand for certain “hot”vehicles exceeds planned plant capacities. Insuch cases, an increase in production capacitywill generate larger profits via more sales rev-enue and/or overtime cost avoidance.

GM’s operations research team analyzedproduction throughput using math modelsand simulation, identified cost drivers andbottlenecks, and developed a throughputimprovement process to increase productiv-ity and reduce costs. The resulting softwarehas been enhanced over a 20-year period toextend GM’s capabilities, enabling it toaccommodate product and manufacturingflexibility, variable control policies and morecomplex routing. The software is used glob-ally in GM plants, as well as to design newproduction systems and processes.

This long-term effort is just one examplethat demonstrates how GM has applied O.R.methods to change the way it leverages oper-ations research and advanced analytics on acontinuing basis. The importance of activitieslike this in a company the size of GM cannotbe fully measured. For plant throughputalone, the savings are estimated at more than$2 billion over the past two decades. But justas important as the economic benefits is themindset – the scientific approach to problem-solving, decision-making, scheming the busi-ness, and identifying new opportunities.

O.R. at GM TodayGiven the success of the work described

above, the R&D Operations Research teambroadened its mission about five years agoand today provides a research capabilitywithin the company focused on tacklinglong-term strategic challenges. With thewide-ranging scope of potential assign-ments, the O.R. team is composed of Ph.D.and master’s-level technical experts, alongwith subject-matter experts with hands-on

and executive leadership experience in keyareas of the business, such as manufacturing,supply chain, engineering, quality, planning,marketing, and research and development.

Projects are aligned with top companypriorities, which are based on a combina-tion of business performance drivers andsenior leadership input. The work may startwith targeted questions, e.g., what’s theopportunity of (fill in the blank), or it canfocus on improving operational effectivenessthrough process improvements in areas suchas manufacturing productivity, capital orsupply chain management, or dealer inven-tory management. Many opportunities toimprove revenue management exist throughthe application of tools and systems thathelp decision-makers optimize portfolioplanning, reduce complexity, target incen-tives, or optimize content and packaging. Inaddition, given the large new data streamscoming from the intelligence available intoday’s vehicles, new emphasis is being put

on improving vehicle efficiency, quality anddiagnostics, as well as more deeply under-standing customers so GM can provide dif-ferentiated value through new automotiveproducts and services. The team’s imple-mentation model comprises a mix of:• analysis by internal consultants to

understand the issue, • capability development, including

analytical principles, math modelsand tools, and

• partnering with stakeholders anddecision-makers early to scope andmaximize the potential impact ofimplemented solutions.

O.R. Drives TransformationThe R&D Operations Research team

recently received two “teamGM Trans-former” Awards for developing businesstools that use “big data” and analytics toimprove decision-making. This is an internalaward that rewards employees who are lead-

December 2013 | OR/MS Today | 23

The Roundtable consists of the institutional members of INFORMS with member company representatives typ-ically the overall leader of O.R. activity. The Roundtable is composed of about 50 organizations that havedemonstrated leadership in the application of O.R. and advanced analytics. The Roundtable culture is peer-to-peer, encouraging networking and sharing lessons learned among members.

The Roundtable meets three times a year. Roundtable goals are to improve member organizations’ OR/MSpractice, help Roundtable representatives grow professionally and help the OR/MS profession to thrive. Fur-ther information is available at http://roundtable.informs.org.

The Roundtable also has an advisory responsibility to INFORMS. According to its bylaws, “The Roundtableshall regularly share with INFORMS leadership and advise the INFORMS Board on its views, its suggested ini-tiatives and its implementation plans on the important problems and opportunities facing operations researchand the management sciences as a profession and on the ways in which INFORMS can deal proactively withthose problems and opportunities.” The Roundtable meets with the INFORMS president-elect each spring todiscuss practice-related topics of interest to him or her, and with the entire INFORMS Board each fall to discusstopics of mutual concern.

This series of articles aims to share with the INFORMS membership at large some information and insightsinto how O.R. is carried on in practice today.

All About the Roundtable

2014 Chevrolet Corvette Stingray.

ing change across the company by findingsignificant and innovative ways to drive GMbusiness priorities.

One of the O.R. team’s TransformerAwards recognized new analytic tools tosupport GM’s Product Development activ-ity. These include a range of tools that helpguide engineering decisions to reducecomplexity in the vehicle and powertrain,apply market research to vehicle attributebalancing and optimize portfolio planningin light of greenhouse gas performanceobjectives. The other award was for devel-opment of a new approach to optimizinginbound logistics. This tool is beingexpanded to support its use by all vehicleprograms early in the vehicle developmentprocess.

With the exponential growth in data, theever-expanding digital connection to cus-tomers and the introduction of excitingnew vehicles technologies, this is an excitingtime for operations research at GM. With somany research-rich opportunities, the team

is always mindful of the characteristics thatare key to successfully applying O.R. meth-ods and achieving organizational excellence,including the ability to:• choose the right problem to address;• see and convince others that a

complicated problem is importantand solvable;

• work as part of a team toward acommon and well-defined goal;

• have tenacity in chasing downdetails and data, and then equaltenacity in the implementation of asolution;

• get the model to the right level ofdetail for the purpose at hand so it isnot too complex, nor too dataintensive, but sufficiently detailed tocapture the salient characteristics andtrade-offs;

• engage the key stakeholders in theprocess of development andimplementation, in order to gainjoint ownership. Technology transfer

is something that takes placebetween consenting adults; and

• deliver an O.R. solution to decision-makers in a form or format that theycan understand and act upon.

O.R. practitioners who embody thesecharacteristics can have a profound impact ontheir organization, help their company riseabove the competition, and most importantlyprovide increased value to customers. As theworld goes global – as innovation strives tocreate more, faster, better and at less cost; asnew business and technology paradigmsemerge – endless opportunities abound totake advantage of operations research andreap the substantial good that can be realizedfrom its practice. ORMS

Jonathan H. Owen is Director of OperationsResearch at GM R&D. David J. VanderVeen,now Director of Analytics in GM Global ProductDevelopment, was formerly Director of GM R&DOperations Research. Lerinda L. Frost leadsexecutive communications and business support atGM R&D.

24 | OR/MS Today | December 2013 ormstoday.informs.org

Roundtable Profile

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