DETROIT -- General Motors with a kinder, gentler approach to purchasing?

Maybe, at least in some ways.

GM told its top suppliers on Thursday, Sept. 22, that it is dropping the 20 percent-in-three-years, across-the-board price-cut target in favor of one that sets targets for each separate part.

The automaker said it also will take “market conditions” such as high plastic-resin and steel prices into account when setting price targets.

GM is the second automaker in the past couple of months to change the way it deals with top suppliers. The Chrysler group said last month that top-performing suppliers will keep business in perpetuity instead of facing a rebid at the end of the contract.

The head of the suppliers' trade association called GM’s changes “much-needed and very welcome.” Neil De Koker, president of the Original Equipment Suppliers Association in Southfield, Mich., said automakers are starting to recognize the benefits of improving supplier relationships.

U.S. automakers have relied largely on across-the-board annual price cuts in recent years to save money.

GM spends $85 billion a year globally on purchased parts -- $61 billion in North America and $12 billion in Michigan. The automaker met with suppliers Thursday at its proving grounds in Milford, Mich.

GM’s three-year plan also will expand the number of suppliers with a “champion” at GM to 300 from 28. A champion is a liaison within GM to help the supplier contact the right people in engineering and purchasing. The 300 key suppliers represent about 80 percent of GM’s total purchasing.

The changes were prompted by GM’s meetings with suppliers and analysis of what worked and what didn’t in the “20 in three” program.

Suppliers were meeting, and exceeding, price targets in some areas and not meeting them in others. But that penalized them, because a supplier’s price-cut target was set for its collective book of business with GM.

“Suppliers were having a difficult time meeting the corporate target,” said Tom Hill, GM’s manager of purchasing communications. “As we looked at the data, they might have been good globally on one of its parts and met the target but might not have been competitive on another part, and that might have been related to market conditions. ...

“Now we’re drilling it down to the part level and breaking them out separately.”

Hill said volatile raw-material costs, such as steel and resins used in plastic, will be taken into account when setting targets. That’ll be easier for GM to do, because it’s basing its goals on individual parts rather than a company’s entire book of business.

U.S. automakers constantly rank at the bottom of supplier surveys, well behind automakers such as Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. Those automakers still demand price cuts, but they work with the supplier more to cut waste.

De Koker of the Original Equipment Suppliers Association said he thinks the recent changes could improve U.S. automakers’ standing with suppliers and, more important, lead to better products and higher market share.

“Working collaboratively will result in significantly better performance,” he said. “You’ll spend less time talking and negotiating over price and more time meeting about new products.”

De Koker, however, said suppliers of basic commodities still will have a tough time because they’ll have to meet the lowest price an automaker can find anywhere in the world.

“They’re going to continue to struggle,” he said.

GM spends $85 billion a year globally on purchased parts -- $61 billion in North America and $12 billion in Michigan.