General Motors Optimizes Vehicle Content for Customer Value and Profitability

Peiling Wu-Smith (), Philip T. Keenan (), Jonathan H. Owen (), Andrew Norton (), Kelly Kamm (), Kathryn M. Schumacher (), Peter Fenyes (), Don Kiggins (), Philip W. Konkel (), William Rosen (), Kurt Schmitter (), Sharon Sheremet () and Laura Yochim ()
Additional contact information
Peiling Wu-Smith: General Motors, Warren, Michigan 48092
Philip T. Keenan: General Motors, Warren, Michigan 48092
Jonathan H. Owen: General Motors, Warren, Michigan 48092
Andrew Norton: General Motors, Warren, Michigan 48092
Kelly Kamm: General Motors, Warren, Michigan 48092
Kathryn M. Schumacher: General Motors, Warren, Michigan 48092
Peter Fenyes: General Motors, Warren, Michigan 48092
Don Kiggins: General Motors, Warren, Michigan 48092
Philip W. Konkel: General Motors, Warren, Michigan 48092
William Rosen: General Motors, Warren, Michigan 48092
Kurt Schmitter: General Motors, Warren, Michigan 48092
Sharon Sheremet: General Motors, Warren, Michigan 48092
Laura Yochim: General Motors, Warren, Michigan 48092

Interfaces, 2023, vol. 53, issue 1, 59-69

Abstract: General Motors (GM) vehicles have more than 100 customer-facing features, known as vehicle content. Decisions about how to package and price these features have a significant impact on our customers’ experiences and on GM’s business results. Vehicle features are assigned as standard, optional, or unavailable on different trim levels, resulting in an enormous combinatorial solution space. Vehicle content optimization (VCO) combines customer market research, discrete choice models, and custom multiobjective nonlinear optimization algorithms to optimize vehicle contenting and pricing decisions. VCO comprehends complex dynamics and tradeoffs and allows GM to optimally balance customer preferences and profitability. After six years of development and multiple proof-of-concept and pilot studies, VCO was officially integrated into GM’s Global Vehicle Development Process in 2014. As of 2021, VCO has been used on more than 85 vehicle programs globally. It has enabled customer-centric product development and more efficient engineering, sourcing, and manufacturing. GM Finance verified that VCO enabled $4.4 billion of incremental profit over the average product life cycle (i.e., six years on average) since 2018, making it a vastly impactful example of operations research and applied analytics.

Keywords: conjoint analysis; mixed logit model; multiobjective nonlinear optimization; Edelman Award (search for similar items in EconPapers)
Date: 2023
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