Soaring raw material costs and an unprecedented number of supplier bankruptcies are challenging the automotive supply chain like never before. Auto maker purchasing departments have become pivotal to the success, and survival of both suppliers and the customers they serve.
Ward’s 7-part series stems from interviews with the purchasing chiefs of GM,, , Nissan, and Toyota. This is Part 4.
AUBURN HILLS, MI – For decades,Group has been the No.3 auto maker in Detroit.
But the feisty Chrysler prides itself on setting its own course, rather than following that of its larger crosstown rivals,Corp. and Motor Co.
First, Chrysler pioneered a collaborative supplier relationship in the 1990s while Ford and GM focused more heavily on reducing piece price. Today, Chrysler continues to go its own way.
For instance, the auto maker has no plan to match Ford’s Aligned Business Framework, which identifies preferred suppliers for longer-term contracts and closer collaboration.
“We don’t have a program of naming a group of suppliers as ‘preferred.’ We are almost 180 degrees from that,” says Peter Rosenfeld, Chrysler executive vice president-procurement and supply.
“It’s a supplier’s choice to be preferred,” he says. “We give them the requirement; we share with them the measurements; we show them how they are doing relative to their competition; and it’s the supplier’s choice to perform well. Obviously, suppliers are choosing that.”
Chrysler’s strategy is to continue developing close ties with suppliers and getting them involved earlier in vehicle programs, Rosenfeld says.
“Our approach to cost management is moving more each day to, how do we minimize part count; how do we improve our process for the design and development of components,” he says.
Meanwhile, Chrysler also has little interest in following GM’s lead in deploying its electronics purchasing organization to China. The move from Detroit to Shanghai for GM’s staff of 15 came last November.
“Our situation in China is a little bit different than GM’s,” Rosenfeld says. “We do not have the same volume of production. We have a procurement office in Beijing at this point in China.”
However, just before his interview with Ward’s, Rosenfeld met with staffers to discuss whether Chrysler’s strategy for China is aggressive enough.
“I can’t tell you right now that we are going to relocate a whole procurement office or a sector there,” he says. “But we continue to explore, (whether) we are aggressive enough. That’s not limited to China. It’s more a discussion of our low-cost country presence.”
One of Chrysler’s most unique projects – unmatched by Ford and GM – has designated key suppliers to run the paint shop, build the body and assemble the chassis of the new Jeep Wrangler at a new plant in Toledo, OH.
The strategy ran into a significant glitch earlier this year when Haden Prism, a subsidiary of Haden International Group, abandoned the paint shop it was hired to build and operate at the Toledo plant.
International Inc., through its Magna Steyr Fahrzeugtechnik AG & Co KG subsidiary, now is taking the reins from Chrysler, which inherited the operation when Haden Prism departed.
Despite Haden’s problems, Chrysler remains wedded to the supplier arrangement at the Toledo plant. “Is our vision for what we want for Toledo still valid? Yes,” Rosenfeld says.
For the past two years, Chrysler also has been using a unique “board of director” concept to evaluate its supply base and to help make purchasing decisions.
There are about 300 such boards, each with four or five people from procurement, supplier quality, engineering and, occasionally, design and manufacturing. Some people sit on multiple boards.
Rosenfeld says the system is working, based on “scorecards” that chart the progress of individual suppliers.
“The supply base is improving either because the ratings of the suppliers are increasing, or because we are moving business away from lower-rated suppliers to higher-rated suppliers, or because we are bringing in new suppliers,” he says.
Overall, the boards have been more prone to improve existing suppliers than to re-source business to a different parts maker.
“Every group we bring into the Chrysler family – or have brought into the Chrysler family – we bring them in because we want them to be successful, not a failure,” Rosenfeld says.