Chrysler Cleaning Up Supplier Relations

Chrysler’s top supply-chain manager says the auto maker is working to improve transparency with its suppliers, but it is in a much better position than years ago when there was a lack of attention paid to inefficiencies by former owners.

“We’re still near the bottom, but that whole thing is kind of converging,” Scott Kunselman, vice president-purchasing, says in an interview with reporters. “In 2012, we had more supplier town halls than internal town halls. We’ll have at least six (this year).

“In general, making progress is probably the best comment,” he adds. “The volume and financial base were big barriers. The next step is, ‘How do I actively plan better and become more efficient with the suppliers?’”

Kunselman says Chrysler has started making advanced payments to suppliers, rather than waiting until the job is done, prompting suppliers to put the auto maker at the top of their priority lists.

“Part of the reason for the positive attitude is that we’ve heard from people that it’s not helping them when we come in late in the game, ride like hell in terms of speed and wish we had a better position,” he says.

Another strategy is to take Chrysler’s World Class Manufacturing quality initiatives to individual suppliers, which Kunselman says is being well-received. “We’ve found ways now to use some of our expertise in their factories. Suppliers have all different kinds of manufacturing levels, but things that drive their efficiency do vary.”

For example, Chrysler has been able to find and eliminate waste in supplier operations and use simulation tools to re-create processes at those plants. “The key to this business is going fast,” he says.

Chrysler’s long-term strategy with ZF, which will supply the bulk of the auto maker’s transmissions, is to build and supply both 8- and 9-speed gearboxes in a mutual partnership.

“We’re in the front of being a volume producer, but they’re never going away,” he says, noting that Chrysler is now the biggest user of the 8-speed transmission. “It’ll never go one-sided. We’ll be in that partnership for a long time.”

The auto maker is preparing for key volume launches this year, including bringing the KL-platform – known to the public as the Jeep Cherokee, the first recipient of the 9-speed transmission – to line. Communication with suppliers will be crucial, but so will keeping all the cogs in place to prevent production snags.

“We have dramatically higher volume expectations for KL,” Kunselman says. “This is an entire plant worth of cars, not a piece of a plant running half the time. All the plans were laid out ahead of time. Platform suppliers knew for a while that (the vehicles) were coming.”

Cherokee production will rely on flexible manufacturing systems, which Kunselman says “didn’t require any convincing” as far as dealing with suppliers. “We’re in a growth mode and it seems like the plan is reasonable. And as much as I’d like to take credit for an original thought, our competitors have done some of this. We’re not breaking all new ground here.”

The auto maker still is working to eliminate bottlenecks with Jeep Wrangler production as demand for the iconic SUV increases internationally. Problems in the paint shop and tire installation have slowed the line, and Kunselman says Chrysler is in “finding mode” to eventually keep things going.

“The image models tend to be the ones that you want (to sell),” he says, not indicating if the Wrangler assembly plant in Toledo, OH, will add a third shift to increase flow.

Kunselman reveals Chrysler is intrigued by Volkswagen’s concept of utilizing platforms more broadly, but there are no plans to replicate the process. As the German auto maker targets a goal of 800,000 vehicles sold annually in the U.S., other auto makers have looked for ways to protect their share.

Chrysler’s strategy remains offering multiple brands. Kunselman muses, “How do I capitalize on and develop emotional products that are specific to a brand? There’s opportunity in all of our brands, but can opportunity outweigh cost?”

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