Extending the Enterprise--Stallkamp to leave, but his philosophy lives on

The timing, by all accounts, was purely coincidental. Still, it made for heightened awareness in the supplier community.

DaimlerChrysler AG management met with supplier executives in Frankfurt, Germany, to discuss their evolving relationship on Sept. 24, the same day that the auto industry learned that board member Thomas Stallkamp would retire Dec. 31 as president of DaimlerChrysler Corp. in North America.

The announcement jolted the supplier community, which has recognized Mr. Stallkamp as the architect of a new era in automaker-supplier relations.

His "extended enterprise" in the early 1990s encouraged suppliers to introduce innovative technologies and to share in the benefits of cost reductions, a revolutionary concept. The trend-setting philosophy, both in theory and practice, was built on trust.

So what exactly did it mean to suppliers that their hero was leaving? Was extended enterprise dead? Would DaimlerChrysler do things that the former Chrysler Corp. would not have done under Mr. Stallkamp, like play suppliers against each other for the best possible price?

Was the DaimlerChrysler supply base about to be severely trimmed? Is the company only interested in doing business with global suppliers?

These were the nagging questions on the minds of some 600 representatives of 300 supplier companies attending the Sept. 24 meeting, by invitation only. The gathering marked the first time since the merger was completed a year ago that the new company could meet with its North American and European suppliers.

While they were looking for specifics, attendees instead heard a broad conceptual framework from co-Chairman Juergen Schrempp and the company's top purchasing executives.

"We will use some of the former Chrysler extended enterprise and some of the former Tandem (Daimler's supplier initiative) program, and we will take the best elements to create a new program," says DaimlerChrysler spokesman Jack Ferry.

"We're not reinventing the wheel."

The extended enterprise name won't go away, and it will include elements of the successful Supplier Cost Reduction Effort (SCORE) program, which was started by Mr. Stallkamp and has generated $6 billion in savings, which the company shares with suppliers.

Contrary to some reports, Mr. Ferry says there was "never any discussion" about paring down the supply base of the new company.

DaimlerChrysler will, however, emphasize the need for suppliers to be more global. "Yes, that's part of the plan," he says. "That doesn't mean we won't use regional suppliers as well. Hopefully, the volume of the business will enable suppliers to grow along with us and maybe have the opportunity to do things on both sides of the Atlantic."

Still, some supplier executives remain skeptical. "When the guy at the top who created SCORE is leaving, it poses a lot of risk as to whether the succeeding approach will have the proper balance between SCORE and Tandem," says one top supplier executive who spoke on condition of anonymity.

What will it mean to suppliers if Tandem wins out? "More price negotiations and shorter contract durations," the executive says. "With the SCORE approach you were basically the long-term supplier unless you screwed up. You didn't have your business at great risk if you were doing the job."

Neil DeKoker, managing director of the Troy, MI-based Original Equipment Suppliers Assn., says many supplier executives are troubled by Mr. Stallkamp's impending departure.

"There is concern because suppliers perceived Tom Stallkamp as the bright light in the industry. He developed the true meaning of partnership more than any other executive or purchasing agent around," Mr. DeKoker says.

"Suppliers are concerned that this could weaken DaimlerChrysler, that it could affect the organization and its strength," he adds.

Some suppliers already have been disappointed in their dealings with the new organization.

One supplier executive says his company had for years been negotiating the sale of certain technology to Chrysler, and that after the merger those talks suddenly stopped. DaimlerChrysler told the supplier that if any brand would get that particular technology, it would be Mercedes-Benz executive.

But another supplier has seen the opposite. In his product line, he sees the former Chrysler as even more eager to embrace new technology, perhaps because its new partner, Daimler-Benz, has historically been a company rich in innovation.