Supply Excellence — Chrysler’s Supply Plan: Back the Future

Chrysler’s Supply Plan: Back the Future

May 9th, 2008 · by Tim Minahan · No Comments · automotive sector, best practices, supply management

Knowing my passion for the Detroit turnaround, CPO Agenda Editor Geraint John this week turned me on to his exclusive interview with Chrysler’s new procurement chief John Campi. As noted here, the ex-Home Depot supply management lead has his work cut out for him. Chrysler has the least buying power of the Big Three and, thanks to the iron fist approached used by its former parent, Daimler-Benz, has many supplier relationships to mend.

The good news: according to the CPO Agenda interview, Campi is dusting off the proven collaborative, risk-sharing supplier management approach that made Chrysler the darling of the automotive industry during fomer CPO (and later President) Tom Stallkamp’s rein. Admitting his company’s faults, Campi told Geraint that Chrysler’s first order of business is to “regain trust and engagement with the supply base.”

Campi’s game plan for rekindling supplier relationships is straight from the pages of Stallkamp’s heralded SCORE program. The tenants of Campi’s initiative are straightforward: collaborate with suppliers to remove year-over-year costs from the supply chain through new designs, lean processes, new manufacturing methods, or other innovations. Chrysler will share yielded savings with suppliers on a 50:50 basis.

The concept, while simple in design, requires discipline to execute effectively and consistently through both economic boom and bust times. (As evidenced by the Daimler-Chrysler fallout with its supply base, any deviance from the promised plan can severely sour supplier relations and put a company’s supply chain at risk.) Under Stallkamp’s rule, the program yielded billions of dollars in savings through enhancements in quality, reduced inventory, streamlined material handling and distribution, and more efficient ways to design and produce parts or assemblies.

Chrysler had also trained suppliers to be more competitive in such key areas as continuous improvement, kaizen, and flow manufacturing. And sent cross-functional teams into supplier plants to perform quality reviews and assist in improvements.

Campi told Geraint that Chrysler would also double membership in its supplier partnership council to help facilitate 360-degree performance reviews and identify ways to improve supplier relations. Campi pointed to early supplier involvment, reduced vehicle complexity, stable production schedules, and fewer post-design change orders as ways suppliers said Chrysler could reduce costs.

Chrysler’s renewed (and welcomed) approach to supply management can best be summed up by a conversation I once had with the program’s orginal architect, Tom Stallkamp: “In order to fully reap the benefits of a world-class supplier, we must become a world-class customer.” Sage advice for any industry.

Email Forward & Bookmarks