Chrysler names Denso its first 'Supplier of Choice'

Stijloor

Leader
Super Moderator
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Friends,

From "Automotive News." I found this to be a very interesting story about supplier development and partnerships.

What do you think?

Stijloor.

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Chrysler names Denso its first 'Supplier of Choice'

David Barkholz
Automotive News
August 15, 2008 - 12:47 pm ET
UPDATED: 8/15/08 2:09 p.m. EDT

TRAVERSE CITY, Mich. -- Chrysler LLC has named Japanese supplier Denso Corp. its first "Supplier of Choice."

Denso will automatically win future Chrysler business and won't have to compete to keep current orders.

Chrysler ultimately will name not more than 10 companies to that select club, Chrysler purchasing chief John Campi said at the Management Briefing Seminars here today. He announced the Denso agreement on the sidelines of the event.

Campi said future Denso contracts with Chrysler will be negotiated and not subject to competitive bidding. As a partner, Denso will participate fully in product development on the programs it supplies, Campi said. Denso, owned 22.9 percent by Toyota Motor Corp., won the designation due to its "global capabilities," he said.

Chrysler today has about 300 important component suppliers out of a global total of about 800, Campi said. But they are heavily North America-centric, he said. That leaves plenty of opportunity to find cost savings and new technology overseas, he said.

Of the 300 suppliers, between 200 and 250 will remain long-term suppliers, while Chrysler will add 100 from outside the current list, he said.

The future is less sunny for about half of Chrysler's 800 suppliers. Chrysler buys just 5 percent of its global parts from them and the automaker will look to prune their ranks to operate more efficiently, Campi said.

Chrysler has several initiatives under way to try to improve its industry-worst relations with suppliers. Campi joked at the session that he was happy about the ranking in the most-recent Planning Perspectives Inc. study because those relations could go no place but up.

At one point, Chrysler's supplier relations were far better. In the early 1990s, its SCORE program, which shared savings equally between suppliers and the automaker, was widely praised for slashing costs.

This week, Chrysler called 160 supplier executives to its Auburn Hills headquarters to detail for them the company's balance sheet and earnings performance. He said the move was to mitigate their fears that Chrysler was failing financially in light of industry concerns fostered by General Motors' $15.5 billion second-quarter net loss.

Campi said he has assigned Sig Huber, formerly with Toyota purchasing, to head a supplier relations team that will initially focus on managing risks from distressed suppliers.

Chrysler also has vowed to do a better job of keeping to stable production schedules so suppliers can avoid overtime or massive production cuts on short notice. As part of that initiative, Chrysler will place parts orders at least 30 days out with at least 80 percent accuracy. If Chrysler has to change more than 20 percent of the order after placing it, the automaker will have to pay a penalty for doing so.

In some cases, orders today are placed as little as four days ahead of vehicle production.

Chrysler plans to have a pilot plant for the program by Dec. 1.

Denso ranks No. 2 on the Automotive News list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $35.70 billion in 2007.
 
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