The concerns include cost and confidentiality. Powerway has software that enables suppliers to feed DaimlerChrysler via the Internet with information about quality. The effort is known as the Advanced Product Quality Planning process.
DaimlerChrysler, which owns an undisclosed stake in Powerway, is mandating that its suppliers use Powerway to report quality data beginning with 2004 model year vehicles. A supplier would use the Powerway software, for example, to report at certain stages of development that a part is meeting the automaker's required tolerances.
This mandate, and the concerns being voiced in the supplier community, comes on top of DaimlerChrysler's call late last year for a 5 percent across-the-board price cut from its parts suppliers, and its requirement that suppliers deliver 10 percent more in the next two years. And it is a bit ironic that DaimlerChrysler would force suppliers to use a specific vendor for software that promotes supplier-automaker collaboration.
The Original Equipment Suppliers Association, which represents 270 automotive suppliers, has stepped in to help bring Powerway, DaimlerChrysler and suppliers together to resolve the concerns, said Neil De Koker, managing director of the association in Troy, Mich. Twenty-two suppliers met recently with both parties, De Koker said.
Suppliers' concerns include the cost of using the Powerway application; the security and confidentiality of information that they send to DaimlerChrysler using the software; the software's ability to work with other applications; and the terms and conditions of signing up for the Powerway tool.
De Koker said he is pleased with the responsiveness of DaimlerChrysler and Powerway.
A survey by the association's e-business council suggests that large suppliers with 50 to 60 production facilities that ship products into DaimlerChrysler can anticipate costs of roughly $500,000 in the initial year, and 80 percent to 90 percent of that cost each year thereafter.
Both Powerway and DaimlerChrysler declined to be interviewed, but a DaimlerChrysler executive provided a short written statement. Peter Rosenfeld, vice president of worldwide procurement and sourcing, said DaimlerChrysler is working one on one with suppliers to address the concerns.
"We also realize that changes in business processes between OEMs and suppliers are never easy," Rosenfeld said. But by using Powerway, he said, DaimlerChrysler and its suppliers will become more competitive.
DCX mandates software vendor
Ford Motor Co. and General Motors also require their suppliers to provide regular quality data and information during product development and production. But only DaimlerChrysler is mandating that suppliers use a particular software vendor.
The suppliers association has created two committees, one to study security and the other terms, conditions and pricing, De Koker said.
"For the most part, a lot of these applications tend to be breaking new ground, so people naturally have a lot of questions about it," said Rick Radecki, e-business director at Delphi Automotive Systems Corp.
Conceptually, he said, the Powerway application is quite good.