Chrysler purchasing boss: Suppliers should prosper, too
In April, Scott Kunselman was pulled from his post as head of Chrysler engineering and thrust into the driver's seat of the automaker's $40 billion annual purchasing operation when Dan Knott retired. Two weeks later, Knott, who had won praise for restoring Chrysler's tattered relationships with suppliers, succumbed to cancer.
Kunselman, 49, says he wants to continue Knott's progress. During a meeting last month with Staff Reporter Larry P. Vellequette and Special Correspondent David Sedgwick, Kunselman talked about his approach to purchasing, Chrysler and Fiat's efforts to combine global purchasing operations and the likelihood that Chrysler will meet its production goals for this year and next.
Q: Have you finished your introductory tour with suppliers?
A: No, I'm still doing it. I mean because we have regular town halls and other events with suppliers, I've had a lot of chances to talk to folks in group settings. But there's still lots of that to do one-on-one. I'll be doing that for years.
Does it help to approach purchasing as an engineer?
Yes, probably more so on the supplier quality piece of my job. I kind of group this role into three chunks. There's the buying commodities that go on cars, and that's the one I probably was the most familiar with.
The supplier quality side is one that I was certainly familiar with. The one I was probably the least close to previously was the indirect -- all the things we buy as a company that don't go on the cars. So I joke and say it's everything from toilet paper to advertising.
Do suppliers see differences between your leadership and Dan Knott's?
I'm sure they do, but in terms of basic philosophy, I think we'd be common.
There was a whole period that was started really with Scott Garberding, and then Dan took it to culmination in terms of the rebuild phase, to rebuild our whole [credibility].
Most people who are rational thinkers certainly had on their list the possibility that Chrysler wasn't going to be around, so that influenced their behavior in 2009. To get from there to where we are today -- where everyone has, I think, come to the point where they assume we're going to be here, that we're going to be prosperous and find ways to do business together -- that's a big task.
I would say under Dan's watch, that was the focal point: to restore the confidence, the relationships and the ability to plan together. What was put in place to enable that was some basic concepts.
It's basics like treating each other fairly. That's a basic expectation. And what I mean by fair is, for example, I want us both to prosper, right? Us and the supplier. It's not my objective to put anyone out of business just to get the best deal because it's short-lived. That's one of our basic principles, in terms of commercial fairness. I think another key piece is communication-related, and that is transparency, and it's transparency on multiple levels. Any time there's an issue, get it on the table as quickly as possible, because we're likely to be able to solve it together when we know about it.
Are Chrysler's engineering and purchasing now giving the same message to suppliers?
I think it's rare today that the suppliers are going to get completely whipsawed back and forth between the organizations; at least it's something we would learn rapidly if it was happening.
Where does the purchasing merger between Fiat and Chrysler stand?
We are one global group purchasing team.
So that's a done deal?
It's a done deal.
How has the Fiat-Chrysler purchasing merger changed your operation?
If you asked any of our partners as recently as four or five years ago, you would probably get the answer consistently that Chrysler cares mostly about cost. Today, I'm happy to say, that's not the case. We've inverted our scale and fairly clearly prioritized quality at the top of the heap. It's the hardest to get and the easiest to lose, and in an industry where typically you have overcapacity and hypercompetitiveness, without it you're going out of business. So quality is at the top. A close second is time to market.
Are Fiat suppliers coming to the United States to become Chrysler suppliers?
It's tough for people to just show up here and go into business just because we knew them because they were part of Fiat.
Now maybe is a better time only in the sense that there are capacity opportunities. If you look at all the corrective actions that occurred as part of the tough times in '08, '09, in many commodities we had a dramatic reduction in capacity, and now we're facing barriers there. I'm sure I wouldn't be the first to tell you that one of our biggest problems is getting capacity for certain components and getting access.
You have said that getting tires is an ongoing problem. Is that because of pricing or availability?
Both. We've struggled to get the tires we need. We're obviously keeping up. It's not the single throttle. I would never say that that's the only thing in my way.
Will Chrysler reach its planned output of 2.4 million units for 2012?
We'll make it.
Are you comfortable with the 2.6 million units planned for 2013?
Will the suppliers be able to hit 2.6 million?
We've been talking about it for a long time, and so I wouldn't say I was comfortable if I didn't think they were on a path there.
Have your warranty costs leveled off?
No, warranty costs continue to go down.
A couple of times this year, you shut down assembly lines because of parts shortages. Is that still a problem?
The problem is I can't make any of that back up. That's my biggest frustration. There's no downtime to fill it back in.
You can reach Larry P. Vellequette at email@example.com.