Chrysler's Tom LaSorda wants better quality from suppliers. His predecessor, Wolfgang Bernhard, focused on price.
The US division of the German-American automaker said it has hired 40 inspectors so far and has begun 16 audits since February, when the audits started.
"Where we have issues, we are sending people to do quality assurance, doing joint audits with the suppliers and trying to improve their processes to give us better quality," said Tom LaSorda, the Chrysler group's chief operating officer.
The audits are part of Chrysler's changing relations with suppliers. The company is trying to spark vehicle innovations by working more closely with component makers earlier in the development schedule.
By contrast, LaSorda's predecessor, Wolfgang Bernhard, who is now head of the Volkswagen brand group, focused more on price reductions.
The new audits come at a time when Chrysler is starting to improve its quality image. But it still has some work to do, according to J.D. Power's Initial Quality studies. Chrysler group brands still score below the industry average, although they have improved in recent years.
In 2004, for example, the industry average of problems per 100 vehicles was 119. The Chrysler brand had 120 problems, just below average. Dodge had 121 problems per 100 vehicles, and Jeep had 136.
Chrysler is focusing its Quality Assessment and Audit Team on suppliers who last year caused two or more quality "spills" -- problems that interrupted the shipment of vehicles to dealers.
The audits initially target major suppliers but will apply to all vendors, said a supplier executive whose company has been audited.
Chrysler's quality audits go well beyond fixing immediate problems. The automaker requires Tier 1 suppliers to follow certain manufacturing practices.
As part of the audits, Chrysler also prods these suppliers to demand that their Tier 2 and Tier 3 suppliers follow those practices as well.
How do the audits work in practice? One supplier executive said a team of Chrysler quality experts visited his company after detecting two problems. An investigation determined the supplier was guilty of one problem while the other was Chrysler's fault.
Chrysler worked with the supplier to fix the problem, the supplier said. "We were highly skeptical at first," he notes. But that changed. "We're working together. There is no big hammer. No one is screaming or taking names. They want to know if you have issues and how they can be fixed."
Chrysler also wants to encourage supplier innovations. LaSorda cites several examples:
Such efforts improve quality, said US consultant John Henke, who teaches marketing at Oakland University in Rochester, Michigan, and is president of Planning Perspectives, a consulting firm in Birmingham, Michigan.
"The best quality program is when you have a trusting relationship with your supplier," Henke said.
Bad supplier relations cause higher administrative expenses, time-consuming price disputes and slower problem-solving, Henke said.
In a soon-to-be-released study of automaker-supplier relations, Henke said he expects Chrysler will show "continued slight improvement." That would be three straight years of improvement for Chrysler as measured by the Henke study.