DETROIT -- Dan Knott, the boyish, hard-charging new head of Chrysler Group purchasing, is trying to lift the company from the bottom of the heap in terms of supplier relations.
It won't be easy, but the 49-year-old former product engineer is off to a fast start.
On April 28, Knott surprised a packed supplier meeting at Chrysler's Auburn Hills, Mich., headquarters by unveiling a cost-savings system reminiscent of -- although more modest than -- the company's much-admired SCORE program of the 1990s.
SCORE rewarded suppliers for cost reduction suggestions. Several years after the Daimler AG regime abandoned the program in favor of a more confrontational approach, SCORE remains a yardstick for enlightened supplier relations.
At another supplier meeting May 25, Knott told parts makers that they would share in cost savings if they help Chrysler cut warranty recalls next year.
Chrysler also is paying suppliers more quickly -- a sure way to win friends.
The monthly meetings -- which Knott has made a fixture since taking over purchasing in December -- are part of his effort to restore Chrysler to the preferred-customer status it enjoyed in the 1990s. That's when purchasing chief Tom Stallkamp made SCORE an industry model for collaborative relations.
"We must have a partnership relationship so they [suppliers] will give me their A team," Knott said in an interview in Auburn Hills last week. "So many times in the past, we were pointing fingers at each other."
Knott and his boss, CEO Sergio Marchionne, badly need suppliers' cooperation if they are to reverse Chrysler's reputation for mediocre quality. The company, which spends $28 billion annually on parts and services, is now in the midst of sourcing components for a fleet of new small and mid-sized vehicles based on Fiat platforms. Production of those vehicles, scheduled to start arriving in late 2011, is expected to grow from 800,000 to 1.2 million by 2014.
Chrysler is flexing its purchasing muscle. Since November, Knott has hired 46 purchasing staffers and 86 quality engineers, expanding his team from 431 employees to 563.
"This is the biggest leverage, from a sourcing perspective, we've had in many years," said Knott.