WINDSOR, Ontario -- Chrysler Group is developing revised terms and conditions for supplier contracts that it expects to unveil in July, Dan Knott, Chrysler's senior vice president of purchasing and supplier quality, said Thursday.
The new terms will be the latest in a series of moves designed in part to help improve Chrysler's frayed relations with its suppliers.
“It used to be I could pull the trigger at the last minute,” he said of the current contract terms and drop a supplier because “I didn't like the way you look.”
The new terms and conditions will “try to put some safety in for us and some safety and stability for the supply base,” he said.
Knott was speaking at a suppliers' conference sponsored by Canada's Automotive Parts Manufacturers' Association and Auto21 Inc. in this city across the border from Detroit.
Review board
One part of the new terms and conditions will add a review board for supplier grievances.
It won't be totally impartial, Knott admitted. “I'll chair it,” he said. But it also will include colleagues from Chrysler's engineering, manufacturing and finance staffs. It will allow a supplier “to have a discussion, rather than just cutting him off at the knees.”
In other remarks, Knott said he did not have a specific target for consolidating suppliers as Chrysler and Fiat S.p.A. begin to share platforms and suppliers, or for buying more from countries such as China.
“I will not have a low-cost country sourcing objective or a supplier consolidation objective,” he said, deriding such targets as showing what he called a “push-button” mentality.
Fewer suppliers
Chrysler will reduce the number of suppliers it works with, but not to meet a target, he said. “As we source 1.8 to 2 million new vehicles” developed jointly with Fiat, he said, “we'll naturally determine the winners and losers.”
His position contrasts sharply with that of his predecessor at Chrysler purchasing, John Campi, who publicly said he wanted to boost purchases from low-cost countries. Relations between Chrysler and suppliers deteriorated badly under Campi, as measured by an independent survey of suppliers.
Now, Chrysler is conducting its own anonymous monthly survey of suppliers to see how it is viewed, Knott said. The survey asks, “Would you recommend Chrysler as a customer?” to another supplier. If the answer is no, it asks why not.
Knott also said that Chrysler already has 18,000 dealer orders for the Jeep Grand Cherokee, which will be shipped to dealers shortly.
All of his efforts come down to product, he added. “I don't care if I'm No. 1 in the supplier survey if the product is no good. The product has to be good.”
