WINDSOR, Ontario -- In new rules for suppliers coming in July, Chrysler Group will provide more formal protections for parts makers as the automaker consolidates its supply base.
Under the current contract, "I could pull the trigger at the last minute" and drop a supplier because "I didn't like the way you look," said Dan Knott, Chrysler's senior vice president of purchasing and supplier quality.
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 here at a suppliers' conference sponsored by Canada's Automotive Parts Manufacturers' Association and Auto21 Inc.
The new terms and conditions, designed in part to help improve Chrysler's frayed relations with suppliers, will add a review board for supplier grievances. It won't be totally impartial.
"I'll chair it," Knott said. But it also will include colleagues from Chrysler's engineering, manufacturing and finance staffs. The review board 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 a target 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.
Chrysler will reduce the number of its suppliers naturally, not to meet a target, Knott said. First, he said, Chrysler knows its supply base is "not 100 percent healthy," implying that the company would weed out weak suppliers.
He noted that Chrysler has kept its inventory at a 58-day supply, "which we think is the sweet spot." But he said that also means "we can't afford to be down."
Second, "as we source 1.8 to 2 million new vehicles" developed jointly with Fiat and sharing components with the Italian automaker, he said, "we'll naturally determine the winners and losers."