Under pressure to introduce technology, improve quality and ensure smooth product launches, the Detroit 3 are giving engineers more influence over their purchasing operations.
General Motors, Ford Motor Co. and Chrysler Group have all chosen purchasing chiefs with engineering backgrounds, and those executives are edging away from their companies' former focus on the lowest possible "piece price."
Consider these developments:
- Chrysler is talking with key suppliers about possible no-bid contracts for its next-generation minivan. No-bid contracts encourage suppliers to develop technology and build factories for long-term customers.
- GM is now judging engineers and purchasers by the same job-performance goals to minimize internal squabbles over product design. That should help GM speed decision-making and avoid mixed messages to suppliers.
- Ford will invite suppliers to help benchmark rival vehicles, giving them an earlier role in product development and ensuring Ford's access to the suppliers' best technology.
Tensions remain between automakers and suppliers according to two industry supplier surveys released this year. Suppliers have long complained that the automakers beat them up for low prices and deny them sufficient planning time on new products.
But with North American vehicle production rebounding swiftly from the recession, automakers appear eager to work more closely with their vendors to ensure reliable production of high-quality parts.
After Hau Thai-Tang took on his new duties as Ford's purchasing chief on Aug. 1, the company wasted no time giving suppliers an expanded role.
Last week, Ford announced that it will ask key vendors to assess rival vehicles during the initial stages of product development.
"We are trying to get suppliers engaged as soon as we get to work on a program," said Birgit Behrendt, Ford's vice president of global programs and purchasing operations.
Thai-Tang, formerly Ford's vice president of engineering for global product development, was chief engineer of the 2005 Mustang and helped develop the Ford EcoSport, a small SUV sold overseas.
During an interview this month in Traverse City, Mich., Behrendt noted that she and Thai-Tang had been a Ford "matched pair" of engineering and purchasing executives.
To coordinate the activities of Ford's engineering and purchasing operations, the company had given Thai-Tang and Behrendt similar responsibilities.
"My role is to make sure there is alignment between product development and purchasing," Behrendt said. "We work very closely together."
During his three-year reign as GM purchasing chief, Bob Socia introduced matched groups of purchasing, engineering and manufacturing executives.
GM also has adopted the same yardstick -- total enterprise cost -- to measure the performance of engineers and purchasing employees.
Grace Lieblein, who was named GM's global purchasing chief last December, told Automotive News on Aug. 6 that she strongly favors the use of one yardstick for engineers and purchasers.
"We tend to behave according to how we are measured," Lieblein said. "So that's one of the big things we've done. This was already under way, but I helped give it a little push."
Total enterprise cost includes a component's manufacturing cost, shipping costs and other factors. Previously, engineers often focused on technology and quality while the purchasing team emphasized price.
Lieblein, who formerly was chief engineer for the GMC Acadia, Buick Enclave and Saturn Outlook, said the new procedures allow GM's engineers and purchasers to take a consistent approach with vendors.
"A number of suppliers have told me they are seeing it work," she said.
Following its bankruptcy in 2009, Chrysler's purchasing operation took steps to repair poor relations with suppliers.
Under Dan Knott, the company sped up payments to suppliers, streamlined quality checks of new parts and stopped switching vendors abruptly to save small amounts of money. Scott Kunselman took over as purchasing chief after Knott retired shortly before he died in 2012.
Now, Kunselman wants to offer no-bid contracts to key suppliers -- dubbed target pricing -- to foster deeper ties.
A no-bid contract "allows the supplier to be involved earlier, and that's the key," Kunselman told Automotive News. "You identify your partner earlier, and then he participates in the target-setting process."
It's too early to tell whether the Detroit 3's recent efforts will improve relations with suppliers.
In May, the results of a survey of 441 suppliers published by Planning Perspectives Inc. concluded that North America's six major automakers had made no progress improving relations with suppliers over the previous year.
But some suppliers have spotted signs of progress as the Detroit 3 nudge their engineering and purchasing departments to communicate better.
Mike Heneka, president of Faurecia North America, says Ford and Chrysler have allowed his company to participate in the early stages of product design.
Faurecia helped develop the instrument panel, console and door panels for the current Fiesta subcompact before it was launched in 2009. "We were brought in very early," Heneka said. "They were looking for small-car luxury, which is our expertise."
Heneka says Faurecia also was an early participant in the development of the Chrysler 200 sedan.
The automakers "are all working towards matching their engineering and purchasing," Heneka said. "You see it at Ford in particular. I see Scott trying to do it at Chrysler, and I think we are starting to see it at GM."