05 June 2008
Chrysler's chief procurement officer, John Campi, has responded angrily to reports he plans to slash supplier prices over the next three years.
The purchasing head said his savings initiative had been misinterpreted in automotive press reports, which suggested he would force suppliers to reduce prices by a quarter. Instead, he stressed, the plan is to take 25 per cent out of supply chain costs as a whole, in an effort to share savings with vendors.
On Chrysler's blog, Campi wrote: "It is disappointing to find the media can't seem to get the message straight. Not once, in any public or private discussion, have I ever suggested suppliers would have to reduce pricing. Our drive for cost reduction will only be accomplished with collaboration between Chrysler and our supply base."
Campi's plan to reduce costs has three core targets: reducing vehicle complexity by cutting back on components such as electronic wiring; minimising engineering changes by bringing suppliers into the development process earlier and helping to stabilise orders from dealers to offer longer-term product forecasts for vendors.
It is hoped these changes will enable suppliers to cut costs by reducing overtime and raw material prices, so Chrysler pays less for their services. A spokesman for the firm told SM: "Healthy, profitable suppliers are a big advantage for Chrysler."
In an interview with CPO Agenda, Campi lambasted the way the company has treated suppliers over the past few years. "Any company that abuses a supplier is destined for failure," he said (Web news, 7 May).