07 May 2008 | Geraint John
Chrysler's new procurement chief has lambasted the way the company treated its suppliers in recent years and made rebuilding relationships his top priority.
John Campi, who joined the privately owned US auto maker in January, told CPO Agenda - Supply Management's sister magazine - that a combination of "knee jerk" demands for price cuts, poor internal processes and broken promises had destroyed its reputation among key suppliers.
"It seems to me that the first thing Chrysler needs to do is regain trust and engagement with the supply base," he said. "Any company that abuses a supplier is destined for failure, because it's only with those key suppliers that you're really able to make progress."
Campi pledged to work collaboratively with suppliers to take cost out of the supply chain and to share savings on a 50:50 basis - an arrangement that had already been implemented in some cases, he said.
Membership of its supplier partnership council had doubled to 25 firms and its remit changed from "very nice social events" to serious meetings that focused on problems and possible solutions.
"This supply council will act as the voice of the supplier, helping us to understand what we are doing well and what we are not doing well," Campi pledged.
Reduced vehicle complexity, stabilised production scheduling and fewer post-design change notices were three of the ways Chrysler could help suppliers to lower their costs, Campi explained.
He also said he wanted four to six "truly critical suppliers" involved much earlier in the product development process. "We do not engage our suppliers appropriately in the design and the conceptual development of our automobiles," he admitted.
But to get greater collaboration, more than 1,000 buyers and engineers at Chrysler needed to do business with "a high degree of integrity" and "a degree of openness that we probably haven't had in the past".
Campi said "structural changes" were needed in the procurement organisation to facilitate this. Last month he began this process by rotating more than 40 buyers and purchasing directors into different jobs.
The buyers, who had been in the same roles for up to 12 years, had become "comfortable and complacent" in their dealings with suppliers, he said, while those at director level were guilty of "something that becomes close to groupthink" with their engineering colleagues.
"Engineering's a pretty strong organisation within Chrysler," he said. "While I have a high degree of respect for them, I don't necessarily believe that they are always looking at the opportunities they could look at."
Campi noted that a difficult economic climate - with falling vehicles sales and high raw material costs - meant the conditions for transforming supplier relationships were not ideal.
He admitted he was "concerned" about the financial state of some of Chrysler's suppliers, and said he would do everything he could to "help those that are caught in this vice", as well as seek to manage supply risk more effectively.
In February, the bankruptcy of Plastech, a Michigan-based supplier of plastic parts, forced Chrysler to halt production temporarily at four of its plants.
But Campi rejected the suggestion that a desire to bypass troubled domestic US suppliers lay behind his enthusiasm for expanding Chrysler's supply base in lower-cost countries.
He admitted the company's failure to develop sources of supply outside North America "has put us at a disadvantage over the past five to 10 years… We probably missed the sweet spot of cost savings from globalisation."
But he said he would prefer to take familiar suppliers into China, India and elsewhere, rather than "start from scratch" with local ones.
Campi said transforming Chrysler's fortunes, and by implication its supplier relationships, was not a one or two-year project but a "multi-year, possibly decade, turnaround".
Asked whether he saw parallels between his own intentions and Chrysler's much-heralded Supplier Cost Reduction Effort (Score) programme in the 1990s, Campi said he did, adding he wanted to meet its creator - former president and CPO Thomas Stallkamp - in the coming weeks to learn more about it.
The full interview with John Campi will appear in the summer 2008 issue of CPO Agenda, published in mid-June. For more information, see www.cpoagenda.com