Chrysler and Fiat drive savings

6 November 2009

06 November 2009 | Jake Kanter

The alliance between Chrysler and Fiat is set to deliver procurement savings of $2.98 billion (£1.79 billion) by 2014.

At the launch of Chrysler's five-year business strategy based on its new links with Fiat, head of purchasing Daniel Knott unveiled an ambitious plan that aims to "strongly contribute" to the US carmaker's profitability.

It is the first indication of the impact on buying since the two companies made an agreement this summer. Chrysler emerged from bankruptcy protection after signing an alliance with Fiat.

Speaking in the US this week, Knott said savings would be achieved as a result of aligning the two companies' procurement teams and introducing weekly savings meetings. Other plans include developing joint purchasing strategies for major commodities and suppliers, as well as increasing low-cost country sourcing and improving assessment of vendor capability.

Chrysler and Fiat aim to share around two-thirds of their supply base by 2014 and will use their combined $68 billion (£40.9 billion) commodity purchasing power to buy car parts together where possible.

Improving supplier relationships is also a priority and Knott set out proposals to boost vendor communication and simplify purchasing procedures. Chrysler will split savings evenly with suppliers that submit successful ideas on cutting the costs of car parts - similar to a proposal unveiled by General Motors earlier this year. 

SMnov2009

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