Chrysler assesses, aids suppliers

BEIJING -- "Your success is our success," Paul Pak, vice president of Chrysler LLC's global procurement and supply for North East Asia, told hundreds of potential suppliers at the China International Auto Parts Exposition in Beijing on Nov. 30.

 

During his half-hour presentation, Pak emphasized repeatedly that Chrysler is looking to source more products from 'non-traditional' suppliers. He added that any supplier that could meet the company's requirements in terms of price, quality, technology, and delivery would be eligible to supply Chrysler globally.

 

To help Chinese companies meet those requirements, Chrysler has implemented a system in which company engineers visit potential suppliers and assess them according to a variety of factors.

 

Based on those assessments, suppliers are grouped into green, yellow, or red categories. Green companies are eligible to supply Chrysler, while red companies are not. Yellow companies need to make some improvements before being able to supply Chrysler.

 

Yellow companies have the most to gain from the Chrysler's supplier development program, says Scott Stryker, Chrysler's vice president of global supplier quality for China/Taiwan. "If you are a yellow, then that is an opportunity for us to work with you and move you over to the capability side."

 

The cooperative effort includes assistance from Chrysler engineers.

 

"Chrysler is not going to ask you to find a third party to fix these issues. Nor will we tell you to fix them and then call us when you are done," Stryker says. "We are actually onsite, at your facility, using our supplier quality process expertise and our product development expertise to assure that all the issues uncovered are addressed."

 

The supplier development system has helped Chrysler to strengthen its base of local suppliers and potential suppliers to include over 2,000 companies in China.

 

Of those companies, 668 offered competitive bids in 2007, up from 455 in 2006 and only 206 in 2005. More interestingly, of the 668 companies that offered bids, 416 had yellow ratings. Chrysler eventually placed orders with 91 of those 416. In other words, more than 20 percent of those initially tagged as yellow were cleared to act as suppliers.

 

Some companies seemed skeptical, however, about the conditions for participating in Chrysler's supplier development program. As part of the program, companies must share information about their own costs.

 

One attendee asked Stryker, "What do you believe is an acceptable profit margin for your suppliers?"

 

"It depends," Stryker replied. Laughter followed, then silence. Finally the moderator moved on to the next question.