Chrysler elects procurement team leader as its new president
By Tim Minahan -- Purchasing, 1/15/1998
To hear the mainstream press tell it, Chrysler Corp. has tapped Tom Stallkamp as its new president for his uncanny ability to make suppliers cut costs. True, as head of purchasing, Stallkamp helped to squeeze billions of dollars from Chrysler's supply and product development operations. However, his most critical contributions deal not in dollars but in relationships.During his 17-year tenure at the nation's No. 3 automaker, Stallkamp has transformed procurement and supply from a task-oriented support function into a strategic operation that has emerged as one of Chrysler's key competitive advantages. A critical component of this success is the emphasis Stallkamp has placed on team building among procurement and other functions, such as engineering and manufacturing, as well as among suppliers.
"One of the things we've done at Chrysler is to show the benefits of working as a team," says Stallkamp, the first auto company president to rise from the ranks of the purchasing department. "We've really worked hard to get people out of their functional niches and concentrating on end results."
By working moreclosely with engineering, manufacturing, and suppliers, the procurement group has helped make Chrysler the most profitable car company in the world (per-unit basis) for two years running. And the strategies that Stall-kamp's team have implemented have earned Chrysler's supply squad the respect of contemporaries and suppliers alike.
"Tom Stallkamp's role at Chrysler over the past several years has been critical to our success both in production processes and in our efforts to reduce costs and to generate new ideas," says Chrysler Chairman and CEO Robert Eaton.
"Chrysler is a company I hold up as a role model of what procurement and supply should look like in the future," says Ken Stork, president of Ken Stork and Associates Inc. and former corporate director of materials and purchasing for Motorola Corp. "The company strategically chose to differentiate itself from its much bigger competitors--General Motors and Ford--by creating a true win-win relationship with the relatively few suppliers that are critical to the business going forward."
Indeed, when it comes to supplier relationships, Chrysler is the envy of the industry. Procurement initiatives such as the extended enterprise and SCORE [PUR: Aug. 14, '97; p. 40] have been emulated by purchasing organizations in all industries. In private, suppliers herald Chrysler as the best of The Big Three automakers to do business with. "To be fair, GM and Ford are trying to do the things that Chrysler does but they're not there yet," says a manager at a tier-one Midwest-based automotive supplier.
Stallkamp, a long-standing member of Purchasing's editorial advisory board, was a big part of Chrysler's initial decision to work so closely with its supply base. Upon taking the reins of production purchasing in 1983, Stallkamp was quick to see the advantages of shifting parts production to outside suppliers. (Some say the company--near bankruptcy at the time--had no choice but to rely heavily on suppliers.) Soon after, Chrysler enlisted suppliers' help in designing parts and full systems. This set the groundwork for some of the much-admired supply tactics that Chrysler uses today. These include:
* Supply concept: Leverages the spending of procurement, logistics, and transportation. Integrates the procurement, delivery, and scheduling of materials and products through these functions.
* Extended enterprise: Launched in 1989 as part of Chrysler's platform concept, pairs cross-functional Chrysler teams with a small group of suppliers to develop new vehicles from the ground up. The process, which has been used to bring about vehicles ranging from the Dodge Intrepid to the Chrysler Concorde, has trimmed the time it takes for Chrysler to develop a new vehicle by more than 40% and has cut development costs significantly. One example: Chrysler recently brought its popular Neon car from concept to market in just 31 months for a total cost of $1.2 billion. That's about half of what it costs rival automakers to develop similar models.
* SCORE: The Supplier Cost Reduction Effort, which taps suppliers for ideas for cost reductions and product and process improvements, is at the core of Chrysler's continuous improvement initiatives. The auto maker motivates its supply base to continually meet an annual SCORE savings target of 5% of sales to Chrysler by agreeing to split savings generated from SCORE ideas equally with suppliers. In addition, SCORE results are part of the criteria used to determine which suppliers will get new business. The results: SCORE generated $1.23 billion in savings last year, increasing Chrysler's profits by $325 million in 1997 alone. More importantly SCORE has put suppliers on a path to continuous improvement.
"Chrysler's SCORE program encourages suppliers to be creative and participate in the program," says Jeff Wincel, director of purchasing for TRW Automotive, a leading supplier of vehicle suspension and occupant restraint systems. "It is flexible enough to allow each supplier to contribute in its area of expertise and encourages sustainable value-added/value-engineering-related suggestions."
Stallkamp's rise, which marks the first time the president of any major automaker has come from purchasing, demonstrates how critical supply management has become to a company's success. The 51-year-old heir-apparent, who has also overseen Chrysler's large-car and minivan operations, is a model of the new procurement professional, concerned not just with getting the lowest price but with developing a supply chain that returns the best total value for his company.
"Stallkamp has been a very effective general manager of external operations," says Stork. "And by external operations I mean the supply base."
Stallkamp's ascension to president this month won't lessen Chrysler's commitment to improving its supply base. On the contrary, Stallkamp expects his replacement, Thomas W. Sidlik, to pursue the company's supply goals with even greater vigor. "I have a great team in procurement and supply," he says. "Tom Sidlik comes in with excellent credentials and under him is a whole cadre of professionals who will continue along with the supply strategies we established but at an even faster pace."
Stallkamp will be able to attack his new duties knowing he has left behind him a supply legacy of which he can be proud. "Chrysler's procurement and supply team has helped define what supply chain management means," says Stallkamp. "We've demonstrated that it is possible to work with suppliers towards common goals instead of working against them."
That's a supply path other procurement organizations would be wise to follow.
Chrysler's new chief of procurement
Name: Thomas W. Sidlik
Title: Executive vice president--procurement and supply; General manager--small car operations
Professional background: Joined Chrysler in 1980 as manager, car product financial analysis. Since then he has held several high-level posts, including vice president of customer satisfaction and vehicle quality and group controller for product development and procurement. He was most recently promoted from vice president of Chrysler Corp. and chairman of Chrysler Financial Corp. Prior to joioning Chrysler, he spent seven years in Ford Motor Co.'s car product development group.
Education: Graduated with honors from New York University with a B.S. in economics and finance. Received an M.B.A. in finance from the University of Chicago.
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