Chrysler’s new procurement chief vows to help struggling suppliers

Big Three automaker promises more accurate parts forecasts, increased supplier spending and improved supplier diversity efforts.

By Dave Hannon -- Purchasing, 9/21/2007 6:30:00 AM

Chrysler’s new executive vice president of procurement and supply says another down year of automotive sales could seriously impact Chrysler's supplier base and unveiled his strategies on how to minimize the impact of that trend on Chrysler.

"If it's going to be a tough year next year, with the number of [suppliers] that are on the edge of Chapter 11, that's going to push them over the edge, no question," said Chrysler's newly appointed top buyer Simon Boag during a roundtable interview with reporters reported by Dow Jones.

Boag said one way Chrysler is trying to help its suppliers is through more accurate parts forecasts, which will limit the amount of excess inventory parts makers are stuck with. In fact, the Detroit News reports that Boag went so far as to say Chrysler may pay its suppliers more for some parts than it previously did to help keep some from filing bankruptcy. 

At the same time, Chrysler is striving to continue to grow its supplier diversity efforts with its struggling supply base. Chrysler last year spent nearly $4 billion in spending with minority and women-owned businesses.

At its recent Matchmaker supplier diversity event, Boag said that in addition to working to spend more with diverse suppliers, Chrysler will ask its existing suppliers to provide the percentage of minority employees employed and compare those figures to a state average for minority employment (for example, in Michigan it’s 20%). While the program is voluntary for suppliers, Boag said Chrysler’s contract decisions will take the voluntary figures into account. "For us, it's not just about the ownership of our minority suppliers, but it's the number of employees that our suppliers use that are minority employees," Boag told the Detroit Free Press. "The essence here is employment," Boag said. "We want to be a catalyst in terms of increasing employment in our communities."

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