Page 46 - MetalForming April 2014

The Automotive Uptick
a stated number because that really needs to be generated not as a top-down arbitrary figure but by each of the teams which have developed their global commodity strategies.”
Chrysler speaks frequently to its supply base about a concept it calls meritocracy, something that is also important within the automaker’s internal culture.
“It means that those who do well and whose performance is high will be rewarded,” explains Huber. “In order to have a system of meritocracy among our suppliers where the strong ones are able to grow their businesses, that business needs to come from other suppliers or from incremental growth. We have a scorecard system and those suppliers that do well will be growing their business with us and those suppliers that don’t do well will be losing business.”
It is important to understand that all OEMs spend the large majority of their purchasing budgets with the top 100 or so companies in their supply base. In Chrysler’s case, that means that only around 10 percent of its annual spend is spread amongst roughly 1150 companies. Yet those suppli- ers have to be managed and that takes a lot of resources.
“What will happen over time in all the car companies is that those suppliers that are in the tail, especially the tip of the tail, will see their business awarded to those companies higher up in the value stream which have performed well,” says Huber.
“We have many factors that determine our choice of sup-
PMA Automotive Parts Suppliers Conference Agenda—Novi, MI Learn more and register to attend: www.pma.org/apsc
APRIL 30, 2014
pliers in any particular case. The most important is suppli- er commodity strategies. Once the suppliers start looking at the business, our engineering teams and our supplier qual- ity team create criteria to analyse the suppliers and rate them in terms of technical competence and plant readi- ness. We also consider their scorecard performance over the past year or so and we even look at things such as their supplier diversity performance. We have a very strong pro- gram where we encourage our Tier One suppliers to use minority-owned businesses for a certain percentage of their work. Cost is, of course, very important but what’s also important are quality, innovation, technical competence, the design capability and the engineering resources. We have quite a large spreadsheet that we use when we make sourc- ing decisions.
“We look at total landed cost of parts as a criterion. Whether they are sourced in China or the Philippines or Mexico or Canada or the United States is not as significant a factor for us as the total landed cost. That said, there is a very strong trend toward regional purchasing; buying the parts in the regions where we are manufacturing the vehicles.”
One of Huber’s areas of responsibility is risk manage- ment. His group carries out financial reviews of all Chrysler’s production suppliers and its largest indirect suppliers.
“If we find a problem, we have a group which gets involved with work-out situations where we are dealing with banks or pri- vate equity firms or other customers through legal processes or out-of-court deals. I also have a group in my risk-management area which is responsible for onsite technical support of sup- pliers where they might be having throughput issues or major quality spills. My group works hand-in-hand with the people on the floor to get the plants up and running and get parts out the door so that our production is protected.”
The other aspect of risk management that has been thrown into focus over the last few years is how to mitigate the potential disruption to supply caused by natural disasters around the world.
“There has been increased activity in this area ever since the Japanese tsunami,” says Huber. “People have been trying to figure out how to get better visibility deep into the tiers of the supply chain. We know who our Tier One suppliers are and where all their plants are located and we have a warning system that tells us, if there is a tsunami or tornado or what- ever, what Tier One suppliers are in its footprint. Where it gets very murky is in the subtiers.
“A lot of industry consultants are trying to figure out how to gain visibility into the subtiers and how to keep that visi- bility current. It is very difficult as an automaker to know who is down there in the subtiers, where they are located and to fully comprehend what the risk profile is. This still is very much a work in progress in the industry.
“I’m not sure that having international reach gives visibility in the lower tiers. What we depend on is for our Tier One sup- pliers to tell us who the suppliers in their subchain are. They have to collect that data from their subsuppliers. It becomes
2:00 p.m. 2:30 p.m. 2:40 p.m.
4:00 p.m.
5:15 p.m. 6:30 p.m.
Registration Opens for 21st Annual APSC Welcoming Remarks: Scott Prince, Tella Tool Mfg. Co. Keynote Address: Sheri E. Hickok, Global Supplier Quality, General Motors
The State of the Automotive Industry: The Global Outlook, Joe Langley, Principal Analyst, IHS Networking Reception, sponsored by Plex
Adjourn Day One
MAY 1, 2014
8:00 a.m. 8:30 a.m.
9:30 a.m.
10:30 a.m. 11:00 a.m.
12:00 p.m. 2:00 p.m.
Continental Breakfast
General Session (supported by OESA):
Max Rogers, President/CEO, Grupo Antolin
North America
Session 1: Legal Briefing, Dan Sharkey, Partner, Brooks Wilkins Sharkey & Turco PLLC
Session 2: Strategic Growth Initiatives
Keith Helfrich, Marketing Director, Michigan Manufacturing Technology Center
Networking Break
Session 3: Automotive Supplier Best Practice:
ERP, Presented by Plex
Session 4: Lightweighting Update, Greg Schroeder, Senior Research Engineer, Center for Automotive Research
Networking Lunch with Keynote Presentation: Jason Gifford, Management Consulting Partner, Plante Moran Closing Remarks and Adjourn
44 MetalForming/April 2014
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